Trade Firm Capital or Capital contribution for new traders

Discussion in 'Prop Firms' started by youngwallstreet, Apr 22, 2009.

  1. Hi there I have been hearing different things on this subject. Some people tell me only go with a firm where you can trade firm capital, others are saying only go with a firm which you need to contribute your own capital.

    My thoughts are that the two apply to different types of traders, when learning to trade who would want to lose their own money? Makes more sense to learn with someone elses capital, then switch to a firm where you put capital up if your experienced enough to do so.

    Anyways Ill see what you people say about this!

  2. cubical


    trade their capital. make sure they have an interest in you succeeding. that is, unless you already know how to trade in which case you should trade your own money(if you have enough).
  3. Makes sense man, thanks, I got cash but dont quite know how to trade yet so I dont wanna blow my next egg just yet!!

    Another question for you? Would you recomend remote trading to start or should I actualy go to NYC and trade in the office, this Im up in the air on! Alot cheaper for me here in Halifax, NYC soo expensive and I dont know anyone there etc.
  4. I totally agree,

    Trade the firm's capital!
  5. As a beginner, I strongly recommend that you trade in a office, instead of remotely.

    In a office you get mentorship, will become more competitive and driven, and have a superior internet connection (A cable connection at home won't cut it if your day trading)
  6. Yeah thats what I was thinking aswell! Maybe trade in an office for 4-6 months then move back home and trade remotely,or maybe Ill like NYC and stay who knows!

    Thanks for insight!
  7. (May think I'm bias, but I have also been on both sides of the equation over the decades).

    "Trade Firm's Capital" - OK, you don't put any money up. Firm allows you trade for a while on their nickel. If you make money, you can stay...if you don't you're gone (think about it, would you let someone else play blackjack for you if they lost money?). If you do make money, say $10k per month, you leave your money with the firm each month (4 months - $20K of your money, left with the firm. They "may" allow a $2K draw or something... So, in 4 months, you have $15-$20K up with the Firm....and they have already made and taken their $20,000 plus your commissions.

    One exception that I know of: First New York Securities. Good people, long training program, trade "their way" - a good salaried position plus bonus.

    So, trade your own money: Well, since it takes a lot of money to make a good living at trading (heck, $550k min just trade opening only orders, correlated pairs etc.)....not a bad option. But you are limited to either 2 or 4 to one of your actual cash. And, not a part of an organized large trading organization, and subject to all the retail trading restricitions.

    The "stock exchange floor trading model" that my brother and I enjoyed from the "other side" for decades seems to make sense as a "hybrid" business model for traders.

    You keep your $half million or more in the bank. You put up $20K or use our money for your actual trading. You keep $100% of your profits, become part of a very tight knit organization of 400-500 licensed professional. You have access to many groups, mentors, training etc. AND if you make $10k per month for 4 months, as in exampel one above, you keep all $40,000 vs. giving away your money to the firm. You do pay commissions, you may trade to be involved in various training programs...but you're "safe" with a firm (owners) that has been exchange members since 1978, and doing business in this form since 1992.

    To be honest, each example may have some "pros" and "cons" - our model tends to appeal to the more "entrepreneurial" types who want to run their own business (not for everyone of course).

    (Now I sit and wait for the few naysayers to comment, LOL.... but just wanted to share from my perch).

    All the best in whatever you choose, or whatever appeals to your best interests.

  8. And what if you don't have enough money? Let's face it, if you are a conservative trader, even if you have 100k to trade with, you can't absolutely rely on making 40% on the year just to get by.

  9. Hi Don, yes I agree with you, and I would like to come over and learn to trade with you guys and really run my own trading business. I understand the commissions are higher, but again I get to keep all my profits so I havent done the math but Im sure it evens out.

    In an ideal world for myself I would have 25,000 and another 15,000 for living expenses while I learn. Unfortunately all I have is enough to live on for a year or so while learning.

    Trading is what I want to do and I even quit my accounting job for this, so Im thinking since I cant do the hybrid stock exchange model which sounds very appealing, I need to work with what I have so if I can make 15-20K from the firm that Im trading their capital for, then at that point I will have capital to look into more appealing options.

    I was actualy speaking with you Don via email the last few days, you seem like a very bright and honest person and I would like to shack up with your firm one day.

    So right now Im trying to gain insight into what firm have the highest integrity and allow me to trade firm capital so I can learn to become a trader. Right now Im leaning towards keystonetrading and smb capital any thoughts on those two Don?

    Yes I also looked at first new york securities and their trading taining program sounds amazing, but I doubt they would hire me.

    Again thanks for your response and I look forward to hearing back form you on this!


  10. I totally agree. It does "take money to make money" - whether you're buying a $million dollar donut franchise, or trading. We tend to attract those who have been in a decent job and have accumulated some basic capital, want to be in business, but don't want to waste a franchise fee or anything. Compared to most business ventures with a virtually unlimited upside, our model has a pretty low barrie to entry. Even the $20K is still yours, not paid in franchise fees. The registrations and training are even only a couple of grand.

    Just another note. Traders don't tend to look at Return on Investment....since that generally refers to passive investing (no matter how hard you work at it, LOL). As traders, the capital we provide is thought of as simply another valuable trading tool that allows them to participate in good working strategies that are likely "lower risk, higher reward" but maybe more capital intensive (espcially our best technique of opening only orders etc.).

    If a trader makes $5k per week with $20K is he getting a 20% ROI per week? I think the Regulators would have a great time with claims like that, even when true. The traders work really (really) hard to make that kind of money, and may use a $million or more of our money to accomplish these results. So, in our terms, it's not's the result of good training, capital use, and hard work!

    As I said, just a distinction for some...

    All the best,

    #10     Apr 23, 2009