risking your own capital can keep your mindset independant and arguably more responsible and objective. trading someone else's can subtly (or not so subtly) affect the way you do your business...unless you can really keep it from doing so. As a prop trader, I can't shake the feeling that I am totally answerable to my firm. This makes me overcautious.
There are two types of traders when using someone else's money...One, is the overy cautios type who are hesitant to lose someone else's money and feel accountable for everything they do. Or, two, the type that does not care and throws caution to the wind and says essentially, "What the f*ck it's not my money." Finding the person inbetween is the key. I think, not sure, that the best relationship is for both parties to have financial risk or the party trading should have all the risk (customer or fake customer -- prop getting 100% payout).
All I know is that if I were to start a prop firm with a bunch of 23 year olds trading on unlimited leverage with a "who gives a f### attitude", I would be buying Pepto Bismol by the case...
My point exactly! Well actually my point is why have I been risking my own capital for the last 10 years, lol! I coulda been losing theirs, let them pay my "tuition." All kidding aside, I know that losing someone elses money probably wouldn't teach you as much, or possibily anything at all, as compared to losing your own. But is there something more to it? If I have the discipline to treat other's money as my own, but the realism to understand that not all plays work out and you can lose your shirt even when you're right so why use your own money when you can use someone else's? Afterall, thats the golden rule of wall street!
The one thing that most people don't take into consideration is that every firm I have spoken with who takes a few people with no capital, charge the traders account much higher commissions. If you're paying $5k-$10K a month in extra commission, you may never make money....break even, and yet the firm makes money from your sweat. After a couple of months you have given away more than it would cost to simply start your own trading business and keep all of your trading profits.... Don
And there you have it, the ever elusive "catch" I knew I could count on you Don The extra you pay in commissions might be more than you would lose if you went somewhere else with 10k or 25k and lost it (all or some). I guess it depends on how active you are.
I was unaware of Sterling's post until just now. However, I appreciate the chance to reply. Here is a copy of the PM I sent to Sterling: ******* Hi Sterling On 17 June you said that <quote as above> The reason why it was possible to make a lot of money on that stock that morning, was that a takeover was announced for the company at 1.5 cents per share, but people mistook it for 15 cents per share. So I went short at about 15 cents and covered at 8 cents. Here is part of my daily statement for that day order number / ticker / company name / exchange / size / price / principal / commission 51244 P PEOP PEOPLEPC INC INSTINET -300 0.3000 90.00 -5.00 51245 P PEOP PEOPLEPC INC INSTINET -200 0.2900 58.00 0.00 51397 PEOP PEOPLEPC INC ISLAND -5000 0.1700 850.00 -27.50 51413 PEOP PEOPLEPC INC ISLAND -2100 0.1700 357.00 -13.00 51473 PEOP PEOPLEPC INC ISLAND -3000 0.1500 450.00 -17.50 52067 P PEOP PEOPLEPC INC ISLAND 7423 0.0790 -586.42 -55.50 52068 P PEOP PEOPLEPC INC ISLAND 3177 0.0800 -254.16 0.00 So on over 10,000 shares I made 7 cents gross.
why do people think if you have a million and a quarter share availble that you base your profit on that. Base your profit on average shares. The large dot is just so that you do not exhaust the limit. Not to come in in the morning and see where you will buy a million shares. How stupid can peoples arguments be.