How much money is a day trader working for a prop firm typically be given to manage? For example, considering 3 different cases, how much money (before considering margin) would a person just starting off be given to trade, versus the average successful veteran trader versus the absolute best trader at the prop firm?
I started at a firm with a profit split where i didnt put anything up it was 60/40 but you started with a 50 dollar stop out, and the stopout worked its way up based on how much you were making a day.
They usually control how much you're allowed to risk on a per day basis instead of controlling the buying power margin. This usually works with some kind of formula to allocate daily risk + some override if you lay down risk capital. A newbie would be usually given $50 or even less per day as a risk limit, while an experienced trader may have several thousand $ available.
A newbie is given $50 to manage intraday? Yikes. No wonder the failure rate is 99.999999999999999999999999999999999999%
No, the newbie is nearly certain to lose money. Might as well make it a small sum. If you'd like to stake some wet behind the ears trader with size, I'm sure you will be french kissed on top of losing the money.
if he loses $50 easily scalping 100 shares on a very liquid name like GE or INTC... why add any more risk? Initially they're expected to lose the $50 but to manage them so that it takes 100+ trades to get there... that gets them more risk... I know of some shops that start them on subdollar names on 100 shares and give risk of less than $10 per day... again, the idea if not for them to make it big at those risk levels but to prove that they can manage risk and show discipline cutting loses and letting winners ride. and the failure rate is *a little* lower than that...
It all seems a bit odd to me. These are not prop shops in the sense I'm familiar. More akin to the arcade type shops. It's very strange to even think about PL in a risk limit way, most desks are given the ability to mark to some theoretical price and risk compares this to consistency vs mark to market.
Depends on the firm. An example respective of each scenario you listed: 0, some firms won't back new traders, only traders with experience and successful track record 200k-1MM 2MM++
When you are a beginner, the rules are pretty much non-negotiable. You get X amount just like everyone else. The daily loss limit is small until you show good grasp of risk management and an understanding of the trading platform. In the beginning, you will push wrong buttons all the time. For the other stages, past performance dictates the amount you get and can be revised if you don't trade the way you used to. Prop firms are known for providing plenty of buying power. Typically this is not what limits the growth of the vast majority of traders.