Hello all, I'm not a Day Trader, nor do my interests lie there. I have my own assets (over 100k which seems to be a guideline here in the forums to be self invested). However, I thought doing some Prop Trading might be 'fun' (or a good learning experience). Are there prop trading firms that allow you to do long positions (months or longer) as opposed to only day? Or am I completely mis-understanding the purpose of a prop trader Thank you.
There are two types of prop firms, in general. True prop firms that allocate their capital toward a manager/trader and want a rate of return for their risk. Then the kind where your money is first loss and they make most of their money through charging fees like for training and commission. A true prop firm will want a track record to provide you an allocation or will want to hire you out of a top school to train you. The other prop firm will not be interested in you if you can generate revenues through activity. Most of the traders that join the prop firms with their own capital, have limited capital to start, can't day trade or get leverage on their own. I think you said in another post that you trade futures. With $100,000 you don't need a prop firm to trade. Why risk your capital in a common account with strangers when you don't need to?
It completely depends on the strategies you want to run. A lot of traders use prop because it avails custom margining and low cost round trips thus making some strageies viable. Dont discount the potential for making new contacts at a prop. Yes you will find the same losers as retail but you will also likely meet some decent traders who trade size if the firm is any good. You will also meet exchange reps and other industry people who are part of the machine. The signal to noise ratio is better and dont discount working in a winning environment where winning is expected. If you deposit into a non-seg keep it small and complete dd. I think you will likely meet people who are trying strategies intraday that you could do very well with swing trading. GL
I disagree that there are 'two types' of prop firms. Typically the ones that do not require an investment have very tight risk parameters, so its difficult to make a decent living starting out. Many traders build up there capital account (first loss money) so they can increase their positions, and keep the risk manager off their back. A good rule of thumb that I have heard many times is to fund your capital account at 3X your worst historical drawdown.
I was being general because there can always be a hybrid. What else have you found besides the types of prop firms that take trader's capital as first loss and the Susquehanna/Wolverine/Peak 6 etc model where they are funded by the partners and each trader is an employee and get an allocation of capital.
So in general there seem to be two types of Prop Firms: 1) Self-funded prop-firms which are typically used by individuals with a small amount of personal capital in the hopes of building up a sizeable net worth. 2) Being an employee of a larger organization where they are paid a salary (+commission). Then, what typically happens to an individual who has a sizeable net worth (>100k USD) but does not wish to be an employee of an organization? Skip Prop Trading and work purely for themselves? It may seem like a silly question, but skimming through a lot of the board I sometimes wonder if most of the prop trading individuals *here* are simply those trying to build up their first 100k. But I'm not sure if I'm getting the wrong impression.
I fall under option 1. My feeling is option 2. is rare, unless your a top minted hedge fund graduate, but that can be a totally different job than prop trading. What is the advantage to option 1 as compared to being a retail trader? The answer is the availability of leverage, plus better execution (most of the time). As a retail trader, the best you can do is 6:1 with portfolio margin as compared to 10:1 prop trading. Also with prop trading, you have a risk desk who keeps an eye on you, usually for your own benefit. As for you last question, yes, at least 100k if not more.
Interesting to see how quickly it thread can get derailed.To answer your question, try bright trading
I dont see why you would want to be at a prop firm if you are trading longer term? It offers no advantage unless you have no money of your own? But prop firms want people to put money down anyway and they will leverage that money for you to give you bigger limits. If you have no money then they wont let you trade long term anyway as you will be a trainee and have to trade in the firms style
Yup, It seems Prop Firms are (mostly) not my cup of tea. I have money and I trade long term. I suppose the types of Prop Firms that would be of interest to me would be more of a division within a bank/financial institution/hedge fund/etc. and as an employee. Thanks for the clarification all!