What's the logic of the capital requirement at a prop firm?

Discussion in 'Prop Firms' started by Druckenmiller, Sep 24, 2002.

  1. Is it right to think that firms with no capital requirement train their traders better? Should I be avoiding firms who have capital requirements?
  2. Define right. I don't know, should you?

  3. The reason firms began requiring capital from new traders is to make sure that traders had something at stake to lose. Otherwise, traders that came in with no capital tended to be more lax. They took longer to become profitable. They used prop firms as stop overs to see if they can make it in the business, but never really worked hard enough to achieve success. Traders that put up capital in no way want to lose their money, they ask more questions, stay late, work harder, etc...

    Don't jump down my throat, not all traders, but MOST.

    You should avoid firms with high capital requirements. Look for firms that have cap requirements under $10K. This way, if the firm doesn't train you, you'll be into their money in no time. Firms with high cap requirements, will just let you sit their and churn commissions.

    That's why researching each day trading firm, and finding an awesome total package is important. Don't just choose the firm based on capital. There are firms that require no capital, but you won't get any kind of training, or very poor training. Those firms also tend to give you a much lower payout ratio, the percentage of money you get to keep after commissions, which will hurt later when you become profitable.

    To summit it up, the trader with capital, will do more to become successful!!!!
  4. if you are a newbie trader, put up as little as possible, preferably nothing. Don't listen to all the hype about training, there is no magic training course. Also, if there is training you will wind up paying for it one way or another, it isn't free.
  5. Pabst


    Chasinfla watch out!! Bright's gonna get up to 3000 posts if comments like this keep popping up.
  6. This is extremely poor information to give to a new trader. Training is very important, you just have to make sure it's hands on training, and not lectures, videos, books, courses etc... Hands on training is the key. This where they work with you everyday. There are several firms out there that offer this type of trading. You shouldn't pay anything for training either. This is the advice you should give.
  7. I am a new trader. And I am very lucky to get into schonfeld securities. Until today, I got to know what exactly this company is and why this company can be successful.

    First of all, I want to introduce the deal I got in my company. 20% gross profit, and no capital. At the beginning, I have around 100k to play although I can only trade 100 shares per stock. But I quite like this deal. As a newbie, you need to learn more instead of losing more. It is very good to learn your lesson when you keep losing your money. But if you don't have to lose your money, this is better. And I don't feel that I don't have to work hard if I don't put up any capital. IMHO, if people enter this field, what they want is earning money instead of losing money. If people work hard in order to earn money, not to lose money. So based on this point, I don't feel that people who don't have to put down any capital will work less harder than people who need to put down capital. Am I right?

    Secondly, since company is willing to let you risk their money, they have to teach you and let you be profitable as soon as possible. I am doing paper trading now. But when I have problems, my boss talked with me and my mentor also talked with me and let me know where I am wrong. I am very moved by that. At least, as I know, in worldco, nobody does that. In schonfeld, when top traders do trading, they will speak out what they do when they prepare to trade some stocks. Then we, some newbies can learn a lot from that trading. That is much better. And they let us to view all of the stocks they watch everyday. Anyway, I feel very comfortable to work in this company.

    anyway, if you don't have to put down any capital, you would better not do so.

    Just my personal idea.
  8. sub7slak


    I think 5K - 10K is about average...
  9. This sounds like a "beaburt-panchovia65-meyerlansky-mango1973" thread. I just have a gut feeling.
  10. Schonfield trade:

    what the FUCK are you talking about? Does anybody understand this gibberish?
    #10     Sep 25, 2002