Need some input from proprietary traders

Discussion in 'Professional Trading' started by SWScapital, Nov 30, 2005.

  1. I was approached with this deal but the person told me he was flexible if I had other ways to structure. Of course I would get it all in contract form. Sounds sweet to me...looking for some thoughts or improvements to go back to him with

    equity prop position, 1mm BP however you see fit to trade it(with more provided if performance warrants),
    0-10k monthly draw (you decide how much and even if you want it on a month to month basis), end of month profits will cover draw and anything left over gets split 50/50 with firm, health benefits, you cover comm @ .02 per share (kind of high but would not be doing much daytrading at all), not on the hook for losses but you get turned off at 50k drawdown from initial 1mm.

  2. Read the fine print.....if it sounds too good to be true it probably is. Also explore the tax consequences -- if you do well do they take half the profits but do you somehow end up paying tax on all the profits?

  3. For sure i`ll be taking it an Atty before signing.

    Tax consequences on draw and my half of profits only. 1099 independent contractor.
  4. lescor


    So you can go up to $50k in the hole on overnight positions? Sounds like a good deal if you have a profitable swing trade system that you want to step up.
  5. I've never heard of a prop firm that wasn't after intraday churning for commissions. Are you saying that they will support swing trading and take 50% of profits after using their capital?

    If so, I'd like to have the name.
  6. This is a perfect example of (extremely) poor "deals" for anyone. These "prop" firms think they are pulling the proverbial "wool over your eyes."

    Just go with me here:

    Average decent trader trades 1 Million shares per month.

    You pay 2 cents per share = $20,000.

    Or you pay .0075 (3/4 of a cent), that equals $7500.

    You're paying $12,500 too much to the firm (every month), which is impossible to overcome...and even if you do, you only get 50%...this is absolutely insane.

    Unless your numbers are wrong, this is a foolish (but typical) deal for those who think they can get in without any cash deposit.

    Put up $10K or so, save the $12,500 per month, keep all your profits.

  7. The deal sounds great, until you mentioned the commission part.
  8. As usual, Don, you have blinders on favoring your view of a "decent" trader, which is someone who burns one million shares a month generating huge commissions for you.

    If you will read his post more carefully, he said that he does not do much daytrading.

    Yes, there are those of us who are - get this - PROFITABLE - without generating commissions for prop firms like yours.
  9. Take it down to 500K shares, still the same bad deal. Heck, I trade for 10 minutes on the opening and still do 200K per month on just that.

    And, since the average trader makes between 1-5 cents per share, the volume does amount to a fair gauge of one's overall success.

    And, FWIW, our longer term pairs traders do even more than average volume...

    Just facts...not looking for an "blinders" here.

    Just trying to inform and offer an option.....that's all....

  10. Just to clarify. The offer came from a small BD with a proprietary trading group. Not a prop shop. I dont even get close to 1 million shares a month. Trading 1mm it would be more like 30k. I play small and swing big...1-3% of equity per position, wide stops and points. Not .01-.05 per trade...nothing wrong with those methods...its just not for me. would hate having my account. :)
    #10     Nov 30, 2005