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Proprietary futures trading is a term used to describe the range of activities that constitute professional trading within a futures trading, financial management or investment banking firm. In the pure sense of the word, prop futures trading is where the individual uses the firms money to trade the markets. The trader is paid a salary or remuneration structure that comprises a base and/or profit share component. This is most common in an investment banking environment or company that uses traders to realize a return on its capital. Proprietary futures trading is widely practiced in the United States
and throughout Europe. Many new hybrid business models have evolved
whereby the trader can participate in proprietary day trading by
joining a firm that specializes in trading. These firms require
the trader to put up an upfront deposit, undertake a training program
and then commence trading with your seed stake and additional capital
backed by the firm. In the US, traders are required to comply with
any regulatory or compliance requirements. In some cases, this can
involve taking a course and obtaining the required licenses. The advantage to proprietary futures trading is the buying power
afforded by gaining access to capital. Trading firms are usually
well capitalized and traders can use the firms capital to realize
superior returns. In some cases the commission structures are also
attractive as part of group buying power negotiated by the firm.
Working in a group environment can also provide the opportunity
to network and acquire new knowledge and approaches to trading the
markets. There are different levels of training provided by these firms.
The less well managed companies do not provide a great deal of trader
support. In other companies, proprietary trader support can be provided
in the form of trading programs and access to mentoring or support
services. In some companies, new traders are inducted through a
comprehensive training program. This includes classroom instruction
and market practice via a simulator. Managers keep a watchful eye
on traders and monitor their progress. Examples of proprietary stock trading and prop futures trading firms include: Bright trading, Assent, ECHO Trade and Swift Trade. These companies operate predominantly in the United States. There are many other proprietary futures trading firms that operate throughout Europe and Asia. With global futures markets now a 24 hour trading reality, this industry is expected to grow in the years to come, facilitated by advances in technology and the movement of all exchanges to an electronic trading platform. Next Article: Foreign Stock Investing 
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