After doing a bit of research on those "Professional" firms advertised here, I find it really funny that remote, do-it-yourself traders are known as "retail", while those hired onto a prop house qualify as "Professional". From what I've seen and read, those "professional" traders sound more like "retail pit traders" -- ie, remote floor traders, with hardly any of the benefits a real seat on the NYSE or CME offers. If some can succeed at that game and are able to feed their broker's families at the same time, kudos to them. But "professional commissions generator" seems a more suitable moniker, don't you think? And strange that the professional crowd doesnt touch the Nasdaq, when it's the closest thing one can get to being a floor trader trading over a computer. If the "professionals" can't handle the Nasdaq these days, then by golly who can?? My bit of advice for those wondering is this: don't fall for that magic "professional" label, even if mom and dad keep bugging you to quit gambling in stocks and get a "real" job; the only real job you will eventually be able to secure at these advertised prop houses is recruiting other newcomers and getting a cut off the house rake. If you want to learn how to trade, find a successful independent trader who is willing to show you the ropes (if you don't know where to start, subscribe to RealMoney.com and go through the entire Todd Harrison archives). Needing someone else to tell you that you are a professional results from the same lack of conviction as needing someone else's opinion on what to do with your last trade. IMO, someone becomes a professional once he or she stops wondering whether they qualify or not.
Well said. The "professional" moniker is completely self-imposed by prop firms. I've traded successfully for 15 years, held a CPA and passed more than half a dozen securities exams, including the series 24. Some newbie with 10K who sits down for a few days and daytrades is a pro and I'm a retailer. Hedge fund guys are not pros either. Part of running the "professional business" that Don speaks of is watching your costs. Prop traders help the prop firm exponentially more than they help themselves.
The two required qualifications to trade at a proprietary are. 1. You are breathing 2. You have $25,000.00 If you qualify for number two, they will gladly wave the first requirement.
One more qualification: 3. You are breathing for as long as it takes to sign the Risk Disclosure statement.
Of course all the prop firm are not perfect but they do not oblige us to work with them. It is for me one of the greatest opportunities of this century. and I mean it. When you compare today's technology with what was offered before there is just no comparison. WE ARE VERY VERY LUCKY, either we work remote or in a trading house. Concerning commission they are part of the business. why would the broker invest in technology and in staff if he had no interest in doing so???? After the rule of 09/2001, I was really happy to find a prop firm and being able to trade remote with less than 25,000 USD. especially that you also needed 25,000 at least on top of that to leave for 6 to 10 months without expecting tobe profitable from day one. I think that there are many briliant would be traders that were restrained by this 25,000 usd rule. Those prop firms are giving a chance to those who want to make it. Of course there will be many losers but the main point is to have a chance to make it, and it's up to you to grab it ...
War Eagle is very correct. Even Worldco, where Hitman trades, has not erased accounts often, and nowadays it is extremely rare (and of course only for those who have otherwise made the firm a very great deal of money and are too big and valuable to the firm to let go). It is true that prop firms make out the best of anyone, provided that they keep traders that take money out of the market and limit the risk on others. In this manner, the firms often make money while the trader does not. With regard to the claim that 10 times 5% (50%) of daytraders succeed, that is rediculous! Peter77, if you are making money (and not just a few hundred or thousand), then you are definitely among a very, very small percent of traders, especially this year. The reason that you may know others who make money (equivalent to a good salaried position?) may be because you sought out other successful traders to talk with. Give yourself more credit, you must be a very good trader (assuming you've also shown consistency), but please don't mislead others. As far as going to a firm that "pays 100%," there are no firms that pay 100% unless you are either one of the top traders in the country or unless you have contributed a significant amount of your own money to the account (and hence are for the most part risking your own money, albeit leveraged). Echo is an example. However, even then, the commissions are often higher than some other firms that require contributions but give you less than 100% payout. And lastly, while some people are ripping on prop firms, and others advocate trading on your own, the bottom line is that they each have their advantages and disadvantages. Good luck to you Roumeo in whatever you choose (including if you choose not to start trading for several years, which would actually be my advice).
liltrdr said it well. why you wanna pick on prop traders? they buy, sell, and pay commissions just like everyone else. when i traded futures retail (way back when), I knew I was considered to be at the bottom of the food chain. You have to start somewhere. Prop firms put you in front of a workstation that didn't exist ten years ago. That spells opportunity for those without connections (no pun intended, but, hey, I'll take it). I guess it's human nature for the green one to peck at the yellow one...from a distance, we all kind of look the same...
