How Day Trading Firms can Make the Profit from other Companies

There has been a lot of rumors surrounding day trading firms, and what they actually entail. A common mistake that new traders are making is that they cannot tell the difference between a proprietary trading firm and an online (retail) broker. Moreover, many newcomers are making the mistake of comparing the brokers based on the overall cost of the products being sold. However, not all products are the same.

There are six key areas that trading has been divided into, and day trading firms could potentially benefit from all of them. The six areas help analyze the difference between a prop firm and an online broker. Every trader is different, and might place more emphasis on one category as the trader considers whether retail or prop is best for them. For example, with day traders, the way retail accounts are dealt with is the buying power is the lesser of the equity in the account, and is divided by .30. This means that 30% minimum global margin requirement for equities, or your SMA is multiplied by two. For traders, you must have at least $25000 in equity in order to complete more than three round trips in a rolling five business day period. Furthermore, with a prop firm, the buying power is determined by the firm you’re with and the risk capital that is put into it. Some traders might have the support by a firm, meaning the firm will take a portion of profits to compensate for the risk taken. This will actually work to the trader’s advantage, because they can trade a lot more capital that they would have access to in a retail account. Traders with less than $25000 are the main clients of prop firms, because they are able to trade without the worrying about the minimum equity requirements. This is because most proprietary firms are set up so that traders can trade sub accounts of the firm, but the firm leaves as one large account


Although this type of business dealing can be risky, there are several forms of trading with other companies, there are now reviews being posted online, in order to see which prop firm is best to work for. For example, Alpha 7 trading academy is receiving positive reviews, and is well-known for helping traders develop their risk management and trading skills. The Alpha 7 has one of the most comprehensive and respected propriety trading training program available by some of the world’s most profitable traders. Day trading firms would benefit from this model, because they would get the most out the firm they are with, and the capital being put into it. Another trading firm that got rave reviews is Bright Trading. It is one of the largest professional proprietary stock trading firm. It was formed in 1992 by two experienced traders, who wanted to provide the necessary tools for serious traders who want to succeed. Don Bright joined the team in 1995 to help expand the business and work with the trading education. One interesting fact is that all trades use the Firm’s capital to trade with, and they are given mutual access to the market as stock members. Bright trading offers this capital when it is needed for serious trading strategies. Once again, day trading would be good for this because they would be able to receive even more capital without worrying about the minimum equity requirements.

The third top rated day trading firm is Echotrade. This firm is a professional trading firm that is dedicated to helping serious off-floor traders. It was founded in 1999 by a group of experienced traders who believed the professional trading community needed more options. The goal was to become an industry leader by offering reliable software geared towards speed of execution, lower cost transactions and higher payouts. Echotrade also sets out to give a world-class level of customer service that is unmatched. Day trading firms can benefit from looking into other options, especially if they have less than $25000.

Although proprietary trading may seem like a daunting task, there are measures that will make this type of business dealing more secure. Day trading firms can profit more with training, as well as following certain measures in order to get the most out of it.

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