Starting a new prop firm

Discussion in 'Prop Firms' started by trader105, Jun 3, 2009.

  1. We are a group of day traders. Right now most of us are in various prop firms. And some of us have the idea of starting a new prop firm to save on commission, or increase our payout (or both). And I just want to know how difficult it is and how much the daily overhead operation cost is to run a prop firm. Suppose we will have more traders to join us. And we need to know what's the miminum number of traders (or the minimum trading profits generated) to make the effort worthwhile.

    From what I understand, we need to find a broker dealer and make a deposit (Can we get leverage of 40:1 or more?). And we need to find a trading software company. Are there any other things we need to do?

    Your reply is highly appreciated.
  2. i think that's probably not enough leverage. i would aim towards something like 80:1

    lehman brothers was, what, 25:1? that's what's ruined them, insufficient leverage

  3. Reg T capital provided by Clearing Firms, such as Goldman Sachs, etc. is 6.67 to one. You need to buy a seat on an Exchange, and hire Compliance people etc. as well.

    We have several entrepreneurial groups within our Organization, much cheaper for them oveerall. PM me if you like.

  4. why not just form your own fund, and get a line of credit from a bank. Seems like that'd be easier.
  5. timcar


    Here’s the game plan CashMoney69

    1. Open an LLC with say 5 trading partner’s call it: CASHMONEY TRADING LLC.
    2. Get loan for the LLC from WFC for a $1million and deposit it at E-trade
    3. Rent office space and buy computers for all traders
    4. Allocate capital to trading partners, add new partners if they qualify
    5. Trade for 6 months, become millionaire, close LLC, join boat “The Steve Irwin” help save the Whales.

    With all that trading taking place LLC would quality for the low rate of $7.99 per trade. Allocated other LLC operating cost to all partner’s. Hey this is cheaper than joining a PROP firm.

    Some possible problems
    1. What if a partners wants more trading capital than his allocation
    2. Someone has to monitor the P&L of trading partners so no one blow’s out his account.