Some people don't want to have to get their 7's, plus and I think this to be true, but if you're doing futures prop you cannot use your own money, only firm capital. Now if this is not true it would not surprise me bc it makes no sense, but I have heard it from a few people in the industry. If I am wrong please correct me..............like I had to ask
I'll PM you some information on the firm I trade with, you can trade futures,options, currencies and even equities (in fact many of us see a better "edge" in futures right now over equities)....we do not "currently" have an office in New York, but they do have remote trading and I know for a fact that you can open a futures account for less than $10K...a lot less... I know they have been talking to several traders in the eastern region and NY who may form a office their very soon though. Jester
Cheeks, The biggest advantage to trading in a Prop group is that most prop groups are set up under a Non Clearing Member structure. They must own Seats to do this, but the structure allows the traders to get Member rates. The prop firms have to employ the traders and W2 them. The savings are tremendous: The CBOT Exchange fees go from $1.25 per lot to as low as $.05 per lot. The CME Exchange and Globex fees go from $1.16 down to as low as $.195. The cost of Leasing a Seat at the CBOT is: $1250 per month, while the seat lease at the CME is $3250. Lessee rates are higher than Owner Rates. Basically, if you join a Prop firm, you will get Member rates without personally buying or leasing your own seat. There are other structures, but this is the main reason why I would trade for a prop firm rather than for myself. Another obvious reason is Capiatal!
Could you please give me the name of one of these firms? I have looked into this and the firms I contacted require you to put up your own money, and then just give you massive leverage. In addition they charge fees greater than what you'd pay with IB. Jay
How about reversing the question? Just for arguments sake, not trying to go too far ot here. But why do equity prop when you can do futures prop. You don't need a 7. No specialists or market makers to yell at and curse upside down. Better tax structure. More leverage than anyone could ever want or need. No PDT rule.....(is thats what its called I am not sure)...don't have to worry about scanning for hundreds of stocks, earnings, splits, guidance billion dollar off balance sheet transactions (c Enron).............I think you get the picture. Also, having read the previous post, commissions are pretty sweet, I am not sure how sweet they are comparable to prop stocks, but you have to admit, either way its not bad. Plus, the hours. If you trade Eurex it starts 3 am est, comparable with I think premarket starting at 8am est. Plus the futures trade pretty much 24 hrs. So why would one want to trade equity prop compared to fut prop? I think going forward we're going to see more fut prop firms opening than equity prop imo.
Actually the question was why use a prop firm period with futures? It is already assuming you want to trade futures (many advantages over equity trading). You already get massive leverage just going retail, with lower costs to boot. Just out of curiosity I have looked into two prop firms that advertise here, and they are both more expensive than IB. I will say, however, that both firms seem like real quality outlets, and if you need training, this could be the way to go. I don't see any other reason to do this however. Jay