Please explain prop trading deals to me...
I am used to hedge fund style payouts (2% and 20% etc), and am trying to understand a prop trading deal that I have been told is pretty typical.
The deal is you put up some Minimum Trader Equity (MTE), and the firm puts up 9x your capital. They then lever that up 6 times. The trader then gets 33% of PnL on the gross amount.
So for example, on a 100K MTE, the firm brings 900K and levers the 1M up to a 6M book. On a 1% pnl, the trader takes (or eats) 33%, so 20K. If a 1% loss is 20K, isn't the trader effectively levered 20x on their money? Why would anyone take this deal if a 5% drawdown will blow them up? Just hope that it doesn't happen? Or just no better hedge fund deals (1 and 10 etc) available? thanks
Thanks for the information & knowledgeable post how can I be a part of your forums friends?
those are called bucket shops
good prop firms offer a base to start, albeit a small one and pay a % of the gains or whatever.
This really a good platform that I have landed and however this is really interesting and we could improve our knowledge too. How to get access of the forums
Yeah, great service. Tried it already. Thank you very much for sharing it !
thank you for sharing this information,this is my first visiting of this site .thank you so much
Odit ipsum qui cum cumque. Doloremque et ipsa non commodi. Dolorem eaque quos ea incidunt. Sit rerum mollitia eos tenetur expedita sint dolore. Pariatur incidunt omnis voluptatem recusandae. Aut nobis libero non pariatur earum eos velit.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...