question about props?

Discussion in 'Prop Firms' started by magicz, Mar 22, 2007.

  1. magicz


    are they all day trading shop? I know the goal is to make money but you have to churn a certain amount of shares per day? or you can go at your own pace?
  2. "Going at your own pace" is a must in my mind. Our people do "some" daytrading, and "some" correlated pairs, "some" market making, etc. (you get the idea). We have people who trade less than 50K shares per month, and some who trade 500K shares per all boils down to your style, training, and comfort level.

  3. Great question to ask each individual firm.

    Like Don said, he has traders doing different things.

    There are places that do only short term scalping. That may work for some, but not really my style.

    If you want a decent shop where you can do anything (within reason) I think a decent shop is V-Trader. They've got stocks, futures, options. I don't trade there, but it's a good shop and you can trade much more than just scalping pennies all day.

    Obviously they're not gonna let you short $500,000 BIDU naked before earnings if you only have $50,000 in capital. They're pretty good in the risk department.
  4. magicz


    thanks for answering Don.

    I was doing a little research on prop firms. my conclusion so far is other then the help with greater leverage(when needed) what is a retail trader like myself have to gain from joining a prop firm. and what does a prop firm gain from me if I was a profitable trader?

    I have a risk adverse strategy and I use derivatives to hedge all my stock position if I own any at that time. Since I am a swing trader by trade, my horizon isn't day to day but closer to week to week. Its seem my style of trading wouldnt be excepted at a prop firm, I am correct?
  5. The term "leverage" is misunderstood for the most part, I prefer the term "use of capital." Leverage implies that you are planning on buying more shares in hopes of "leveraging" yourself into more profits by using more capital, not the case.

    By having access to a couple $million, you can engage in different strategies that work well (lower risk, higher reward), but tend to be capital intensive (Pairs, opening only's, M&A, market making, baskets, etc.). The general public is pretty much limited to "picking stocks or picking direction, or both." We don't have to be.

    We also collect interest on short stock sales, around 5% or so, which is nice vs. using derivatives at times (most retail accounts don't receive short stock interest, which makes it pretty foolish to engage in long/short strategies and mergers of course).

    All that being said, the only thing that matters is your bottom line. If you're able to make good money trading retail, then by all means, continue doing so...prop trading is definitely not for everyone.

    Longer term holdings, and hedging, are both part and parcel of successful trading. As traders we shouldn't limit ourselves to any particular time frame, ours sure don't.

    All the best,

  6. magicz


    thanks for the informative answer. maybe someday I will have to try out prop trading, maybe with your firm. I do contract work and sometime I have a lot of down time to trade and do research. Other time I will be out on the road 3 to 6 month at a time. So not much time to trade. I figure trading with a prop firm is like a full time job but you're the one controlling your pay. So part time is probably out of the question. Anyways thanks for clearing up the "leverage" defination.
  7. Sure, we'll be here when/if you decide to join us. BTW, this is a good question for my montly column in Stocks and Commodities, do you mind if I use it (alias of course). ?

  8. magicz


    sure you can use it if you think it might help others to understand more about the prop firms.
  9. Don, I have a question. I want to swing trade some time in the near future, but only have 10k and want to be fairly active, so the PDT rule is a problem. Would you mind one of your remote traders being very low volume? I would trade very very small at first.

  10. Hi, Don, I become much more interested in your firm after reading this post by you. Previously I thought people in your firm only do day trading. I am not a day trader, rather I try to build a long-short portoflio with average holding period about 6 month. I think i need a minimum 1 million of trading capital to diversify effectively. So may I ask you a few questions?

    1) Is it ok for your trader to hold a position more than 1 year, as long as it's not losing money?

    2) How much cash I must deposit into my account if I want to have 1 million trading capital?

    3) Can I buy options ( as hedge against my long, especailly short positions)?

    4) What's exactly the relationship with your trader and your firm? On your website it's said not employee, so are your traders limited partners of your firm?

    #10     Mar 23, 2007