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Can you explain what prop traders and prop firms are? I was tempted to join one a long while back but decided against it having reading a few reads here and there and wasn't convinced enough to trade in freedom and keeping my own money. Is it as true as some forums claim? |
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Good morning Torero,
A prop firm is a trading company that lets traders use their trading capital to trade. Most of them now require a trader to deposit a small amount, like $5000.00 and then they can use the firm's leverage to trade larger size than they would be able to on their own. Most of the firms have an arrangement with a clearing house so as to share in the commissions, and most charge monthly fees for the desk, software, ect. A few of them do a decent job of training the trader. Most of the training I see is to jump in when there is news without any idea about where to get out. I trade using supply and demand so I work with the traders to identify the trading ranges for the day. As you know, there are times when good news can be sold into and bad news can be bought if you know where.
FD1