question for prop guys

Discussion in 'Prop Firms' started by jd1028, Sep 16, 2007.

  1. jd1028


    using Bright or some other prop firm where you put up money,how is the risk managed from the standpoint of the firm, meaning...
    i put up say 25k or 50k and i get leverage of say a million, can i be long on a intraday basis , say for example 4 positions of 250k,10 positions of 100k and so on. Where will i be capped for risk sake by the firm. I'm not asking a cowboy question i just haven't read any questions that ask this.

    Also how do they treat overnight,if any,what hedges are necessary

    thanks a million guys
  2. lescor


    It'll depend on the trader. Experience level, capitalization, strategy, but mostly how well the firm knows you. When you open an account they'll usually give you a set amount of buying power, both intra-day and overnight. They may also place share size and $ value limits on positions. These are probably hard coded into your order entry software.

    Every firm will have some kind of risk watch software monitoring all the trader's positions, along with someone watching it. If you go all cowboy on them or start getting close to negative equity in your account, expect a phone call and possibly intervention from the risk guys.

    Aside from that, most firms will leave you alone to do whatever you want.
  3. if your mostly taking directional trades without being hedged, intra-day, Especially overnite.. chances are your going to be watched closely, too many variables, depends on what type stocks you trade, how you control risk, usually max share size & max number of positions are definetly going to be in place & probably a max drawdown for the day allowed is going to be encouraged, which is a good idea in any event. using common sense will good risk management will allow most traders flexibility to trade their strategies without too much hassle, however the equity in your account will dictate how much breathing room a trader has within reason for sure. varies with different firms, some treat you as adults, where others may babysit a trader, depends on how you structure your deal so you can trade with freedom & focus on trading with less frustration from risk managers.
  4. jd1028


    very helpful guys,thanks--anything else regarding this question is appreciated
  5. jd1028


    with a 50k contribution what could i "expect" to receive in buying power from most prop firms--trying to get a handle?

  6. It depends somewhat on "what" you're doing. For opening only orders, probably use $2million or so with $50K. For intraday, we monitor to see if anyone comes up showing down 10% of their account, or up 20% of their account before we generally check BP.

    20-30 to one is a basic number...all subject to change as you are with us longer.

  7. jd1028


    why do some props require series 7 others dont--i let my 24,7,63 expire when i started my fund a while back
  8. Maverick74


    Prop firms do not require a series 7, exchanges do. It all depends on which exchange you are joining. If the firm is a member of the CBOE, you are not required to have a 7. All the other exchanges require a series 7.
  9. jd1028


    thanks again mav
  10. good question, maybe don or someone can elaborate on max share size & max positions with 1 mil intra-day bp, whats allowed?
    #10     Sep 17, 2007