Hi Guys, I have been a fairly successful retail trader since I started about a year and a half ago. I have grown a modest account size($80,000 from $18,000) and I am quite sure that I have a small edge but am seeking some larger payouts through higher leverage. I am a swing-trader and may trade as little as 3 days a month. I mainly use options synthetically on hard to borrow securities (I am not sure how this would be looked at at a prop firm, since I am technically holding stock positions but I am really using options to hold these positions. I am not seeking training, a spot to trade at with others or any large up front fees that I have to pay for no reason. I simply want more capital to trade with(and still be able to use the trading strategies that are currently working for me). Is there a prop firm out there that would work well for me, or is a prop firm the wrong way to go and I should look at some other way to add capital to my account? If so what other ways are out there. Thanks.
Don't know where you are from, but my guess is that if you show them your P&L and are willing to accept splitting a significant portion of your profits with them you may find someone to back you. Traditional Prop firms are much shorter term traders than you are, however, so that may be a problem. Don't know if firms will be willing to expose their capital to so much time sensitive risk when their high frequency strategies are profitable and require significantly less market exposure on a relative time basis. Maybe in addition to prop firms you should seek out successful individual traders who have a similar risk profile and would be willing to back another trader with a proven strategy. good luck!
Thanks for the reply. I would say my average hold time could be anywhere from 3-10 trading days... is this really an extreme time frame for the prop trading world? I do believe that I could utilize my edge through pair trading if that makes a difference... I did some research through the forums, and it appears that Echo will give 5:1 overnight and bright will give up to 30:1 overnight on what I am assuming are low risk pair trades. Does anyone know if Echo's 5:1 rate is for directional trading or only pairs or if Bright offers margin on directional trading? (I tried to contact them, haven't received a reply yet). With these large firms if you can document or convince them that you have an edge will they simply provide you with capital to trade, or is that not how they work? Also with these large amounts of leverage, how do margin calls work? Does one simply receive a margin call when they lose all of their initial capital they put up, or are margin calls based off of some complex formula, or are they somehow based of reg-t or the new margin rules even though the margin is already exceeding those regulation limits(ie, margin call when short or long goes below 60 percent value on 2x overnight margin)? Also, I guess I am a little confused as to how prop firms work or what their ultimate goal is... Are they like a bank that is trying to make a return on their capital through spreads, commissions, and interest rates on margin, an investor who is trying to make money by teaching new traders how to trade or finding talented traders and taking some of their profits, are they all some sort of pyramid scheme where they act like they teach you how trade but are just ripping you off in the end, or are they all a combination of these three? Thanks again for any help you can provide.
TradingRM specializes in penny options. So they may be a lead for you to follow up on. They may understand your strategy better than some. Or they may know of someone else that will work with you. Hope this helps, -jmjatlanta