Any market participant with healthy ambitions strives to manage large capitals and consistently goes to it. But the starting conditions can vary greatly – some begin with a large deposit, others with a minimum, and still others are looking for investors willing to entrust their money for management. And this is where strategies of proprietary trading come to the rescue.
Prop trading, prop traders, prop trading companies – what is it and how does it work? What is the Best Prop Trading Firms. In this article we will introduce you to the concept of prop-trading. As a rule, traders who earn a sum of 6 or 7 zeros a year started out in prop trading companies.
The Essence of Prop-trading Companies
In English it means “private trading”-when companies give their assets to hired traders to trade on certain terms:
Traders pay a deposit, which is multiplied by the company’s prop depending on the amount.
Bo time drawdowns losses should not exceed the amount of personal deposit.
The trading company sets a daily loss limit of not less than Z0 dollars, after which all transactions will be automatically blocked until the next session of the special risk management programs.
It looks attractive, but that’s just the tip of the iceberg – they don’t just give money to the first person they meet. Candidates go through a competitive selection process, where they have to prove that they have trading skills and successful experience in the market. Newcomers to trading are offered sensible training and given a small amount of money to manage, which increases gradually.
What does the structure of proprietary trading company look like?
Bo is a group of investors with 2 or 3 persons who make important decisions. The next link is made by up to 10 senior traders, each of them has their own specialization – active trading, scalping, trading in currencies, shares, other assets and so on. One senior trader directly manages the group of rank-and-file – personally trained or invited professionals.
A separate place in the hierarchy is occupied by risk managers, who control the positions of rank-and-file employees and the overall balance of the company’s risks. Their task is to do everything possible so that the company does not make critical trading mistakes and does not go bankrupt. If this has happened, it means that the risk control specialists were not competent enough. Inside each organization there is a training center where experienced practitioners teach the basics of trading to the newly hired. And the last link is technical support where specialists develop software and write programs for trading robots, create their own trading platforms.
What trading strategies are used in proprietary trading?
Almost all of them, beginning with scalping, arbitrage, pair trading, volatility trading, and others. High-frequency trading based on algorithms helps to execute a large number of transactions in a short time, which is difficult or impossible to achieve with human efforts. Here is also used an investment approach, where company analysts develop a trading idea and traders then open positions in basic or derivative assets for various periods of time – from 2 to 12 months.
A prop trader can trade the company’s strategy or his own. Since one of the conditions for the existence of prop is the focus on a certain inefficiency, it is logical that the props prefer traders who trade their strategies. For this purpose, traders are trained and tested (for example, on a demo account) before they are given capital to be managed. If the trader still wants to trade their strategy, they need to coordinate it with the companies and convince the lead trader that it works.
Prop companies can trade many different strategies and combinations of strategies. Here are the most common ones:
- merger arbitrage;
- index arbitrage;
- volatility arbitrage;
- statistical arbitrage;
- financial analysis of a company’s condition;
- technical analysis;
- global macro trading.
Trading stock market, stocks are banned in my country. Can I access it via VPN?
Using the app (Trading stock market, stocks) if it is banned in your country is completely illegal. However, you can access it for special reasons, such as closing your account or getting content/money from the app. You can use a VPN from another country and access it. We strongly recommend that you do not use a VPN, as it can cause legal problems.
What is the best VPN to use for Stock Market Trading, Stocks?
If for some reason you want to access Trading Stock Market, Stocks using a VPN, you can try one of the several VPNs listed below. These are the best VPN services tested and used by millions of users around the world. They are also simple, fast and provide full support and security when you use them.
- ExpressVPN
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