That's the reason why retail loses: Equities Prop Trader: Direct market access, realtime orderbook of every exchange, 200+ order routing options Equities Retailer: Zero commission, gets fleeced on every execution because his orders are sold to market makers to lean against Futures Prop Trader: Pays 1,5k/month for professional grade execution software with co-located algo/spreader functions. Pays exchange member rates and a couple of cents/contract in commissions. Has access to volume rebates Futures retail: trades one contract for 2$ half turn and uses software that runs on the client. Has 300ms latency one way. Guys, trading is a business. Once you're past the beginner stage you need to scale. And when you trade 5k contracts or 1m shares a week, you're not going anywhere with retail setups, period. Retail is fine as long as you trade part time, invest or dabble a little as a hobby. But in order to make this endevour worth your while you better eye north of 20k monthly profit and use professional tools. For everything else, just keep your day job
That's not true in all cases. There are several extremely profitable properties traders out there. Not all prop firms are arcades, pay yo play or pay to train. In fact, those firms are not real prop firms and they don't back traders. The reason for failure is that as Buffet said. People want to get rich quick, not get rich slowly. Its a craft and takes a long time. As a chisel is to a carpenter, money is to a trader. Most people blow up within 3 to 18 months, cry it off and move onto something else.
Legit prop (hired) is nowhere near 80% failure. Deposit prop failures probably exceed 90% as 1) the only difference between retail and deposit prop is leverage and 2) the public is retarded.
'Retail traders' consist of a large quantity of nutters just gambling in the markets without having a clue what they are doing.... Retail Traders who do online prop firm evaluations, will largely consist of people who have proven to themselves that they can trade profitably, at least under certain (favourable?) conditions...only to find that the ultra tight risk tolerances enforced by the prop firms, are something that they hadn't really bargained for, and can't deal with.......and as has already been pointed out, they aren't really expected to deal with it all. They are expected to largely hand over $$$'s in subscription and reset fees until they wisen the fk up. and 10%-20% are 'successful'? Yeah, perhaps that many get funded. But I suspect the number who then go on to extract meaningful capital out of their prop accounts, is considerably less.
if you can find edge as a retail trader, why can't you scale that up? what's wrong with <$20k/month? that's more than what most people make anyway. Are you primarily coming from the angle of day trading? because the time frames matter a lot. believe it or not, there are profitable retail traders, and plenty of them. I don't know why people here pretend they're the only ones who can win just because they have a bloomberg terminal.
Things are a little more complicated than you think. 1. <20/month: You're self employed. No health insurance no retirement provisions, when you're ill you can't work and don't make anything. On top of that you trade financial instruments, which is one of the most competitive environments out there. You can lose money and most important: the skillset is an absolute dead end. If you fail as a trader you may just ask for a job at McD because there is nothing about your skillset that is useful in any other job. Aiming lower than 20k/month is economical suicide. 2. edge as retail: All edges in trading fall victim to economics of scale eventually. Meaning you're either so good, that you reinvent yourself and your strategy every 6-12m just so you can stay profitable with your 2 lots. Or you trade bigger to enjoy economics of scale, too. Given the fact that the good retailers only average a ridiculously low return of 10-30% per year on 5-6 digit accounts I don't even want to talk about "edge" here. Most of it is just leveraged beta. 3. timeframe: timeframe doesn't matter at all. Trade frequency does. The higher it is, the smaller your edge can be but you rely on infrastructure and volume to make it work...which is not the forte of retail. The lower it is, the more edge you need to have and the more you're depending on research edge aka. you need to be smarter...just look at the average ET user. There are profitable retail traders but definitely not plenty of them. 90% of retail traders lose >90% of their account in 90 days and that's a fact. A bloomy doesn't make a good trader but being connected and having top tier infrastructure makes a significant difference.
Prop trading is probably no different than the retail traders. Stock market as a whole is a money making machine. But when people are driven by the greed and high leverage, they fail more than the average investors. The majority of the hedge fund manager probably underperformance vs the passive index fund managers.