Does this sound right?

Discussion in 'Prop Firms' started by NBPR6, Jul 8, 2007.

  1. NBPR6


    I've been lurking around this site for some time, and have found a lot of useful information, but I can't seem to find the threads that'll answer these questions.

    Is this how it works? Let's say the cap. contribution is 5k and you have 20:1 leverage(100k). Once you lose more than 5% of the 100k the prop shop will ask you to recontribute? Or do you have more leeway before you need to contribute? Generally how much is the leeway if there is one?

    Also, I think I read in one of the threads that when you join a prop you should make sure that you are not liable for any loses over your initial contribution? What happens if you contribute another 5k, but you had loses of 20k? Will the new contribution give you another 100k fresh to work with?

    Under what circumstances will a prop firm ask someone to leave? I read somewhere that the average first year trader makes -10%? Let's say I fit that profile and lose 10k of 100k with an initial contribution of 5k, will I be asked to "reload" or leave?

    I also heard that traders that work for bulge brackets are expected to make 200% or they risk being fired. Is this true? If that is the case, then why is a 20% or 30% return considered an ok year, or do I have it all wrong and it should be something like 100%?

    I am fairly new to the world of trading, and am trying to understand all the options that are available, but it seems like prop will be the way for me. I'd like to know as much as I can and make the necessary preparations/plans before I begin. I appreciate the help, and will appreciate any kind of feedback/advice for a newbie, hopefully something that hasn't been mentioned in a previous thread. Thanks.