why do most prop firms focus on intraday trading?

[spectastic]

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.

https://twitter.com/x/status/1641098012788244480

yep these guys do have 7-8 figure traders, supposedly, but they also do a lot of this.. (see replies)

i listened to their webinar. it's basically a 2h sales pitch to their education.

 

[spectastic]

Ok, I’ll ask. Who are they?

sorry, I thought this was popular.

 

[Overnight]

Ok, I’ll ask. Who are they?

I think he is channeling Cramer there.

 

[Overnight]

Yep! hehe. They have NO idea, They know NOTHING! They are NUTS!!

 

[spectastic]

I think he is channeling Cramer there.

I'm actually channeling you.

 

[qlai]

i listened to their webinar. it's basically a 2h sales pitch to their education.

What did you expect, detailed description of their trade set ups?

 

[spectastic]

What did you expect, detailed description of their trade set ups?

They actually have pretty detailed breakdowns on YouTube, alongside their sales pitches.

 

[mtserovtrading]

Robert, that's a gross simplification. JBOs have evolved over the years and firm structures vary. I know of multiple JBOs that back traders. The answer to OP's question is risk management and overnight margin. The large well capitalized JBOs carry a good chunk of their books overnight.

Yes I agree with this. Many JBOs now fully back traders with no 1st loss. And there are many reasons they focus on intraday but biggest are risk and margin.

Risk is much higher if hold positions overnight and many prop firms give out significant leverage or BP. If market move 2% during the day, this is not instant move and it is easy to cover and limit loss at 0.5% or whatever tolerance you have. If market gap 2% overnight, then can't control risk during that time and lose full 2%. This is also why broker give much higher leverage for intraday BP vs TIMS for overnight margin.

The firm I trade with offers my trading floor both overnight and intraday BP because of our relationship, strategy and risk and profitability. But other traders I know they only offer them intraday BP

 

[DallasCowboysFan]

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?

Because you are paid to work all day and not just the first thirty minutes of trading and the last thirty minutes before closing?

 

[spectastic]

Because you are paid to work all day and not just the first thirty minutes of trading and the last thirty minutes before closing?

and you think 90% of trading is order execution? furthermore, that the market cares about how much time you spend in it?