What would you give up for say, 5MM BP?

Discussion in 'Prop Firms' started by illiquid, Feb 25, 2008.

  1. Say you are currently trading at 500K bp, 100% payout -- what percentage of your profits would you give up in exchange for nearly all the BP you can use, say around 5MM for your particular method?

    What if this included 0 deposit and flexibility on drawdowns?
  2. Nothing, just put up more money. Why should you give up anything for leverage?
  3. I'd pay a slightly higher commission rate, which is fair, since you're using more money. I wouldn't give up any of my P/L. I wouldn't pay more than an extra .0005, either.
  4. mews


    For 0 risk capital deposit and flexibility on drawdowns I think a percentage of profits is only fair, obviously a greater percentage if you arent on the hook for loses.

    But for relatively unlimited BP and the ability not to stress shitty periods in the market at least 10-15% profit participation seems acceptable.
  5. Why not just put up a little money and get all the buying power you need?

    To be honest, if I was at a firm handing out $5,000,000 in BP to guys who had no capital up I would probably close my account.

    Back in 2001 when times started getting tough, guys would go all in with the firms money. Most blew up and then left to go to another firm. They weren't making money anyway and they had nothing to lose by taking a big shot.

    Soon after, almost every "prop" shop started requiring capital deposits.
  6. I think you just answered your own question there :)

    They are fairly conservative with the leverage (which I suppose is a good thing), so a "little money" won't get me that much buying power.

    I suppose the question here is, at what point does it make sense for a trader to go a "true" prop trader route, trading a firm's capital and getting a cut, as opposed to just getting leverage?
  7. Since you brought it up, how much do you have up now and how much are you willing to put up for 5MM BP?
  8. This is all just conjecture for now, I was just putting up an example to see where opinions are. Honestly, right now I'm comfortable with leaving around 50K as deposit for at least 20:1, with no rush to change anything.

    I just wanted to get my bearings in case they came to me with another deal, it's still probably a long ways off but want to be prepared. I really wouldn't know what to do with 5MM right at this moment but further on down the line I see no reason I couldn't use it eventually.

  9. oh reallllllyyyyyy????? thats not what im being told...


    Registered: Feb 2008
    Posts: 11

    02-26-08 11:15 AM

    Like said before, branches put up $5,000. For this, they get the BP that they need, which might be more than 50,000,000 , so in terms of leverage, that would be 1:10000, lol
  10. Fistfull


    Heh, you wouldn't like my firm.
    #10     Feb 26, 2008