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Definition of a prop firm


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Definition of a prop firm

  #11 (permalink)
 
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 xplorer 
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mattz View Post
I think you just focused on one sentence. A prop firm could potentially have an educational arm, where someone could share with you his or her knowledge for a fee. However, that is an additional source of income and not where they (in my opinion) get their talent pool from. The "legit" part again, in my opinion, is the selection criteria, splits, and whether you need to show a real-time record.

Ask yourself one question: "what would I require from anyone if they asked me to hand them over my money to trade?". Further, Imagine you had a number of talented people you can choose from, and now you can be selective with your criteria. This would be a good start to think how props would act as well.

I agree. For me it's all about the business model.

My point is, if an organization offers training as a parallel service to their trading arm, then it's acceptable to call them a prop firm, because their primary source of revenue is not (or not necessarily) coming from training.

I was browsing "prop firm" on Google earlier on today and I came across Savius LLC (I've seen they're also mentioned here on FIO). That to me looks like a prop firm which also offers training services. That's legit in my view.

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  #12 (permalink)
 
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xplorer View Post
I agree. For me it's all about the business model.

My point is, if an organization offers training as a parallel service to their trading arm, then it's acceptable to call them a prop firm, because their primary source of revenue is not (or not necessarily) coming from training.

I was browsing "prop firm" on Google earlier on today and I came across Savius LLC (I've seen they're also mentioned here on FIO). That to me looks like a prop firm which also offers training services. That's legit in my view.

You will gain most from your live trading. Going from one training to another is mentally exhausting, and you want to at some point narrow it down to a few simple rules that you can stick with. If you feel that someone's training will give you an edge, sure go for it. Typically a good sign for a good program is one that helps overcome challenges of trading.

If you were to approach a prop firm you want to contact them from a position of strength, in other words, show a positive track record and that you have skin in the game. Prop firms may look at variables such as quantities traded, the risk to reward, draws, etc. So no one should expect anyone to hand over capital without a thorough interview process.

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  #13 (permalink)
 tpredictor 
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A prop firm is a firm where the traders trade firm capital. Historically, prop firms had specific selective advantage. Specifically, they had selective advantage over retail traders. Also because they did not answer to outside investors, they could take more risk. The rise of the prop firm was largely as a result of bank regulations, retail day trader restrictions, and the desire for traders to be able to take advantage of a floor atmosphere, capital, and learn from other professional traders.

Today, it is very difficult for prop firms to obtain advantage because there are fewer retail traders and more of the trade is algorithmic. As a result, many prop firms have went to a split model of offering training and trading. Most firms today fall into the categories of market making firms, firms structured more like hedge funds, pay to trade models, etc.

As for whether any specific firm or offer is worthwhile, one would need to analyze the specifics. In a general a "real firm" will offer enough capital to make a living and should be able to demonstrate traders doing that. Most of the futures pay to trade models have not demonstrated that they are doing that.

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 blb014 
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tpredictor View Post
A prop firm is a firm where the traders trade firm capital. Historically, prop firms had specific selective advantage. Specifically, they had selective advantage over retail traders. Also because they did not answer to outside investors, they could take more risk. The rise of the prop firm was largely as a result of bank regulations, retail day trader restrictions, and the desire for traders to be able to take advantage of a floor atmosphere, capital, and learn from other professional traders.

Today, it is very difficult for prop firms to obtain advantage because there are fewer retail traders and more of the trade is algorithmic. As a result, many prop firms have went to a split model of offering training and trading. Most firms today fall into the categories of market making firms, firms structured more like hedge funds, pay to trade models, etc.

As for whether any specific firm or offer is worthwhile, one would need to analyze the specifics. In a general a "real firm" will offer enough capital to make a living and should be able to demonstrate traders doing that. Most of the futures pay to trade models have not demonstrated that they are doing that.

Who does a real prop firm even hire?

I would think someone with very high IQ with a degree in Physics, Quantitive Finance, Mathematics, Ivy league or top notch education. You are not going to pay to trade at actual prop firm. These are highly intelligent individuals that could make top money in other endeveaors.

Best advice ever got was from my mentor- You are not as smart as you think you are, you are not going to outsmart the market or "program a indicator to make you flithy rich". You can work hard, save and invest in companies that offer value. Patience and work are the keys to success

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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 xplorer 
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xplorer View Post
I agree. For me it's all about the business model.

My point is, if an organization offers training as a parallel service to their trading arm, then it's acceptable to call them a prop firm, because their primary source of revenue is not (or not necessarily) coming from training.

I was browsing "prop firm" on Google earlier on today and I came across Savius LLC (I've seen they're also mentioned here on FIO). That to me looks like a prop firm which also offers training services. That's legit in my view.

In light of some recent conversations with some FIO members I want to clarify:

with the quote above I never meant to say that firms that offer purely training services are not legitimate.


My contention is, they simply should not call themselves prop firms.

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Last Updated on June 13, 2018


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