What exactly is prop trading?

[Ltte]

Sorry for the basic question, but what exactly is prop trading?

Currently from home I take upto 10 forex trades a month, each trade can be open for a few days rather than intraday. My return can be anywhere between 3% to 30% per month. What kind of trading would this be called?

Thanks

 

[timsk]

Sorry for the basic question, but what exactly is prop trading?
Currently from home I take upto 10 forex trades a month, each trade can be open for a few days rather than intraday. My return can be anywhere between 3% to 30% per month. What kind of trading would this be called?

Hi Ltte,
You're a home based 'retail trader'. The ' prop' as in prop' trader stands for proprietary. They work for a firm and are usually funded to some extent by the firm who then takes a slice of their earnings. The benefit to the trader is a professional office environment with state of the art kit, insy winsy spreads and equally tiny commissions. At least, that's what I think a prop' trader is but, if I'm wrong, I stand to be corrected by the many T2W members who actually are prop traders!
Tim.

 

[UKtradergirl]

Sorry for the basic question, but what exactly is prop trading?

Currently from home I take upto 10 forex trades a month, each trade can be open for a few days rather than intraday. My return can be anywhere between 3% to 30% per month. What kind of trading would this be called?

Thanks

Prop is not a type of trading- see poster above.

The type of trading you are doing sounds like swing trading.

 

[Directional]

Plop trading is:
1. the kind of trading I was doing in the "beat the broker" competition
2. Japanese prop trading

 

[white_goodman]

how long do traders stay in a prop firm before trading for themselves generally?

 

[Directional]

how long do traders stay in a prop firm before trading for themselves generally?

usually a retail trader would move up to a prop firm, and not the other way round.

The biggest advantage in trading prop is the fact that if you're doing well, the company will give you risk limits to trade much larger, much quicker than most people would be able to achieve trading their own money independantly. Yes, you share profits with the firm, but its better to be trading with 100+ contracts and sharing profits, than trading with a couple of lots and keeping it all.

Combined with the greatly reduced costs of trading, ie: a retail broker would typically charge you $5 per roundturn in the emini S&P, where a prop firm would be around $1.28 or less. If you're doing 1000RT's a week, you'd save nearly $15,000 a month in commissions alone, which means more profits going into your own pocket.

 

[timsk]

Cheers Arb!
The other great advantage that's worth mentioning is that anyone who manages to get into a good prop' house will be surrounded by successful traders. The ones that aren't successful tend not to get their contracts renewed and account for the traffic from prop' trader to home based retail trader. As good a resource as T2W is, it's not quite as inspiring, educational or motivating as sitting next to someone who pulls in £250k every week - as Trader_dante does at his firm. Just to spend a single month at a good prop' firm must shave a year or more of the ol' learning curve.
Tim.

 

[Ltte]

Thanks guys, can anyone recommend a good prop firm to trade FX, oil and gold in the UK?

 

[Skill Leverage]

Plop trading is:
1. the kind of trading I was doing in the "beat the broker" competition
2. Japanese prop trading

For more information on plop trading, please visit 2girls1cup | Daddy Must Be Proud

 

[white_goodman]

usually a retail trader would move up to a prop firm, and not the other way round.

The biggest advantage in trading prop is the fact that if you're doing well, the company will give you risk limits to trade much larger, much quicker than most people would be able to achieve trading their own money independantly. Yes, you share profits with the firm, but its better to be trading with 100+ contracts and sharing profits, than trading with a couple of lots and keeping it all.

Combined with the greatly reduced costs of trading, ie: a retail broker would typically charge you $5 per roundturn in the emini S&P, where a prop firm would be around $1.28 or less. If you're doing 1000RT's a week, you'd save nearly $15,000 a month in commissions alone, which means more profits going into your own pocket.

but surely you get to the stage where youve made enough money where you say "hey ive made enuff i want more time to meself and dont wanna wake up early in the morning".

im interested in doing something like prop trading but my university degree is property economics, would they give me a shot? would i need a fairly impressive trading record?

 

[Directional]

but surely you get to the stage where youve made enough money where you say "hey ive made enuff i want more time to meself and dont wanna wake up early in the morning".

That depends on whether you trade just for the money, or whether you do it because you love trading and the market environment.

im interested in doing something like prop trading but my university degree is property economics, would they give me a shot? would i need a fairly impressive trading record?

use the search function and find trader dante's thread entitled "how to get a job in trading" its pretty much the best info available on this subject.

 

[WallStreetHero]

what are trading times like at a prop firm, i guess its up to you as your incharge, so can you take days off when you want and what if you want to trade round the clock are offices open all night?

and secondly how can you get into a prop firm, im in my last year at uni and will graduate in may, can i move straight into one? btw. im in london.

 

[Skill Leverage]

what are trading times like at a prop firm, i guess its up to you as your incharge, so can you take days off when you want and what if you want to trade round the clock are offices open all night?

and secondly how can you get into a prop firm, im in my last year at uni and will graduate in may, can i move straight into one? btw. im in london.

If you were at all motivated you could very easily find a list of UK arcades on this very website, and spend an hour emailing each of them a copy of your CV/cover letter. Of course this would require a modicum of determination; I'm sure if you play the waiting game long enough someone will pm you with a job offer.

 

[Parky]

There are several but they are all very different, best bet is to go round and take a look as an environment that suits you will give you the best chance of being successful and optimizing your trading returns: - Kyte in Islington, Marex, Schneider’s and Xconnect in the City, there are others, some smaller bespoke outfits but give these a spin.
You can find their contact details on this very website in the Traderpedia section under Arcades