At prop firms requiring security deposit, how is loss deducted from the deposit? Say I put a $5K security deposit for 10:1 leverage. If I lose 5K at the start, is the entire loss deducted from my deposit, or just a portion of it? If I have made the firm money larger $5K in the past and then lose just $5K, will the loss be deducted in a different way? Or is it different from prop firm to prop firm? Thanks!
it has nothing to do with leverage. if you lose $100, $100 is out of your account. They give you leverage on more money. But that doesn't mean they will supplement you loses.
With most prop firms, your "deposit" (capital contribution) is a hedge against the firm's losses in its master account on the trades you make in the sub-account. If you lose the 5k, then it is deducted from your deposit. If you're profitable, then any forward losses are still taken out of your profits (assuming you're keeping a running balance over and above the original deposit). If not, then a loss dips into the original deposit. Hope that helps...