In the prop world, if you have the choice of depositing some of your own capital or deposit none and still be allowed to trade there capital, why would you ever put up capital? Is there any benefit to putting up capital at all? It seems all things being equal would point to using OPM other then your own. Am I missing a key concept on this, or am I headed into a bad situation?
Positives: More leverage, cheaper commissions, higher payout... (General Assumption, each firm might be different) Negatives: Risking the money and possibly losing it all. Also depends if you are responsible for money lost. If you go in no money down, and trade without having to worry about losses, then that can be an advantage. That's all i know about it though. Others probably got more goodies to tell.
Very simple choice.... A. You attempt to become an employee of a firm that will never allow you to stay very long if you lose money for them....and if you make money, they not only charge you commissions, they keep a big chunk of your profits. Say, for example, you gross $10,000 in a month...your commissions are (high, they need to insure a profit for the firm) about $7,000 (so the Firm now has $7,000 in profits from you)..and now you split $3,000, giving you $1500, and the firm overall has $8500. B. You put up some risk capital, negotiate fair rates...make $10,000, pay maybe $4,000 in commissions, keep $6,000 for yourself.... of course there are other variables...you must find a firm that will allow enought buying power to let you employ working strategies (and, hopefully, teach you what is working by showing you what their other 500 traders are doing...(yes, a bit of a plug for BT, LOL)... Running a business, vs. gambling with other's money in the hopes that they will "move you up"......employee vs. self employed, IMO. Don
Sure, the key concept you are missing is almost no one is backing traders anymore. Pay to play is the name of the game now.