Benefits Of Proprietary Trading Vs. Retail Trading

Give plenty of thought to what kind of trading you want to do and then who you should trade with. Do you want to put up $30,000 in a retail account to day trade and receive lesser leverage or a proprietary trading firm that allows you the ability to put up a fraction of that trading capital with far greater leverage?  A motto I live by is, it takes money to make money. Proprietary trading for me provides that added leverage and flexibility that retail accounts do not and offers me another “edge” but it is not for everyone.

Match Your Trading Style To Your Lifestyle Or You Will Not Be Able To Focus properly.

Your choice of trading style is important from a lifestyle perspective. Trading usually means you will be at your computer for several hours at a time. Longer term (swing) trading doesn’t require as much attention. As a rule, the shorter the time frames you trade the more intense the trading will be. Join a proprietary trading firm that allows you to trade when you feel like trading and not when they want you to. There are a couple of well known proprietary trading firms that accommodate and consider their traders needs before their own.

Select A Broker Or Proprietary Trading Firm That Allows You To Trade Your Style and Plan.

The type trading you choose to do will determine the type of broker to use. Day traders need high-speed direct access technology.

Use The Risk/Reward Trading Method.

Stock trading involves risk. Most people cause serious damage to their trading account before they learn how to trade. THIS IS INSANE PEOPLE!  Though it may not seem glamorous, education, risk management and practice are essential for successful trading. Find a firm that will help educate you as well as support your trading style.

Markets Go Up, But They Also Go Down Too.

Having a firm that allows you to short stock with little difficulty is extremely important. Before joining a proprietary firm, ask about their stock locate division. Don’t be shy, because if they are not able to offer you a large percentage of shortable stocks, then move on and find another firm that can. We must never self impose limitations on ourselves that are not beneficial to our trading plan.

Trade Stocks, Companies and Sectors You Understand.

Stock selection is a skill and  research is essential. Unless you are extremely skilled and know a lot about a lot of sectors, stay with what you know. Avoid big brokerage firms and mutual funds. Facts show that most of their trading “experts” end up losing your money and theirs. Find a proprietary trading firm that will offer you the opportunity to trade in a group. This is an edge you will love because 40 eyes are much better then 2. Work as a team

Know When To Exit A Trade.

Many traders proprietary or not focus on what and when to buy or short stocks, yet few consider the right time to exit. Unrealized profits become real, only when you convert them to cash. Don’t let your stock gains disappear due to broken disciplines. Plan ahead. Before you get in, always have an exit strategy in place.

Do You Have An Edge Proprietary Trading? 

I was taught over 20 years ago, by a very successful man and genius trader, never to get involved in a business that you have no edge in.

You must have a reliable edge to consistently make money trading. Proprietary trading allows you several edges that the average retail trader simply does not have. do you know what factors give you an edge? Be specific. If you aren’t sure, you probably don’t have an edge.

Invest In Good Stock Trading Education.

Surveys have show that 9 out of 10 investors/traders foolishly believe their chances of winning are “above average” yet more than 85% of them actually lose money. This is simply because they don’t have the specific skills needed to succeed.  If you think trading education is expensive, try trading without it. Good education and mentorship is worth their weight in GLD.

Surround Yourself With Successful Professional Proprietary Traders or Retail Traders.

My mentor also taught me to always surround yourself with success. As a proprietary trader I am able to meet, speak and interact with many traders in a day. If you are trading next to someone negative and who is losing money, get out of there and fast.  Success breeds success so why would anyone want to be around someone who only has negative things to say.  Find a way of making friends with winning and successful traders. Negativity is not welcome in my circle.

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