How do prop firms leverage your trades?

Discussion in 'Prop Firms' started by coolpurplefan, Dec 6, 2007.

  1. timcar


    O.K. At retail 4million BP to these traders.
    O.K. At Prop 20million BP to these traders.

    Who then lends the difference of 16million to these traders??
    Is it the Prop firm?? (the money that say Bright puts into an account for the trader).
    Is it the Exchange??(that once you become a member can lend all these traders this BP).
    #11     Dec 8, 2007
  2. FWIW, all the traders end up using our capital in the long run.

    #12     Dec 8, 2007
  3. bdon


    Honestly I have to know. Why would you care about compliance unless you were a compliance officer? I mean studying the material for the 7 and 63 was stale enough. I can't imagine how stale all that principal material is. Honestly why? Are you into sadomasochism? Read a series 24 book would be my first thought.
    #13     Dec 8, 2007
  4. cstfx


    There is no added liquidity or funds added to the trading account to cover the 16MM you question. It's all about tricky, real time accounting done by the software that the firm uses.*

    *again, this is retail accounts used by sub-LLC props. Licensed firms get their leverage thru different means. I can't speak for that as I am not registered, but look at what Don says. He would know.
    #14     Dec 8, 2007
  5. cstfx



    to answer your question, in a retail account, you can't be long and short the same stock/same quantity. That's a given.

    But prop software treats the traders trades differently, as if they were both still open. For simplicity purposes, if they both opened their trades for the same size at the same price, but long and short, the retail account would be flat, but each traders position would still be open on their platform. They close the trades out at the same price, a trade is opened and closed on the retail account and becomes zero again. But wealth is moved from trader A to trader B depending on which side of trade they were on. This is all done thru the internal account of the prop platform that they are using. Does this make sense?

    * again, this is about the sub-LLC prop that uses a retail trading account to run his business. I can't speak for how it is done with you guys, I can only speak for what I know
    #15     Dec 9, 2007
  6. Guess it's weird curiosity. But, like, I was wondering lately on something unrelated and thinking what would happen if someone asked me for a basic book on the stock market. Well, several years ago I read "How to Buy Stocks" by Louis Engel and Brendan Boyd. But, I know that's kind of outdated now. It's weird.

    I gotta make a list of books I just downloaded from eMule. I think it's kind of cool.
    #16     Dec 9, 2007
  7. Hey, check this out. I was doing lots of downloading on eMule and found these books:

    Come Into My Trading Room, Alexander Elder
    Options: Essential Concepts and Trading Strategies, CBOE
    The Economics of Money, Banking, and The Financial Markets, Frederic S. Mishkin
    The Index Trading Course, George A. Fontanills, Tom Gentile
    The Options Course, George A. Fontanills
    Options Made Easy, Guy Cohen
    Market Wizards, Jack D. Schwager
    Stock Market Wizards, Jack D. Schwager
    The New Market Wizards, Jack D. Schwager
    How to Trade The New Single Stock Futures, Jake Bernstein
    The Compleat Day Trader Vol I, Jake Bernstein
    The Compleat Day Trader Vol II, Jake Bernstein
    Day Trading The Currency Market, Kathy Lien
    Getting Started in Options, Michael C. Tomsett
    Understanding Stocks, Michael Sincere
    How I Made $2,000,000 in The Stock Market, Nicholas Darvas
    The Handbooks of Portfolio Mathematics, Ralph Vince
    A Currency Options Primer, Shani Shamah
    Japanese Candlestick Charting Techniques, Steve Nison
    DeMark On Day Trading Options, Thomas R. DeMark
    A Beginner's Guide to Short-Term Trading, Toni Turner
    Fundamentals of The Securities Industry, William A. Rini

    I only read like 3 books in that list but those are books I'd like to read in the next year.
    #17     Dec 9, 2007