Help Me Understand

Discussion in 'Prop Firms' started by Peanutz, Feb 2, 2007.

  1. Peanutz


    Could someone give me a basic understanding of how a prop firm works? I have done searches, but they all seem to come up with responses such as "why don't you use the search function!"

    If I understand correctly, you fund an account through the firm with their minimum amount, then they allow you to use a large amount of their own capital giving you much more leverage. In return you pay them a percentage of your profits.

    Do these places require college degrees or any type of long term experience?

    Are there any places that allow you to trade the eminis from home?

    I appreciate the help and apologize for the newbie question.
  2. You can be as stupid as a rock, but with a series 7, and I think a series 63, and 5k of your own cash, you're good to go.
  3. A pretty simple explanation, going back to when my brother and I started on the exchange trading floors. First off, we had to buy seats (memberships), but after doing that, we thought it was pretty cool that we could put some risk capital ($20K or so), and use a $million or more of (what is now) Goldman Sachs money to trade with.

    This use of capital allowed us to particpate in strategies that tended to be "lower risk, higher reward, but capital intensive" - vs. the standard "market direction" fantasy.

    We duplicated that business model in 1992, and now we have a few hundred traders who Don't have to buy a seat, put up some risk capital, and use our money to trade with. This allows for the guy who might be stuck in "pattern daytrader hell" - to engage in strategies that, once again, are "lower risk, higher reward, but capital intensive" (like Pairs, mergers, opening only's on the NYSE, market making, etc. etc.)...vs. trying to pick direction.

    and..if you're planning on trading anyway, you may as well give yourself the best possible chance for success

    Feel free to call to discuss if you would like to know more.

    Don 702.739.1393
  4. Maverick74


    Didn't we do a live chat about this?
  5. Peanutz


    So what kind of capital is required in general for a good firm that provides training, etc?

    And how much of the money do you get to keep? Or does it just depend on that specific company?
  6. FWIW, our traders keep 100% of their trading profits...we offer training and capital usage, along with security and a lot of continuing mentoring.

  7. Yep, we'll have to make this a monthly gala event, LOL.