[lionrock88]

Climber and all you other finance gurus... need your help!

Are all prop trading firms hedge funds?

Are all hedge funds prop trading firms?

What's the difference?

[Football16]

This is a good definition:
A proprietary trader is one who is involved with transactions with a securities firm that affect the firm's accounts (or his own linked account within the firm) but not affecting the accounts of the firm's clients.

Strictly speaking a prop trading firm is one where you would trade the firm's capital (and only their money). But today the most common so-called "prop firms" are ones where you put up $5,000, $10,000 or more and then you trade using 10:1 intraday leverage.


http://www.tradersnarrative.com/list...firms-735.html

Check that site out for a list of companies that do prop trading. No, it is not hedge funds.

However, Bright Trading systems teach a way of trading pairs where you go long on one and short on the other and gradually enter a position as the market signals the trade is correct. A pair would be like Coke and Pepsi.

[PDLM]

Eh? A prop trader is one who trades with his employer's own money rather than with their clients'. It has no correlation with hedging or otherwise.

[climber07]

What PDLM said.

Prop trader uses the firm's capital to take positions which are either structured to expoit a specific "arbitrage" in the market or take a view on the future events.

Hedge Fund trader uses a pool of client's money to do the same. (Basically trying to maximize the return on that capital).

[KnowItAll]

To add to that ... most investment banks have their own proprietary desks that can take positions independently of what rest of the world is doing. There should be a firewall of sorts between the prop desk and the rest of the firm ...

They don't always invest in publicly traded stocks etc ... often take VC / private investment positions too.

[jgl]

Prop trading desks are typically where a lot of hedge fund traders come from.

[HKNewbie7007]

I see a lot of conflicting answers on this topic. I am a prop trader for over 6 years now and am still trading to this day through a proprietary account. If anyone has any questions they can PM me.

[KnowItAll]

Now would it not been helpful to just post what your version of the truth is?