Prop Shops

Discussion in 'Professional Trading' started by Bones1955, Aug 11, 2003.

  1. Bones1955



    I didn't mean to start World War III about Prop. I am just starting out and open to opinion. As in all things in life, you make it what it is. I just thought that Prop might be the way to go to get my feet wet.

    I have done real well with my long-term investments, now I truly believe most people should integrate short-term trading in the mix.

    I believe I can do well either way, but as I said I'm open to opinion.

    I enjoy the posts here and have learned much.

  2. Yep,

    It is tonight at the soho grand.

    I am leaving in about 15 mins for the train station.

    As per props.

    You can get lower commish rates at IB (I use IB). In fact, rates are often about half that of most props unless you do a ton of volume.

    The only reason to go prop is if you don't have at least 25k.
  3. nitro



    I think this is the first time I have actually seen you say something I disagree with. Reasons to go prop:

    1) Access to capital. Even if you have say, 50K, there are some strategies that requie $500K+ of buying power, e.g., Opening Only on more than three or four stocks, Merger Arb on more than one or two deals, Pairs on more than one or two pairs, and others.

    2) Economies of scale. Most of these firms have access to news services, state of the art scanners, etc. You can sample these and see if they suit your style without having to deal with the mess of going thru a trial (if they even let you - try getting a trial of Neovest for individual.)

    3) If you are starting out, many of these firms will at least hold your hand thru the first couple of weeks to a month, helping you with as simple a thing as getting used to the software execution system (for those that are not too computer literate), to actual strategies. Some may even offer mentorship. Although I did not need alot of this, some people do, and I don't believe I can generalize my experience to others.

    4) In the case of places like Worldco, ETG, FNYS, etc, there are people that simply cannot trade their "own" money for psychological reasons, even if they have the stake to get started. They do much better trading firm money, even if they have to give some of the profits to the company as a split.

    I do agree with you that a disproportionate number of prop traders seem to be there only because of the lack of capital.

    Have fun tonight.

  4. Bones1955



    I agree with you 100%. I am going Prop at first to sponge up all I can learn and not risk my own capital at first. The firm I'm going to is not requiring any up front money whatsoever. Even if I do become successful I still have the option of going on my own, or staying at the firm. I think I will get the experience to trade large as I progress and obtain the leverage, as you've said.

    I'm not trying to use anybody, just willing to split profits in exchange for the learning experience.

    What you said is right on!

  5. speedy



    I agree with P2.

    You don't need to go prop to get all that. Capital is the Main reason. You can trade a retail account on a trading floor of daytrading firm and get all that. Daytrading firms provide that and get compensated from the commissions you pay.
  6. nitro



    Please give an example of where I can do this?

    Huh? That is what the guy is saying? Let me clarify - For me:

    1) Proprietary (Prop) means you put up minimal if any capital, split profits with firm, pay little or no comission. Examples are Worldco, ETG, FNYS, Schoenfeld, etc.

    2) Professional means you come with 25K, get 10:1 or 20:1 BP or more, you take all loses and keep all profits, you pay comissions, haircuts, etc. Examples are Bright, Echo, etc.

  7. speedy


    Exactly, P2 said that its just about the capital. You said it wasn't and that it was about the services. Well, I don't want to pump any firms but I'm sure others can tell you firms that have retail accounts that offer you mentioned. There are firms that have prop and retail on the same floor albeit separated by walls but have access to the same services. And yes, the guy didn't have 25k so that's why he would consider prop.
  8. I traded retail at Broadway Trading, both from their offices and remotely.
  9. nitro



    So you are saying that if I go with this retail firm like Broadway or Assent, etc, that they would let me trade with 25K and give me 10:1 or 20:1 buying power!!!!!!???? Are they SIPC?

    There has to be a CATCH, otherwise, why would these firms canibalize their own prop/prof side by offering a retail arm?

  10. nitro, there must be a misunderstanding here. Retail at Broadway (and I presume all the other places) meant the standard 4:1 buying power, which was more than enough for my purposes. I didn't have a Series 7, so I couldn't join whatever it was you had to join to qualify for the extra leverage had I wanted to. I could, however, avail myself of all the other "perks" the prop boys had, like squawk box, news and charting services, back massages etc.
    #10     Aug 11, 2003