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Originally Posted by knocks420
Does anyone have any experience or tried working for a proprietary trading firm, either in equities, commodities, or FOREX?? These are the companies that require a capital investment, then they teach you how to trade, allow you to trade some of their money and keep a portion of profits?? What are your experiences with this? Would you recommend it? Or is this just some kind of scam?? Thanks!!
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Hi Knocks,
While I've never actually traded with a prop shop myself, I know of several people that do/did (equities). You ask some very broad and general questions - which will no doubt will have different answers depending upon who you're trading with/for and what you're trading.
Some firms require you to put up some/all of the money for your account, and some don't - it really depends on your situation/qualifications/experience and who the firm is and what their policies are.
I would say that the majority of the time they don't really "teach you how to trade", per se - at least not a style that I would consider "trading", more like a scalping style really.
Normally they're more interested in teaching you methods that produce massive volume and thus generate a lot of commissions for them (and then they usually kick back a percentage to you). Most/all of your profits will come from the commissions you generate - not the actual trades you make (they don't care about the outcome of your trades, as long as the commissions you produce cover your losses and then some).
Of course this is not how every prop shop operates, but most of the ones that I've heard of and that I'm familiar with do - at least for equities/futures.
As far as FX goes, I know FXCM/Refco has some sort of setup (though I'm not sure of the details) and also GlobalFX has one also (who also happens to be an IB for FXCM). As far as I know, I don't think there are very many firms in FX that offer proprietary trading - at least not yet.
Most of the time I'd say you're better off trading on your own - but that being said there are certainly people who thrive in that type of environment and find an advantage trading that way. I personally wouldn't recommend it though.
Whatever you do, make sure you perform LOTS of due diligence on whichever firm(s) you consider. I guess it goes without saying that you need to be careful of scams and watch for any indications of unscrupulous behavior.
You might want to visit EliteTrader and do some searching/reading on prop shops there. That's a common posting subject, and there's lot of people there who have direct experience trading with them.
Good Trading,
Sundance