prop shop desk fees?!

Why do prop shops charge desk fees? Isn;t this some form of con?
Shouldn;t a prop shop simply put up some capital for you to trade with, accept that that is their risk and then they take 50% or agreed amount of any profits?

if you're a good enough trader anything is possible... there is no legal requirement to take desk fees

It just seems a strange setup to have...agreed they pay for high quality bandwidth links and systems but if they're running a company, shouldn't that be their investment?

Not really because the general model ends up with people either on very low splits or entirely self backed... as why would one have it any other way? A 80 or 90% split (in the trader's favour) is far more usual than 50%.

The prop shop's investment is almost just a way to get you started rather than a serious investment, in most cases.

That arrangement works out better for the self employed folk who trade at prop firms; the desk fee basically covers fixed costs, while commission fees and split cover variable costs. You could build the desk fee into the variable costs but then you'd have the more successful subsidising the less successful, and why would they want to do that?

The other option, of course, is to work in a hedge fund or similar and take a salary and bonus.

Main point seems to be lower commissions, top end equipment, and trading with someone else's cash (plus benefit of some mentoring in some places) but if you have to cover any losses yourself, why not just trade your own account...or is prop shopping a hark back to the last 10 years and pre where most of the links/equipment weren't available to the retail user? I guess some people get bored at home too

http://www.trade2win.com/boards/trad...ng-arcade.html

Given that desk fees seem to be in the £1k to £2k range, what sort of sixe would you have to be trading to make that negligible per month. Say desk fees 5% of monthly profits?

y your thread is in this section ?

You'd only have to cover losses yourself it was your own account