The problem of proprietary trading

Some time ago I wrote about the proprietary trading firms and how many of them were just simply scams that attract people with promises of future riches.

The proprietary firms supposedly look for traders with talent to hire them for the trading teams and generate supposed profits for the company.

It sounds very good.

The problem is that this kind of companies is involved in frequent trading so-called day trading, and it is there where the problem lies.

This is the real problem: there are no supposed proprietary traders making a living for their companies doing day trading.

What some proprietary firms do eventually is trying some sort of market making and dealing business, but for that they need traders and customers willing to trade or “learn”.

They end up developing “software”, systems, bonus in commissions, etcetera, and make a living out of those concepts, not because of their talented day trading techniques.

One of the things I noticed about this sector is the difficulty these companies have to maintain themselves alive after some time because most of them disappear.

To realize how difficult is to survive in this business we can visit a page where we could see many of the proprietary firms that were based in the United States and in Europe.

Well, the majority of firms do not exist anymore.

What is more, I wrote this article two years ago in the Spanish version of this blog and not surprisingly, some of the firms that had not disappeared have already gone, which means that the vast majority of proprietary firms that were alive 5 or 10 years ago are gone.

This is especial significant in the case of Europe.

These are the proprietary firms that were alive years ago that are close: Argotraders, Custom House Capital, Elite Derivatives, Enigma Trading Services, Global Exchange Trading, Heron Futures, London Capital Group, MTA Trade, Saxon Financials, Sigma Derivatives, TCA Markets, TraderHill, Traders Clearing Alliance, Trading Places, Triniti Financial, Turtle Futures, TXL Trading.

Prop trading companies in Europe opened 2 years ago (some of them have closed in these 2 years): Candlestick Trading Company, CFT Financials, Dubai Profesional Trading, Futes Group, GHF Financials, League Traders, Mercury Financial, MET Traders, Nevis Trading, OSTC, Propex Derivatives, Pyne Trading, Schneider Group, Trade Link.


Out of 30 initial companies only 14 were alive in 2015.

Of those that closed it would be good to know why.

For instance, after 2015 CFT Financials and Mercury Futures have closed.

As we can see the survival ratio is not very good.

Besides being a difficult sector, is also quite competitive.

I fear that the majority of traders who try to join those companies end up not being a professional day trader precisely.