What are the advantages and disadvantages of trading remotely with a prop firm versus trading retail on one's own? Of particular interest to me are decision support software and trading costs. I gather from speaking to some traders that the decision support software offered by the prop firms is better. Is this true and, if so, is there anything available in the prop world that can't actually be duplicated in the retail world, and, if so, what is it? Are the commissions and fees less in the remote prop trading than in retail trading? I'd imagine there are other advantages and disadvantages that I should be aware of and I'd really appreciate your bringing them to my attention. As you can probably tell, I'm fairly new to trading and am trying to decide between these two basic approaches. I'd greatly appreciate any insights that anyone can offer here, especially if they have experience in both arenas. Please feel free to email your response to me directly at cwb@intrex.net if you'd like. Many thanks in advance for any assistance you can provide. Adios,
This has been dealt with in previous threads quite a bit, but not, I'll have to admit, totally to my satisfaction - yet. You can either read back or use the search capability of this board to find the relevant posts, and form your own conclusions. However, since players and their perspective changes with time, I'll hang around to see if we get anything fresh and more conclusive.
Depends on your trading style. Are you a part-time trader with a full time job? If yes, you will probably be more of a swing or position trader, so lightning fast quotes and executions are not that important. A retail account like Datek will suit you fine. On the other hand, are you a scalper or active trader seeking to immerse yourself into trading full time? Then it's better to first join a prop firm and learn how to trade and then go remote when you've got the experience under your belt. It doesn't make sense to open a remote account with a prop firm if you don't have a clue how to use the software.
I am in the process of becoming an active trader. As far as learning the software is concerned, I soon should know RealTick pretty well (am going to MarketWise trading school next week), although I recognize that that's not a product in wide use in the prop firm world. Do prop firms not offer training in the use of their software to remote traders? What are the other advantages/disadvantages of trading retail v. remote with a prop firm? Look forward to learning more, and many thanks to all. Adios,
I trade full time with an Interactive Brokers account. For me, the biggest advantage of a prop firm would be increased margin. The biggest disadvantage would be the lack of insurance on my trading capital - if the prop firm dies, I loose my capital. That is a big deal to me. Paying professional data feed rates wouldn't be too nice either.
Eldridge: Aren't the data fees included in prop desk fees? If this is the case, then some of the prop fees that I have seen, particularily remote, seem to be fairly competetive in terms of the fee structure that exchanges charge for "professional quotes." Anyone that currently trades prop. please feel to correct me if I'm wrong. Thanks, Gordo
That's probably true, but you don't have desk fees with retail, and I don't know if you would be stuck with pro status if you went retail after being pro. If you have enough volume or the right rate structure, this probably isn't much of a factor.
Eldridge: That's a good point. I think, but don't hold me to this, that as long as a person holds their licenses, 7 & 63, etc., the exchanges consider their status "professional." The last that I heard, 7 & 63 were good for two years after leaving a firm. Not sure how this works in terms of prop to retail, if you can resign your license or what. But after going through the trouble of getting them, few people care to relingquish them. If anyone else has insight on this area, be interested to know (especially with the job cuts on the Street). Thanks, Gordo
Eldredge, As someone pointed out to me before, there's a difference between leverage (which I can get through trading futures as opposed to stocks) and availability of capital (which enables one to use techniques such as market on open, etc.) My suggestion would be to make sure you know which is which, because you may end up chasing a ghost, and taking unnecessary risks with (not to mention tying up) your own capital. After thinking about it, my own conclusion was that I don't need additional capital - I'm happy trading futures, there's enough leverage there to enable me to make a good living - and therefore I don't need prop firms at this point. Not to mention that training, software and inexpensive commissions are available to everybody... no need to join an LLC to get them.