Prop vs. Arcade

Discussion in 'Prop Firms' started by bkveen3, May 5, 2008.

  1. bkveen3


    Do a lot of arcades try and call themselves Prop firms? I was under the impression that by its very nature you didn't have to make a deposit to a prop firm; you simply traded firm capital. But when I went to find a prop firm to trade remotely a large majority of them required capital deposits. How are they different from an arcade? Does anyone know of any true prop firms you can trade remotely from with no capital deposit? I am also looking for one that allows you to trade the FX markets as that is my specialty. Thanks in advance.
  2. Trist88


    sure if you want to trade remote, most of prop firm will ask a security deposit, they don't know you, they don't know how risky you are, and they don't want to loose money with your trading...

    In other case If you work in their office, make their own training, they are gonna be able to control your risk and should not ask you any deposit.
  3. artis74


    allot of arcades have tried to shift to the prop model BUT they can not peel away from the income stream. they want to take risk but once they realize that they no longer can nickel and dime guys with fees they flip. hence you have allot of place who tell you that you are prop but are charging ridiculous aracade style fees such as the FICO pass through.
  4. Steve Dillinger

    Steve Dillinger ET Sponsor

    In general-

    A prop firm hires traders to trade 'proprietary' capital- ie the capital belongs to the owners of the firm. The traders are employees.

    An arcade is a place that houses independent traders that trade their own capital. The owners make money from the commission dollars of the traders.
  5. artis74


    Very easy way to figure it out.

    1)Ask the person you are speaking with if you are a 1099 or a 1040 employee?

    2)Is it a salary or a draw against your account?
  6. mabenn


    I am exploring my options for setting up a 24hr prop firm / arcade combined up here in Calgary Alberta Canada.

    Traders can trade all firm money and get some portion of the profits, or all their own money and keep most or all the profits and pay a desk fee or shared cost type of thing. Traders could mix their money and firms money and the payout structure would conform to their percentages. Also I am wanting to include all major financial instruments.

    My background is focussed on Forex so I intially wanted to set it up for JUST forex, but thought, why not open up the opportunity to trade all markets, so traders could develop their own ideas and methodologies and trade the markets and styles that suit them best? If I get it going we will have a strong emphasis on training new traders so they have everything they need to develop their own consistent low risk ideas, and offer training to existing traders with their own capital to help them become MORE profitable and MORE consistent.

    Anyway that's my idea, im working on putting it into action, might take some time but let me know what you think?

    What would other traders want from such a firm that would make them WANT to trade there?? Prop and Arcade type traders?
  7. saico


    Hi Steve, or anybody else, who knows it,

    if Arcades do overrides on coms, are they required to be registered as B/D? If they do this without being registered is this against SEC rules, or are they under other regulations?

  8. Professional trading firms are registered broker dealers (mostly exchange members as we are), and allow their traders to use the Firm's capital to trade with. It generally takes a $million or more to make a good living. Traders P&L goes to them. Traders put up some money to be able to participate and keep 100% of p & l vs. being an "employee" or giving away their profits.

    There has been a recent crack down on non-registered firms. Traders need to be S7 licensed.

    Feel free to call to discuss. 702.739.1393.


    Most of the pros I know who make "a good living" trade with less a million BP. How can you even seriously keep a straight face polluting noobs with that fraudulent misinformation? 300,000 BP is enough to make a good six figure living with. If you have 6k shares of a $45 stock you can stand to make or lose $1500 quite easily on a trade. I just don't see how that can't equate to a good living if the trader is skillful.

    I realize you encourage pairs, but the fact that you want your guys doing that doesn't mean that it "generally takes a $million or more to make a good living," since traders who trade pairs (which I guess MAYBE requires that kind of BP) make up a miniscule percentage of profitable daytraders out there.

    I can think off the top of my head of 5 traders who make over 100k with 500k BP or less.
  10. I think your trying to compare apples to oranges. How many of the traders with 500k BP can hold 500k of stock directionally unhedged overnight? I would guess if they are at a regular prop firm, the answer is 0 of them.

    Stat arb, and extensive enveloping most definitely requires many millions of BP. Don has repeatedly encouraged traders to not be directional scalpers, but rather to be Opg, stat arb, and envelope traders for as long as ive read this board.
    #10     May 18, 2008