Erik Kolodny is associated with a dubious NYC pop firm that I won't name here and give free advertising hittinbidz is Brendan Byrne, also of said firm To read about them and their ethical workmanship, start here: http://www.elitetrader.com/vb/showthread.php?s=&threadid=91594
I just went to the T3 capital website and saw the video on Scott Redler---gotta admit this has been on the money. I'm in the process of joining echotrade, but i'll def keep them in mind. Does anyone know if they have remote traders? Do you need a Series 7 to trader with them?
I think if you call them, you can get in with a lower cap contribution, and they will set on lightspeed a maximum loss per day and share size/risk. Scott does believe in what he does, but he can take much bigger risk with his deep pockets. The first rule of trading I ever was told is scared money never wins, and it has proven to be the number 1 rule of trading.
Training. Training. We talkâ n about Training. Training from a PROP shop. That is the last thing I would like from my PROP shop. If you want Training go read a book, watch a video or sign up for workshop classes at one of those TV seminar stock market shows. But do not ask for training from a PROP shop. 70 to 1 leverage now that is what I want from my PROP shop. That is what a PROP shop does for a trader: 1. Provide more trading capital (i.e. leverage) for the investor than he can get at retail. 2. A better trading platform than retail trader. Those extra fees you get charged, are for extra leverage and better trading platform. You are correct in that after a month of trading at PROP shop you fees are higher than trading retail but you have to figure out which method is overall more profitable to you.
I'm interested in trading with a prop firm, but there are a few things I don't understand: In this thread there is a 60 to 1 intra & 4 to 1 overnight leverage mentioned. So this means that if someone deposits 10k she would get 600'000$ buying Power? If yes, where's the catch? If it would be that easy to get buying power everyone would do it. - Why is the leverage intra and overnight different? Does it mean that when someone would use 500k she would have to close all positions before the closing bell because only 4 to 1 han be hold overnight?
Usually, 10 to 1 intraday is standard, some are more, 20x, up to 40x. Not sure where you saw 60x, perhaps that's an old post or when someone has developed an effective strategy where the firm feels comfortable to extend that kind of intraday leverage. Overnight has to be less as the firm is exposed to gap risk, which could deplete your equity capital contribution on a negative open (or positive open, if you're short stocks). "If it would be that easy to get buying power everyone would do it." One may think it looks "easy" however it's only the concept that's "easy", the actuality of daytrading and making consistent returns is difficult, although quite achievable over time, especially if you have the buying power. The "catch" is you first need to develop a viable strategy to use that buying power effectively, or you're going to "blow up" your capital with the accumulated drawdowns and fees. Usually, the prop firm will have limitations on your daily stops so that you have enough net capital to trade another day. Hope that helps.
Not "my" thread, but I think I can help with this. "Use of capital" is not the same as "leverage" or "margin." My best example is the entering of 40 stock symbols, 2000 shares to buy, 2000 shares to sell short, pre-market as "opening only orders." You might "use" $4Million (80,000 shares x $50 stock price), but you cannot actually be filled on all of them. Half cannot be filled obviously, and you might expect a 5%-10% fill rate on the rest. So, you "use" capital to try to make $1,000 or so on the opening gaps. Intraday capital use is fluid, up and down, and you have a constant view of actual p & L for risk purposes. Overnight "naked" long or short positions are limited more, simply for risk purposes - we use 5 or 10 to one for most traders...but in reality, we have very few "naked" types - a few do well with their swing trading however. Most overnights are generally hedged positions - where we may have mergers or pairs going on. Some use 10, 20, or 30 to one for these "market neutral" positions. Sometimes a "haircut" fee (risk fee) will apply at the higher numbers. We have traders whose business plans require many longer term positions, and they don't mind paying a bit for capital usage if they're getting a solid return on it. The overnight capital use varies from firm to firm based on their capitalization and risk controls. Some firms need to use their traders capital for net capital rules, some don't. This is why they limit the overnight capital usage. Hope this helps a bit, Don
no one is gonna serve you free lunch in this narcissistic world. Prepare to stand on your own. Be prepared for hardship, this will keep you away from scammers. If you do find a helping hand, consider it nothing more than rare chance.
Thanks for the answers, but no, i still don't understand at all how the leverage works. To clarify things, let's consider the following example: Let's assume that i deposit 5k. Using a 20 to 1 , that would be 100'000$ buying power. Now let's assume that i buy 2000 shares UBS for 15$ a share. That's an amount of 30k, and 70'000$ Buying Power left. Now the question is: Can i leave that position open overnight (until the next trading day)? If no, that would be a joke, because then i would have to forcibly close the position at the end of the trading day! That's not trading from my perspective.
What would happen if UBS gapped down 2pts at the next day's open due to some unforseen news event and traded flat all day? That's a 4k loss on your 2000 shares, and your capital would be practically wiped out (4k of 5k is 80% drawdown on ONE trade). Sure, it could also gap UP 2pts and you'd score, however it's speculative and most props clearing firms won't allow that. The prop model is designed mainly for daytrading. When you place a capital contribution at a prop firm, the firm will deduct your balance for any losses it takes on your trades. So the first 5k of losses is YOURS, not theirs, and therefore you will probably not find a firm that will allow you to go directional at six times your equity for overnights on a 5k capital contribution, even if you're willing to take the risk on such a trade.