Leverage for traders..no prop needed

Discussion in 'Prop Firms' started by cashmoney69, Nov 19, 2009.

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  1. Is it fair to say that most people join a prop firm for the huge amounts of leverage, they wouldn't get trading retail?

    What if there was a Company that was willing to offer the leverage (a loan, at no interest, no payments for x amt of months...or something similar) you needed without having to deal with props?

    This is something that full-time traders probably dont want/ need, but for the new trader, a service like this could draw the line between success or failure.

    Of course there are other factors that determine a traders success, but without the right amount of capital, no "edge" or mental disipline is going to save you.

    If this is something you think you might be interested in, this service could be available sometime in 2010 in select cities. hint hint :p
  2. l2tradr


    How do you make money?
  3. It's called deferred interest. Even though they dont make a payment, interest is building up, and every month the balance on the loan gets higher until its paid in full.

    Samething that many retail stores offer customers
  4. How can make money on deferred interest charges when you mentioned in your opening post the loan has no interest?

  5. It's the same as School Loans. But these are backed by the Federal Gov and severe penalties on non payments...

    Interesting But I dont see it as a viable business. Imagine... What are your default rates on the loans going to be trying to fund traders?.?.?. And How do you plan on dealing with non-payments?
  6. Agreed. At that point you might as well start a prop firm, so the gains from a couple of good traders can offset the losses from the other 8.
  7. There is interest, just not in the traditional sense of making a monthly payment.

    Ya, I'm not saying its not risky, lending money to anyone has a chance of default, but to help, certain back ground checks would be done to try and calculate the risks.
  8. Hold the phone.
    Are you actually suggesting giving people you don't know an unsecured loan to trade? And then piling on the interest at high rates? And then hope that they repay?
    Let me know how I can short the shares in this new venture. I'll be able to retire in no time.
  9. payday loans are unsecured and you dont hear many of them going out of business, now do you? :p

    Besides any slightly intelligent person would want to pay off the loan, than suffer the consequence.

    The rate would be not much higher than 3% APR for 24 months max, and probably wouldn't exceed much more than 10k.
  10. I retract half of what I wrote.
    3% APR is an excellent rate for what you offer.
    However that you don't understand that there is a huge, monumental difference between a payday loan and a trading loan shows a huge flaw in the business model.
    When a person takes a payday loan, he receives the paycheck shortly afterward and (I think) it is somehow signed over/leined to the loan provider. Either way, there is a real expectation of immediate income and the loan is AGAINST something, in this case the paycheck.
    What you are offering has nothing "securing" the loan except the expectation of successful trading and willingness to repay. So the loan provider faces two hurdles. 1) The necessity of successful trading, 2) The willingness to return the loan, regardless of trading outcome.
    The payday loan has neither hurdle.
    But, hey, it's your money, and my offer to short still stands.

    #10     Nov 20, 2009
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