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Definition of a prop firm

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shodson View Post
Technically, any "prop trading" or "proprietary trading" is trading a firm's money, as opposed to trading the money of investors, depositors, or partners. It may or may not have some sort of profit splitting, but that doesn't matter. Banks or other financial institutions may have prop trading desks or departments which trades the firm's own money, as opposed to the money of others.

So if you go to some prop firm like SMB where you pay to be trained then are given an account of their money to trade, it is called a prop firm because you are trading the firm's money.

Thanks shodson. I see what you are saying.

My point is this:

1) I presume that any such firm is going to give you an account of their money to trade provided you have demonstrated profitability. In other words, I don't expect any firm would risk money upfront letting you trade without some track-record, even if based on the in-house training they provided.

2) If you take a person that a) wants to trade and b) has never traded before, what are the chances that they will be profitable after having taken any training course, i.e. one that likely lasts between 1-5 months?

3) On this prior point, we also need to define "profitable" carefully.

4) In my mind, either

a person has already such a level of prior trading experience that they come to the firm already profitable and with a track record (or able to pass their selection criteria), hence they would not need to pay for training


they do need training / more experience, which means they are unlikely to be ready by the time they finish the course, hence no sponsoring

Do you see the dilemma?

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