I have never traded at a prop firm, or visited one. I work from home, at one time with Broadway, now IB. I think prop firms must be doing something very right, because they seem to prosper. The Bright bros have over 40 locations. Echo seems to be a going concern. Some independent traders seem to think that if you don't do it the way they do it, you must be an idiot, and therefore they knock all others. If everybody traded they way I trade, I'd never be able to make a living. Live and let live. For your interest, my day job is that of a doorman, but I do have a university degree on my resume. My point is traders are often an eccentric lot, but no need to knock other styles. Just dont fill the board with pessisism and BS.
and what difference does it make who you pay your commissions to, as long as they stay in business and you get your executions?
------------------------------------------------------------------------------- From what I've seen and read, those "professional" traders sound more like "retail pit traders" -- ie, remote floor traders, with hardly any of the benefits a real seat on the NYSE or CME offers. If some can succeed at that game and are able to feed their broker's families at the same time, kudos to them. But "professional commissions generator" seems a more suitable moniker, don't you think? And strange that the professional crowd doesnt touch the Nasdaq, when it's the closest thing one can get to being a floor trader trading over a computer. If the "professionals" can't handle the Nasdaq these days, then by golly who can?? ------------------------------------------------------------------------------- If you are professionally licensed, then you are a professional trader, buddy. You have your series 7 and 55, you are considered professional. You must see the difference between retail traders and professional traders then. Retail traders can claim ignorance on violation of nasd and sec regulations and the brokerage firms they trade with must take on the responsibility of preventing such violations. Professional traders do not enjoy such 'protection' and are liable to a much greater extent for violating such regulations. Also, professional traders often have access to leverage which retail traders can never hope to have and very rarely are personally responsible for the losses in their accounts (i.e. if your account is negative you are not likely required to pay back such money to your firm....of course, certain levels of negativity will be cause for your dismissal from the firm). These are differences between retail and professional traders that your statement seemed ignorant of. And by the way, the NYSE is the most efficient market on the planet......there are many reasons why one would wish to stay away from the NASDAQ....unpredictible and ridiculous volatility is one reason. The NASDAQ doesn't have a specialist system and therefore doesn't provide traders with the same advantage as the NYSE does. With market maker collusion (which we all should know for a fact is still very real....even after such collusion was publicly exposed in a paper titled 'The Frequency of Odd Eighth Quotes on NASDAQ' by Christie and Schutz in the early 90's), can you please tell me what advantage a trader has in trading NASDAQ over NYSE? NASDAQ is not very efficient with b/o spreads often being untradeably large. I would therefore disagree with your statement that NASDAQ trading is more like trading on the floor of a major exchange. Any major floor stock exchange is much less riskier than NASDAQ. NASDAQ trading will likely eliminate your risk capital much more quickly than floor exchange trading. On floor exchanges, there are many stocks which one can trade with minimal risk. I beg to differ on any opinion that such stocks exist on the NASDAQ. I say only trade the NASDAQ if you are a Market Maker. I would be the first to agree that many professional traders do not trade as well as some retail traders. Trading is in your blood and not in your 'ability to pass licensing exams.' The major difference may be that while retail traders often lose their own money, professional traders often lose their firm's money. Clearly, retail traders enjoy 100% of their profits while professional traders only receive up to 98 or 99% of their profits without risking their own capital. I personally am willing to give up that 1 or 2 percent for no risk capital (or very little risk capital). Just thought I would share some of my thoughts on this subject.