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Definition of a prop firm

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mattz View Post
Prop firm is a very competitive business as many want to attract the best talent out there. The industry itself is very capital intensive and has a high cost of technology. Hence, The number of prop firms has gone down drastically in the last few years as a result of these costs. In my personal opinion, those who have succeeded are those that were able to facilitate two types of traders:
1) Algo/HFT traders
2) Spread traders. Those who traded non-exchange and exchange recognized spreads

Some prop shops provide training, but it is supplied without pay to those who have passed selection criteria based on aptitude and other attributes that the prop shop considers essential to becoming a successful trader.

The Futures prop shop that I talk to over the years had exchange memberships, so the funded customers pay pennies in commissions and way below retail exchange fees. Naturally, they want to reduce the cost of execution for the profitability.

Thanks Matt, well, if they provide unpaid training then they would be legit prop firms in my mind.

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