The questions that should be asked

Discussion in 'Prop Firms' started by talebi818, Jun 29, 2009.

  1. What questions should be asked when joining a prop firm?

    EX)Trading fees
    Series 7
    Min. deposit requirement
    etc.
     
  2. commission
    desk fees
    lock up
    non compete clause
    payout frequency
    tax structure (LLC, etc...)
    K1 vs 1099
     
  3. "Have i taken ownership of this by spending reasonable time looking through the Prop Firm threads to answer this question myself, since this has been repeated over and over again?"
     
  4. Hi, I'm new to prop firms. Would be helpful if anybody could give me some pointers here.

    1) How much money can I expect to make if I put up 10K?

    2) Assume I'm aiming for an annual target of a 20-30% return on my trading. Is this too small, too much, or more or less it?

    3) How does leverage work exactly? If it's, say, 1:10, does that mean I can trade 100K positions (if I contribute 10K)?

    4) How do prop firms win in this business model. Suppose they get 100 traders on board, all of whom lose money. What happens?

    Thanks for your thoughts on this guys!
     
  5. >1) How much money can I expect to make if I put up 10K?

    $0.

    >2) Assume I'm aiming for an annual target of a 20-30% return on my trading. Is this too small, too much, or more or less it?

    No idea. What have you done in your demo accts ?

    >3) How does leverage work exactly? If it's, say, 1:10, does that mean I can trade 100K positions (if I contribute 10K)?

    Yes. But you'll loose 90% of the time, on average, to start. At least according to the experts. So expect to loose $ 90K.

    >4) How do prop firms win in this business model. Suppose they get 100 traders on board, all of whom lose money. What happens?

    They all loose money, the prop firm takes no risk (unless they're idiots :)). Why do you think they ask you to put up $5 - 10 K ?
     
  6. Ok, thanks. So what's the advantage of using a prop firm, if I can get the same leverage, and risk profile, by simply buying more contracts, if we're talking about futures?

    Is it a better deal for stocks then? I don't get it.