P&L stop loss at prop firms
what is the P&L stop loss allowed for new traders at the various prop firms
FNY
Gelber
Transmarket
DV
ect...?
anybody know
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anybody?
Doesn’t exists like that. Depends on experience and track record and personal relationship to an extent.
At a typical MM platform you are allowed to run 2% vol on your VaR. At a 4% drawdown, your assets are halved. At a 8% drawdown you're shut down forever. Usually you get shut down before you hit the 8% because they don't want PMs making YOLO bets to claw themselves out of their PnL hole. It's not a hard formula where you get shut down, because they don't want PMs gaming the risk system.
From my friends who work at various market making firms any prop shop which is running non-market making strategies would employ a similar methodology. For any market making book it would be even tighter risk constraints, with some possible leeway given for super left tail events. There is no leeway for black swan losses at MM though.
These risk constraints look super tight but they are not given the strategy type that prop shops like to run. If you actually have skill, you should be making money all the time, so these tight stops act to filter out non-performing traders.
Yolo bets. That’s a good one lol
Generally correct though some shops are a bit looser. Also, there are restrictions on universe and concentration in individual names. 2% vol on VaR seems too tight. May be due to different products though, are your friends on the quant or fundamental side?
Also, market makers generally won't have delta risk, desks running at prop shops want to see 3+ Sharpe so most of these strategies are going to be flat end of day too. Only problem is scalability. Also these strats are hard to find.
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