Hi, folks: I'm trying to make a choice between two prop shops: 4xprop (spot fx) or Pulsar Capital (futures). My bias is for spot fx although I am open to trading currency futures as well. Can you help me decide? Below are the important features for each: 4xprop: 8-10 week evaluation period, active trading at FXCM, up to 50% profit-share. Pulsar: 25 day simulation, 300 GBP refundable fee, >4 Sharpe ratio, 3% profit/3% max drawdown, daytrades only, 70% profit-share. Thanks in advance.
Pulsar deal looks much better imo and 70% payout is not bad for no risk. BTW, what platform does Pulsar use....any idea?
The thing I never understood about prop shops, (i've never been in one) is why do you even need them when your broker already provides you with leverage? The first trading book I ever read was Reminiscence of a stock operator by Jesse Livermore and it is clear in the book that the motives of prop shops are to churn and burn. Is this correct or am I missing something?
The problem is with the SEC regulations on pattern day trading rule which requires maintaining $25,000 account to daytrade. Retail traders only get maximum 4:1 leverage and no leverage below $2,000 in your account, and some stocks have no leverage an no shares to short overnight. With prop, a trader only needs $5,000 Prop firms have 10:1 leverage for stocks and many brokers require minimum of $10,000 to open an account.
In equities it's to circumvent pattern daytrading rule that requires $25,000 minimum traidng capital and to get higher leverage than allowed to smaller individual traders. Further, prop firms tend to get lower commissions as high-volume customers and discount in exchange fees as exchange members. For longer-term traders this may not matter much but for very active daytraders this may mean the difference between breaking even and being highly profitable. Then it's communication opportunities. It may be boring to always be alone in a home office. Further, when a trader runs out of ideas he or she may be able to piggyback off other traders' trades. Finally, it's nice to have something that looks like proper employment on the CV. In additions, some prop firms allow trading the firm's capital and may even pay salary.
Yes, but you have to participate in an evaluation program for 8-10 weeks where you open a live account with FXCM. The things that give me pause are that they want "active traders" (aka scalpers) and that FXCM is their broker of choice.
I understand (from posts at another board) that they use Interactive Brokers although I'm not sure which particular platform. I'm actually leaning toward Pulsar at this point even though my trading experience has been confined to spot forex and I'd have to make adjustments in order to shift to trading currency futures.