Hello, I plan on trading equities through tradestation, where I already have a futures account. What advantages would a prop shop have over tradestation, or any retail account in general? I'm willing to do 10k with prop or 30k with tradestation. Prop not SIPC insured I think. My trading strategy would require me to hold positions for a few hours or days. When you take strategies, overnight position, commish, or any other fees into consideration what would be the better choice? oh, and Assent is the only prop I know of in the los angeles area. Thanks for the feedback.
if you are going to hold overnight or for a few days,there is no reason to seek out a prop firm as leverage no longer becomes an issue. prop firms offer no better leverage than a run of the mill retail/brokerage firm when holding over night positions. that said,intraday leverage is very liberal with some doing 20-1 depending on your skills and experience.more importantly,prop firms can offer much better comission rates than a retail/brokerage firm. this becomes less of an issue as well if you do not do many intraday trades...
That's not true. Many firms offer substantial leverage over retail for overnights, depending on the type of trading you are doing. For pure stock trading, most firms off more then three times as much leverage. For options it can be 20 to 30 times as much. For pairtrading, i.e Bright trading, probably several hundred times. Not to mention all the other benefits which have been posted ad nauseam on ET.
No advantages other than if you are going to trade inside the prop office everyday and drive to the office to trade everyday instead of trading from your home. If you go to the office to trade then you will be around other traders who you might learn something from. But don't count on it. Most of them are too busy thinking about their own money to care about weather you lose yours or not.
Whoa, let's not disseminate such wrong information, at least as far as my traders are concerned (Maybe where you are). Our traders use $millions at times, overnight, for weeks or months, with $20K or so. And, "20 to 1" "leverage" is hardly worthwhile for intraday trading, heck my guys would laugh at that. Let me try to explain. "Use of Capital" vs. "leverage" actually does mean two different things. It generally takes a $million or more to make a decent living in this business. For example, I "use" about $3million every morning, pre-open, entering "Opening Only Order" on the NYSE. 3000 shares to buy, and 3000 shares offerered to sell short, on about 50 stocks. I try to get filled on 5-10 stocks, and try to make $500-$1,000 right on the opening. This is not possible with any retail account, since most traders don't have that kind of money, and most brokerages won't allow "buys and sells" on the same stock at the same time. Our pairs traders, where a good 30% or more of all the money at Bright is made, might take home 25 pairs of 2,00-4,000 shares each, rolling in and out of them, taking profits, but keeping many of these pairs on. They may need to "use" a few hundred grand or so in this activity. Mergers and acquisitions, another top money maker, requires holding a lot of shares for months. There are a lot of "retail trading myths" out there, and apparently a lot of wrong information about serious, professional trading. You can check some articles pertaining to, at least, our way of doing business. www.stocktrading.com/articles.html Basically, my brother and enjoyed the same treatment, when (after buying seats on the Exchange), we put up $25K or so with Spear, Leads, and Kellogg (now Goldman Sachs) - and were able to use $millions, keep all of our profits, and run our trading business within theirs...and all they asked is that we clear our trades with them. (We are still with Goldman, after all these decades). So, in 1992 we duplicated that business model, and now have hundreds of traders using our capital to trade with. Regarding SIPC "protection" - again our traders would laugh at being limited to only $100K or so of "protection." What we do, is we put (at minimum) $10Million of our cash directly in with the traders (class b members) - which is 100 times SIPC protection. There are many (too many, look at Babak's new list, LOL) of, how shall I say it, "Firms of Concern" out there, who aren't even Exchange members or Broker Dealers, who may limit the unwary to some "XX times" leverage, but not the decent organizations. We are all traders at Bright, and we monitor our traders "risk" not so much their "use of capital" (within reason of course). We have had very (very) few cases of traders needing to be "nudged" by any of us for excessive risk, even though they may be using a lot of capital. I hope this helps explains some of this. All the best, Don
Don how come that Muslim guy doesn't work at bright any longer? He use to work out of the Vegas office. I didn't see him on your website where he use to be.
2 things, first off, I need to mention that nearly half of our traders do trade remotely, from around the World. If you're referring to Aly, he is in Egypt/Dubai region working on projects that will hopefully include BT. And to my friend, Mav. "What in the world do we have to do to insure that some of these wild misconceptions are put to rest?" Don
Don, I think the problem is, guys are coming on here, asking questions about prop firms, they eventually blow out and then are replaced by new traders asking the same questions. At the same time nobody seems to know where the search function is. It's in the upper right hand corner!!!!!!
When I was shopping for a prop firm a few months ago, I came across one that offered good leverage and decent commission rates to its traders and had an outstanding reputation within the trading community. Upon checking further with their head office, I found out that they are not a registered broker/dealer and do not even require a S7 license from their traders to avail of their leverage. My question is: what would be the advantage/disadvantage in signing up with this type of firm? I find it interesting that even though they are not an NASD or SEC licensed firm (and I assume offer no SIPC protection as a result of not being registered), they do have a lot of profitable S7 licensed traders trading with them. Am I missing something here? Would this type of firm still fall under SEC oversight should a trader have issues with it?