Which pro firm to choose?
- Thread starter lojze
- Start date
you have to ask yourself why you want to go to a "prop" firm if you have to put up your own money. If you want leverage, you can go to a retail firm and get 4:1 margin on a 25k account or larger, or you can get into derivatives. If you are unemployed and broke, then you need to get yourself a job, not trade the stock market. If you want to learn how to trade, then open an account at a discount broker and start trading in small amounts and read lots of books.
IMHO, Newbies with limited funds should not put up money to learn how to trade at a prop firm. 9 out of 10 will blow through their accounts before learning how to trade well. The 10th one will either be a trading prodigy or not be trading actively enough to really learn the tools of the trade.
From my experience, the learning curve is about a year of full time trading before you can be somewhat consistent in this difficult market. Generally, you have to lose money before you learn how to make it. If you're willing to sacrifice your deposit as tuition money, then go for it. But don't expect to learn the difficult art of trading AND maintain your deposit. You can't have your cake and eat it too.
If you want to learn trading, try to find a firm that will back you with no deposit (this is incredibly rare in today's environment). Otherwise, practice trading an account with an online broker and reading alot of books. If you want to learn Nasdaq Level 2 scalping, make sure your online broker has access to this tool and learn through trial and error (and lots of good books). You don't need expensive seminars and training courses to learn how to trade. They don't teach anything more than you can get from the best trading books. Ultimately, practice will make perfect (or as perfect as you can get in this profession).
From my experience, the learning curve is about a year of full time trading before you can be somewhat consistent in this difficult market. Generally, you have to lose money before you learn how to make it. If you're willing to sacrifice your deposit as tuition money, then go for it. But don't expect to learn the difficult art of trading AND maintain your deposit. You can't have your cake and eat it too.
If you want to learn trading, try to find a firm that will back you with no deposit (this is incredibly rare in today's environment). Otherwise, practice trading an account with an online broker and reading alot of books. If you want to learn Nasdaq Level 2 scalping, make sure your online broker has access to this tool and learn through trial and error (and lots of good books). You don't need expensive seminars and training courses to learn how to trade. They don't teach anything more than you can get from the best trading books. Ultimately, practice will make perfect (or as perfect as you can get in this profession).
I know I might get big time flamed for this but here I go. Don't rule out starting your trading career with futures. There are a couple of small contracts out there - Dow $5 even Dow $2 Crude oil E contract perfectly suited for strating out traders. Here are my reasons...
1. Cheaper cost structure. no cost for bullets since you can short w/o this downtick restriction. $3-$5 per trade RT on an instrument that has comparable profit/loss characteristics as stock trading at less than stock commish.
2. Futures trading gives you more grounding on the technical anaylsis aspect of trading w/c is useful and transferable to stocks as well.
3. Due to the margins, you are not "forced " into trading for a prop/pro firm. (double edge sword since I think that if you really have your mind set on stock trading) you should do it with a prop/pro just bec of cost)
4.Tax advantages. If you happen to be one of the 5% successful ones, you will keep more of your $ since better tax treatment.
5. Diversification. If you can be one of the 5% winners trading the SP, and the stock markets die much like last summer, skills in emini trading are transferable to the other emini contracts and there are tons of them.(bonds, currencies, oil,) NEVER a dull moment.
I often read from a prominent poster here that there is no edge in trading futures. I would agree with him years ago when all you see in the intraday charts were last trade,no bid/offers and the vol stats are from yesterdays. Now, trades are posted w/ volume, there is depth of market (the efficacy of which is still debatable) so I think there is an edge. And there is always that edge of having the ability to stick to your plan, cut losses, sit on your hands when the setups are not there...etc.
Just my meandering musings. Have a great weekend everybody!
1. Cheaper cost structure. no cost for bullets since you can short w/o this downtick restriction. $3-$5 per trade RT on an instrument that has comparable profit/loss characteristics as stock trading at less than stock commish.
2. Futures trading gives you more grounding on the technical anaylsis aspect of trading w/c is useful and transferable to stocks as well.
3. Due to the margins, you are not "forced " into trading for a prop/pro firm. (double edge sword since I think that if you really have your mind set on stock trading) you should do it with a prop/pro just bec of cost)
4.Tax advantages. If you happen to be one of the 5% successful ones, you will keep more of your $ since better tax treatment.
5. Diversification. If you can be one of the 5% winners trading the SP, and the stock markets die much like last summer, skills in emini trading are transferable to the other emini contracts and there are tons of them.(bonds, currencies, oil,) NEVER a dull moment.
I often read from a prominent poster here that there is no edge in trading futures. I would agree with him years ago when all you see in the intraday charts were last trade,no bid/offers and the vol stats are from yesterdays. Now, trades are posted w/ volume, there is depth of market (the efficacy of which is still debatable) so I think there is an edge. And there is always that edge of having the ability to stick to your plan, cut losses, sit on your hands when the setups are not there...etc.
Just my meandering musings. Have a great weekend everybody!
If you get lots of capital you can come to the company I will start.
I agree. I just switched over to IB so that I may do both as easy as possible on a limited bankroll. I find myself spending more and more time with the futures where there is NO short list to worry about, leverage is great, the product cant get bought out (although the Hunt bros. tried to control the market for a while), the product cant go out of business ( of course we could stop using oil but the writing should be on the wall long before the price goes to zero) and you dont have to worry about how many trades you made in the last five days.
I also am wondering for the small trader if its not cheaper to trade futures as well. Still debating that one myself.
Best of Luck!!
Maybe this article I wrote awhile back might help sort through some of the info.
http://www.daytradersusa.com/tharp.html
If you truely have little capital than you will need to find a proprietary firm and not a professional firm.
Robert
