I always see threads about how little money they need to put up to get into a prop firm, but how about the opposite? What firms are people comfortable enough to hold larger amounts of capital in? Why don't traders commit more assets to their account and either increase buying power or reduce risk and de-leverage?
they do once you have over 25k you can go retail and have additional benefits, leverage is usually 4:1 for under 100k. if you have 100k you can get 6.67:1. Retail accounts are insured so you never have to worry about a firm closing down, although, that's not really an issue with firms that have been around a while and are known in the business.
I have had multiple 6 figures with a prop firm and I know of a few people that have had multiple 7 figure accounts. The two firms that I would feel comfortable doing that with are Bright and Echo. If you are really worried about your money though, you would have to go somewhere with SIPC and keep your accounts within their limits. It will be interesting to see what happens with MF Global and find out if there is basically no protection of any kind for futures accounts.
MAV nailed it. Your average retail trader is broke. PERIOD. If you try working with a clearing firm, directly...not only do you have to fill out 1000 pages on your financial situation but you have to have "CAPITAL". The "BUCKET SHOP" is the poor mans entry to the Markets. 5 grand gets you into a "POOLED" account whereby you can trade with better leverage than just an average margin account. DAY TRADING is on it's last leg for this model. I can not see the "BUCKET SHOP" model lasting much longer, as in a few more years at most. Now, this is not to say that you can't open an IB account with 5k and trade simple margin that they give you. But you will not have the same buying power as a "POOLED" investment shop. Bottom line, IMHO, except for ET of course......90% of retail traders are under capitalized and are one step away from going bust.
by the way. not all retail brokers offer portfolio margin selective by retail brokerage firms with min 100k or higher most traders keep the min amount in there prop account / use the leverage usually less then 25k in account gets the job done for most prop traders if you have money or not people go broke with retail or prop even with a pile of cash the majority of traders are not profitable the more capital you have the better off you are . no doubt
Futures Prop Firms are not allowed to risk employee funds ( the trader paid on a W-2) by CME mandate. http://www.cmegroup.com/company/membership/files/ECMQA.pdf See page 2.
The deposit is just to guard against loses. If your profitable they just boost your buying power. No need to lock up more funds. Its just a starting point in the beginning. Once established they give you the capital you need.