Depends on what you put up, if you are licensed, if firm is a broker dealer or hedge fund. Their money/their losses - 50/50 and .01 share is standard with no fees, better deals out there though. Your money/your losses 95-99% and .003-.005 + fees.
what do you mean put up your own capital? having a few greenbacks as risk is not trading your capital you are trading your capital + firm capital to get leverage greater than 4:1 True, for b/d's there is a 15% haircut, and if you get 6.7 x 1 your still not trading your own capital b/c your piggybacking on firm status and their deposits to meet net capital. The only exception to this rule is if you do portfolio margining. So, if are REALLY trading your own capital with no leverage - then, you are getting 100% because you should have your own separate retail account. In the case of putting up money and getting leverage, 100% was not an uncommon payout, but definately NOT industry standard (plus which industry are we talking about?). However, in the wake of REFCO, SEC started scrutinizing "prop" relationships because of people like you thinking that you are trading your own capital, plus getting 100% payout - this smells like... a retail account. But according to Reg(T) (with the PM exception I noted above), you are subject to max 4:1 intraday leverage. And you cowboys getting 20x1 + (or even 5:1 + for lesser adventurous types) are violating the Reg(T). But the hammer won't fall on you of course, because, hey you thought this is all cool, and the hammer will fall on the firm -they are in effect enabling you to violate Reg(T). SO! most competent attorneys have said , to possibly avoid this scenario, why don't we, NOT give 100% payout. This way IT DOESN"T SMELL as bad - so there is some kind of relationship. While it is TRUE - there is no regulation for this, its a business/compliance/interpretation decision for a firm. 99%? 95% 98% is up to them. What I meant by regulatory - was a regulatory concern. And as I mentioned in my previous firm, the firm may be using this excuse to make a few extra bucks in the % , which could or could not be the case. But to say there is no validity to the argument is simply un/or misinformed/
I agree with you about the 20x being a bit reckless for SOME rookies (by some I mean 99%), but it's really the cowboy-rookie's 5k or 10k that's at risk, not the firms capital. As I understand they have a way of automatically shutting your butt down if they're losing too much too soon. The reason I think they give a lot of leverage to begin with is that to be a daytrader, you have to have the mind of a risk taker to begin with, if you have two firms, one giving you 5x leverage and the second offering 20x leverage, you go to the 20x automatically, because that is how you naturally think, no daytrader wants restrictions, especially rookies, that is they go to prop firms to begin with. These prop firms know this so they up the leverage without double-questioning your experience, it's all about getting as many traders as possible. To set leverage rules on prop firms will be like setting the pdt rules on people who are willing to risk their capital to take on this career, it just doesnt make sense to me. If sunday joe is willing to blow 10 grand trying to trade, then let him. By the way the .0055 was on 100k shares, it will decrease as my volume increases. I told them Id be trading light to begin with.