Prop Trading, a good use for $5000?

Discussion in 'Prop Firms' started by YoungNAmbitious, Oct 16, 2002.

  1. So I got some encouragement from the site about becoming a prop trader. However, it seems that I was a bit naive about what this means. Apparently all of these firms want you to put up $5000. Assuming that this isn't a scam of some kind and assuming that they really are trying to help you become a successful trader then perhaps this might not be terrible??
    The few people I have talked to have indicated that if you loose the $5k that they will let you trade the firms capital.....however since you are paying commissions to the firm it would seem that they have a great business even if everybody looses there money fast. I know that it is possible to get a position just trading a firms capital but I imagine that these are probably infinitely harder to get? Does anybody really start out at firms like this and make it big??? For me $5k is definitely a significant amount of money so I am somewhat wary. Also the fact that everyone seems eager to talk to me is nice but it seems a bit suspicious........

    What do you think?
  2. Firms get loads of people who want to be traders going to them, but only some of them are going to be any good. So lets say, as in this case, that you get them to prove themselves with their own money first and then think about hiring them. No risk strategy for the firm...

    So they end up losing their money, you still get a load of commissions and move on to the next. When you find someone good, you keep them and feed them. For the majority who fail you let them go.

    Answer this question.

    If you were a potential employer, and someone came to you and lost their own money trying to do the job, would you give them a load more to lose as well?

    Just my 2 cents...

  3. the problem is that nobody can make you a trader, and those who want to tell you otherwise are after your wallet. It takes years to become a great trader, and some people will never make it no matter what.

    Think about it in terms of sports. What if you had never played tennis in your life, and then somebody said "give me $5,000 and I will make you into a pro tennis player in a few months". Obviously you would laugh and walk away. If you were serious about being a tennis player you would start out on the local court trying to learn before even thinking about going pro.

    The idea that random people off the street can plunk down $5,000 and immediately start making a living trading is an expensive delusion.

  4. The $5,000 is a commitment. I find it funny to read posts like your's every single week that seem to think prop trading firms are out to scam you. Not true. It is in their best interest to make you a profitable trader. If you blow your capital, what would you trade with? If you can't trade, how will the prop shop make any commissions?

    Find a good shop that will teach you to trade. The $5,000 is nothing more than a commitment that shows them you are serious.
  5. True prop trading means putting up zero capital on your part. Look for a firm that is willing to make the committment to you by teaching and training you since it is their money at risk.

    The problem is the number of firms willing to do this is significantly less due to the difficult trading environment and the fact that most can't teach trading to most people. Go try to find a real firm that does not have any "upfront money" requirements or stupid "desk fees." Good luck.
  6. The reason the 5K is required, is to show commitment from the trader. Too many traders came in with no money and just toyed around until they found a steady paying job. If you got money on the line, you will work hard to learn the art of trading, so you lose as little as possible.

    Anyone who guarantees they can make you into a succesful trader, beware of. Realistically with proper training, in this enviroment, it will take anywhere from 6 - 8 months to get good enough to start making a couple of hundred dollars a day on average. But in the end, it will be up to the trader whether he makes it or not.

    Do yourself a favor. If you want to find out if the firms are lying or telling the truth, visit a few of them, check out the enviroment, and talk to their traders. If they're unhappy, then so will you be.
  7. nitro



    PM either:

    DaytraderNYC, Silk, daffugginman, ertrader or big_jdez and ask for advice. These guys all work(ed) at either Worldco, Shony, or ETG. Get it from the horses mouth...


    PS 1. e4
  8. I agree.
  9. Actually I didn't say that prop trading was a scam. I asked if it was because I don't know very much about it.
  10. The $5000 is a way for prop firms to limit their risk exposure while they evaluate new candidates. It has nothing to do with how "serious" you are. Any head trader can tell if you're serious by your daily performance, ability to follow rules and degree of pre- and post-market preparation. If you are not serious, the head trader can fire you on the spot.
    #10     Oct 17, 2002