why do most prop firms focus on intraday trading?

[trade2020]

afaik, most prop firms focus on intraday price action. But the most legendary traders that I know of are swing/position traders, because you can capture much bigger moves than the average daily ranges (even with catalyst), and you're not getting chopped up by noisy algo driven intraday price action, or losing edge in commissions. In fact, a lot of these traders I've learned about were once day traders, but then went to swing trading. I don't want to just say swing trader is "easier" but it would appear that's what the evidence suggests. So why are such large % of prop firms developing day traders vs swing traders?

They dont want the risk in overnight and weekend gaps--there are some firms like FTMO that offer decent sized Swing Trade accts that you can hold session to session or through weekends--however-- even those account types still have a daily reset on max loss daily drawdown allowed--so even in the case of FTMO where that drawdown limit is fixed and not trailing--that is only true (that it is fixed and not trailing) during one day sessions--if you hold your positions past the daily reset time then if for example you have a $10,000 daily loss limit--if you were up $20,000 before the reset on live positions and the next session the market goes against you (or gaps against you) and now your position lost $11,000 and is now up only $9,000 instead of $20,000 then you have violated the $10,000 loss.

However during the same intraday session if you were up $20,000 and your daily loss limit was $10,000 - with a fixed drawdown below the zero line --then you would have to lose $30,000 or more within that same session to violate the $10,000 daily loss limit--as the fixed drawdown (as opposed to trailing) means you can build a huge cushion (but that cushion is only going to last within that same session)---if you have a swing acct type and hold that $20,000 profit position and dont close it out before end of the same session then as in the 1st example--if you were up $20,000 before the reset on live positions and the next session the market goes against you (or gaps against you) and now your position lost $11,000 and is now up only $9,000 instead of $20,000 then you have violated the $10,000 loss.

 

[Overnight]

...and is now up only $9,000 instead of $20,000 then you have violated the $10,000 loss.

You are up 9K. In the real world, that is all that matters. What you are describing effectively is a trailing profit, not a trailing draw-down. So the person is up 20K, but the next day is down 10K, but is still up 9K? Close the account? This is why these firms are BS.

 

[trade2020]

You are up 9K. In the real world, that is all that matters. What you are describing effectively is a trailing profit, not a trailing draw-down. So the person is up 20K, but the next day is down 10K, but is still up 9K? Close the account? This is why these firms are BS.

Yes--all the firms are BS in 1 fashion or another some much worse than others -- the ones with "trailing anything" whether its trailing drawdown or trailing profit are the worse. The only ones even worth considering have a fixed drawdown during any single intraday session (with no trailing profit or trailing drawdown during that same session) which allows you to build an cushion (during that session only)--example $10,000 fixed drawdown below zero line (during session) you are up $9,000 - now you have a $19,000 drawdown (for that session only). If the same firms that offer that --also offered daily payouts--instead of once every week or once every 2 weeks then that would be of value as a funding source for intra-session day trading only--however there is no firm that offers both. Either they offer daily payouts but have too many other "gotcha" rules that monitor your trading and allow them the sole discretion to not pay you--if in their opinion you have violated one of their "fuzzy grey area rules" - or they have clear black and white trader friendly rules and fixed drawdowns but only offer once a week or twice a month payouts. The only way to have it all is just to trade your own account with your own funds where you can transfer profits out of your account daily and your success or failure rests solely on your P&L and no one is making up discretionary rules to trip you up and cancel your account or not pay you your earned profits

 

[traderjo]

Not to mention most of these are based on milking the fees hamster wheel ,, test fees x tests fees and some when they claim you are funded don't even give you real account... but a demo! how is that legit? if one trader makes huge profit and they have to pay where is the money going to come from? .. for suckers

 

[murray t turtle]

Nailed it. Most “prop firms” that people think of that don’t require an extensive skill set, are making money off of your trading activity, not your pnl. While some do allow for overnight, the bulk of their traders and, and what they recruit for, are day traders.

Legit prop firms are mostly market makers, like optiver, susq, student, etc. There are some others that operate similar to a multi strategy hedge fund, such as first ny and a few other shops.

But the vast majority of prop firms discussed about on this forum and thread and are simply profiting from the trading activity of the daytraders. It’s like casinos recruiting gamblers lol.

%%
LOL. And no question single stocks have more risk overnite. Then leverage adds more risk to that.
Another big difference\ casinos don't really want anyone to win much.
Some of the more honest gambling companies disclose ''for entertainment purposes only''
Most anyone who profits off ,commissions or data feed would prefer winners.