Since around 1998 a S7 is required to trade, or being an exchange member..except for some extremely rare cases. Optionzz.....thanks,, keep the "day job" for a while...the markets will be here when you're ready to go... Don
just thinking things out. so if u put up $5k in ur prop firm acct for example, trade 10:1 or 20:1 leverage, u just get to keep profits on what u make on ur $5k only, correct? prop firm gets to keep profits from other funds they provide, correct? seems fair to me. i'm not that greedy to want the profits off money they extended me. but if they want to give it to me, i ain't gonna complain. sorry for naive question, just want to make sure.
You keep 100% of what you make in most cases. You are using that money, I don't understand how they'd make money off of you using their money, how would they make part of the money you make, considering you used a lot of money to make a little money. That above statement made no sense, partially because your question made no sense, you make 50 dollars on the buying power you use, you keep 50 dollars minus commissions and fee's. Just think of it this way... they loan you the money to pay the extra, with the assumption that you will give that money back after you are done with it. It's buying power, you can buy and sale, but you are using their money, but you return it back as soon as you are done with it. That is how I look at it any ways. The outcome of how you use it, you are responsible for. If you lose 50,000 dollars somehow, then you are responsible. So use leverage wisely.
well let me rephrase. i put up my $5k. lets say i use some buying power that equals to another $10k making total trade $15k. when i make a profit, i get to keep profit on my $5k and they make and keep profit on their $10k used in buying power. sorry if i worded incorrectly. does this make sense? sorry, just not too fluent with prop firm methods, etc.
I actually have no clue how it works with Prop shops for options, again, I've never actually interacted with a prop shop that handles options, it seems since with prop shops that it can be all or nothing, they will wait for you to prove you can make money before giving you any B/P. If you fund a 5k account, and buy 10k worth of calls, I don't know how that will work, but if you lose that whole 10k, you will be paying that firm money I'd imagine. Again, I keep thinking you want to trade equities, I have no idea about options, I still think it's insane to go to a prop firm that does options, it's just so risky. I've not heard of many. I'm just so used to "prop firm" being associated with "equity trading" or "futures trading"... even Forex lately, but not options. I think this thread would have been much better suited in the options forum, maybe you should start a new thread in the options forum.
sorry, i will trade equities with their buying power since u cannot use options with buying power, only cash. options trading only allows u to use cash. i am talking about trading only equities here. sorry for confusion.
Oh... dang, in that case, I shouldn't have erased my previous threads. PM if you want more info. Buying power is just power to buy stock. You don't really have that money, you just use it to get into a stock. Again, just view it as a loan to buy more than you have, you put up your own capital so you don't risk a firms money. If you have 20 to 1 leverage on 1k, you can buy 20k worth of stock. It would be assumed that you'd not risk 20k though. With a 1k contribution I don't believe any firm will let you hold overnights, at least not with the ones I have contacted.
"i get to keep profit on my $5k and they make and keep profit on their $10k used in buying power." Look.... stop talking about that, that makes no sense. YOU... ARE BORROWING the money. You have full control of that money. You profit 100% from all that money. You return that money, to the prop firm once you sell, and they make their commissions from the trade you executed. That is how it works. Don't think about all this complicated stuff, giving me a headache. It's power... they give you power. If you get 10 to 1, you multiply everything you can buy by 10, your profits could therefore possibly be 10 times more. You control the buying power, you borrow it. With an intent on returning it. That is it. No fancy talk about what you are talking about. If you have 5k, and you have 10 to 1, and you buying 50k worth of stock, and you make 5k on that trade, you keep the 5k. You keep 100% That is it. YOU KEEP WHAT YOU MAKE... lol, I can't make it any simpler than that. If you need more help, PM me and I can try to explain it a little better.
Real simple...you keep everything you make, minus the commissions for the trade (which the firm keeps).