Mav, Does your firm still require $100k to join, or did you reduce it? I have an option/stock hedge strategy that requires a lot of leverage to be worthwhile. thanks, Walter
Leverage MY MAN. If I have $150k in my online account and earn 20%($30,000) I can make payments on my new car. If I have $150K times says 5 leverage and earn 20%($150,000) I can buy me a new car MY MAN.
Yes, but with leverage you need flexibility. It's like driving a high performance sports car that has terrible handling.
I once called Don Bright years ago about his firm and he said. Bright: how much are you trading with ME: about 100k so with PDT rules around $200 to $ 300k but I average 30% per year so I was making OK money. Bright: if you put that money with our group you could have access to say $1 million in trading capital a lot more profit for you. ME: I doing OK now so let me stay on me own. Looking back on it now I have to say. DAM IT DON BRIGHT WAS RIGHT.
I believe leverage, when used to take advantage of situations that have "edge", increase profitability. However, you have to be comfortable with the risk, and use it at the right times. Never to gamble. My focus has been, that if you have the assets for a segregated customer portfolio margin account with up to 6.67 to 1 leverage, why take the added risk that comes with a prop firm. I did for a year. I made a mistake. I would never do it again.
It's damn, not dam. And Don does not give you that kind of leverage to make directional bets. He gives you that leverage to either pair trade or use for open orders where you will have outstanding limit orders in the market that may or may not get executed. I think you misunderstood our good friend Don.
I guarantee you this, the trader has 1000 times more risk to himself then even the worst, most unstable prop firm has to him. I actually worked for one of the most corrupt and notorious firms in NY back in the day that folded in 2003 and they paid out all their traders. I can't say the same for all the traders that have blown up at the various firms I've been with. The greatest risk you have is yourself. That is a statistical fact.
Make no mistake. Prop firms encourage leverage, because it increases trading volume. Traders sit in a room and are asked to trade or lose their spot on the floor. Maybe not all prop firms, but many. Yes, as an introducing broker, we want volume also. However, we don't insist our customers use leverage, we only offer it. We don't have trading rooms with limited desk space that has to be filled with the busiest traders. We offer a business model and support however you want to run your business that's allowed by law and your capital.