Again, I was not recommending that all traders go out and raise $5MM. I'm saying in response to the question, "Ideal Prop Firm", that I believe setting up a prop firm with portfolio margin, rather than a broker dealer, would be faster, less expensive, have lower over head and have no regulatory over site. My game plan has less risk than starting a prop firm. Capital is always the challenge. The interesting thing is that raising money for a business that requires let's say $50K to trade, is appealing to a small set of investors. Raising $5MM+ is appealing to another set of investors. The middle tends to be too big for small investors and too small for big investors. In my opinion, starting any business underfunded, puts you at a disadvantage. That does not mean you can't survive and grow, but it's harder. I think it's very difficult to make a living trading if an equity trader has less than $150K and an option trader has less than $250K. With the prop set up, they enable these levels with small capital investments, that's why they do well. As a trader, I would prefer the trading account were either my money, a partnership with a sharing of gains AND losses, or a true prop firm where the trader is an employee. Robert L. Morse rmorse@victorsecurities.com office: 646-545-3860
i know of several traders that are consisitently profitable with accounts in the 50k range with leverage at prop firms. it's working capital to operate there daily business. they have buying power in the 1-2 million range intraday serves there purpose. they are pro's they don't trade there equity but rather focus on trading there stocks & managing there risk my view larger accounts do not dictate profitability whatsoever. comes down to talent & risk management for a trader to be profitable & earn a living
I wouldn't spend five minutes "raising" capital. I'd do exactly what I've done and what I've done is none of yours or anyone else's business. Money is attracted by greed and greed is fed by fear. It finds its path wherever and whenever it wants. People are sheep when it comes to investing in general. They seek out those who they perceive to know something they do not in a world where order and chaos are equal and opposing natural forces in the universe and thus, this "secret" is nothing more than a mirage. There is no secret. That's the ironic part in all this and why sites like this are a comic fallacy. It serves no better purpose than mental masturbation for those with nothing better to do than write posts like this late at night while under the influence of "allegedly" illegal drugs and/or alcohol. Successful traders learn these lessons early in their "careers." The rest fall by the wayside wondering how we did that and end up never making a dime while we go on to buy big houses in the Hamptons and other useless crap our future exwives steal from us in the inevitable divorce. If you can't figure these things on your own then you, by definition and attrition, are not a trader.
good point, read Adam Smith's thoughts on "Sympathy" for the rich and it's role in social order - very descriptive of how people act when it comes to economic activity, especially risking capital.