Prop trader vs Day trader. 50/50 vs 100%

Discussion in 'Prop Firms' started by CarolinaCpaGrad, Aug 21, 2009.


  1. it all depens on amount of capital you get to play with.
    50% on 5M is a much better proposition than 100% on 500k.
     
    #11     Aug 23, 2009
  2. some good points but no reason to act like your three. i never stated newbies should be making 10-40k/mth. go back and read my posts.

    just some comments, i've been trading long enough to see the rock stars of the late 90's blow out and are now working in other careers. having a larger line to play with does not equal greater profits. i've seen numerous traders hang themselves with the extra rope provided. sometimes owning 100% of something is better that whatever % of a larger entity, especially if your business is not scalable.

    this may not be 1998 but i'll take multiple repeats of 2008 everyday. i know several traders that started in 2007 doing just that on a $250km overnight / $1m day buying power line with probably the most recognizable shop out there and keeping 90%.
     
    #12     Aug 23, 2009
  3. I think you're misunderstanding me.... I'm not talking about 1 million BP.... I'm talking about 25MM intraday BP and that makes a huge difference b/c it's not possible to trade with or even learn how to trade with size like that when you're using your own money. You not only have to have the money to trade with that type of line but you also have to learn to work in and out of your positions.

    But even if it's a 500k BP type thing where you're starting off at 60% it takes alot of pressure off of a new trader, especially a young one. I know for me, when I started out, atleast I knew I'd be able to make rent and pay my bills b/c even if I was losing at work it wasn't coming out my bank account. Not to mention that when you're trading your own money, especially at the beginning when your balance is low, your BP is affected on a day to day basis. If you put up say 10K and get leveraged out to 200k, it wouldn't really make a difference that you had that buying power if you had three days where you lost a few K and your balance was 0. In the end getting leveraged is multiplying your downside as much as your upside. So, if anything is a waste of money it would be giving away a piece of your profit and paying higher commissions just for leverage, b/c it helps just as hurts as much as it helps. I would much rather give up 40% for someone to eat my losses than give up 10% or 20% for the opportunity to trade my own money with size I have no business trading..... That's the difference. In a real prop deal they're getting a piece of the gains and all the losses..... With a shop like you're trading for they get a piece of the pie and YOU eat the losses.

    Which sounds like a better deal to you? In actuality you're trading that extra 30% on the upside if you go prop, for not have to pay 100% of the downside. And I've traded both ways and turned out a much better profit trading prop. I now have enough to trade the way I want with 4 to 1 leverage so I'm comfortable doing it, but I would never want to have 20 or 30 to 1 leverage while trading my own money even now..... You end up taking loses that you don't want to cover personally if you're position trading and not just scalping in and out.
     
    #13     Aug 23, 2009
  4. so at the end of the day your trading your own capital, 4 to 1 and keeping 100%.......
     
    #14     Aug 24, 2009
  5. Correct.... But this is after building up my stack by trading ONLY firm money.
     
    #15     Aug 24, 2009
  6. ok, then back to my mid thread question. if 50/50, 60/40 is such a great deal - why are u self funding ?

    imho, self funding is the only way to go unless your a superstar trader slugging around huge size and risk.
     
    #16     Aug 24, 2009
  7. EPrado

    EPrado


    Curious why you are so anti- prop deals. Most of the people I know who have gone the self funding route couldn't make enough without using huge leverage. A few of them did ok, others lost everything due to over leverage. But in the end they would have been much better off having a large backer and taking a smaller cut.
     
    #17     Aug 24, 2009
  8. I'm trading my own money b/c I've built up enough to do it comfortably at a high level. And I built it up by trading other peoples money, not putting up 5K. You are telling new guys to put up money and just learn.

    I WOULD LIKE TO ASK YOU THE SAME QUESTION THOUGH, IF YOU'RE SO SUCCESSFUL THEN WHY AREN'T YOU KEEPING 100% OF WHAT YOU MAKE AND WHY ARE YOU GIVING A PIECE OF YOUR EARNINGS AWAY TO A FIRM IF YOU'RE TAKING ALL THE RISK??

    That doesn't make sense to me. Atleast if you're giving up a piece of your profit and getting something in return. You're giving up a piece of your money just to have leverage. And if you're trading at a level where you need more than four to one and using your own money as an experienced trade, then you're probably trading above your head.

    Self funding is ONLY THE WAY TO GO after you made your money elsewhere and are profitable. Why the hell would you tell anyone to self fund if they've never traded before, I have never met a trader that doesn't piss away money for about the first year.
     
    #18     Aug 24, 2009
  9. i also trade fixed income. even with portfolio margining in my personal accounts - i still have the need for extra bp. office, phones, bbg, tech support and someone to deal with BS that comes up occasionally.
     
    #19     Aug 25, 2009
  10. leela

    leela

    2k only? it is more like 5k, 10k, 12 k nowadays. by the way, your account start out with a big 0 (zero), not any of the money u give the prop.
     
    #20     Aug 25, 2009