Margin to equity / leverage used by prop firms

Discussion in 'Prop Firms' started by turbonerd, Jan 6, 2008.

  1. turbonerd


    I am exploring how much leverage day trading firms are able to take with their capital base. I assume that stocks would be different from futures and other instruments but that everybody is at some point tied to the same economic consideration - margin.

    Are prop firms restricted to a fraction of margin, multiples of margin? Anybody know how this works from the firm side?

    An example would be that CTA's might stick with 25% margin to equity but for daytrading why not lever up more, even much more?
  2. i have 125k bp with 5k. 25-1. i could get 50-1 or more but 125k is fine in this market.also i buy no more than 2k shares at a time. 2500 tops. i made about 750 today shorting MA.
  3. I don’t care who you are or how amazing you trade your not averaging 3.5k to 4k a week with 125k buying power. I am happy you made 750 today and keep up the good work.

    Most day trading LLC firms are clearing with someone else. They get a pretty solid amount of margin for a small amount of capital. They have to manage margin strictly. Your volume and rates are figured into what margin you receive as well.
  4. Nothing to do with margin to equity but equity to potential draw down.

    A position trader may have only 20 lot access and more potential risk on his actual trades than a scalper trading 50 or 100 lots and risking no more than 2-3 ticks.

    It all about the trading style and time in market before getting flat.