Pros and Cons of Prop Trading

Discussion in 'Prop Firms' started by hexculan, Jun 4, 2013.

  1. hexculan


    Hello I recently graduated with an undergrad finance degree and am interested in getting into prop trading. I've been to a couple job fairs recently where some small firms were looking to hire. I've heard good and bad things about them but was hoping someone could help me out. One firm was asking for 5000 upfront and would leverage you with 100k and provide free training but im worried if i do poorly the first couple months after training i might be liable for losses passed my initial investment. I have little to no experience but some firms ive looked into are willing to hire recent graduates. Any advice would be appreciated
  2. coachd


    You do not need to worry about loses after the $5000 because they will just close you account when you get to that level. To be honest if you are looking for a job as a new grad prop is not they way to go. I use to manage a successful floor with 60 traders and out of the newbie less the 10% would succeed to become a good trader and be able to trade for a living.

    The training you will receive will not really help you trade. For the most part if a firm had a strategy that worked why would they teach it to you and give you such a high percentage of the payout rather then just have a blackbox run this strategy. These firms hire out of University knowing that you will loose your deposit most likely but charge 0.001 per 1000 shares comm when their cost is about .0001. So lets say you trade for 3 months on that $5000 the firm will prob make at least $2500 just off your comm. So if they hire 10 traders they will make at least $25,000 just on comm.

    My advice to you would be to get a real job while you trade a demo account and learn about the market, or contact one of the firms that require a smaller deposit like WTS and see how hard this industry can be. I will be honest I have had years in the mid six figures but I have also had years where I earned less then $30k.
  3. zdreg


    your numbers sees to be way off or not written down as intended. no firm has costs of .0001 per 1000 shares. even .0001 per share seems to be on the low side as an average cost.
  4. coachd


    Sorry I did mean .0001 per share or 10 cents per 1000. I know two firms who has a cost of 7.5 cents per thousand. I use to be on management side I know the cost seems low but it is correct
  5. Thanks for the info!
  6. arna