How do prop trading firms make moneY?

Discussion in 'Prop Firms' started by tshin01, Jun 11, 2003.

  1. tshin01


    How do prop trading firms make money?!?!

    Why do ppl work for them?!?!

    Why the hell am I working for them?!?!
  2. Most ppl work for them because they don't have the capital to trade their own accounts.
  3. The skinny...the spread....
  4. ktm


    Warren Buffet once said that "if you have played poker with a group for a half hour and you don't know who the patsy is, it's you."
  5. These days, prop firms make about .0025-.0035 per share traded. With firms like EGM and Andover offering sub-1/2 cent rates, prop firm revenues have come down dramatically in the past 12-18 months.

  6. Your job as a trader is to trade... if you want to be a business analyst then you might consider a career change.

    There are many reasons, pick one... lack of capital, commission rates on day trading accounts, lack of experience, office environment etc. Does the reason why someone else works for a prop firm greatly affect your personal situation?

    If you don't know the answer to question (3) then you should take some time off from trading and examine your feelings about why you are doing what you are doing.
  7. prop firms make money off commissions

    traders like them because of leverage and low capital they supply the equipment, quotes, and charts
  8. Awesome reply! yes, prop firms make money off of sheep. anyone who's really good is either trading for themselves or trading for a real firm where they do not have any downside. "secured prop" is the biggest scam going on in the industry right now. they make money off your commissions (usually artifically high, places like lynx, caliber), providing very little for the compensation, and some even take a cut of your profits while you take 100% of the downside! some even charge "desk fees"!!!!! THEY ACTUALLY CHARGE YOU TO SIT THERE TO WRITE TICKETS FOR THEM. HOW IDIOTIC IS THAT?!?!?!? so, to sum up, they make money a lotta different ways off the sheep.
  9. its simple how prop firms make money..... say they charge ya .009 a share... the clearing firm they go thru charges say .004, so the firm pockets .005 per share that is traded in thru their firm. And if you dont get 100% pay out they pocket what ya dont get.
  10. Dustin


    Back it up. I'm with Lynx (now Assent) and I pay a fraction what I did at Bright, or what I would at various other prop shops.
    #10     Jun 12, 2003