What is Prop Trading
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Questions and Answers

What is proprietary trading?

  • Trading financial instruments using the firm's own capital (correct)
  • Trading financial instruments using clients' money
  • Trading only stocks
  • Trading without any capital

    • What is a key principle of prop trading?

  • Avoiding all risks
  • Using only fundamental analysis
  • Efficient capital allocation (correct)
  • Trading without a plan

    • What advantage does prop trading offer regarding capital?

  • Limited personal funds
  • Access to the firm's capital (correct)
  • No need for any capital
  • Only small positions allowed

    • What is essential for managing risk in prop trading?

    <p>Setting strict risk limits and using stop-loss orders</p> Signup and view all the answers

    What does leverage in prop trading do?

    <p>Amplifies positions, increasing potential returns</p> Signup and view all the answers

    What is a benefit of prop trading regarding tools and technology?

    <p>Access to state-of-the-art trading platforms and analytical tools</p> Signup and view all the answers

    What kind of training do new prop traders often receive?

    <p>Extensive training and mentorship from experienced professionals</p> Signup and view all the answers

    What is profit sharing in prop trading?

    <p>Traders earn a percentage of the profits they generate</p> Signup and view all the answers

    Which strategy involves making numerous small trades to capture minor price movements?

    <p>Scalping</p> Signup and view all the answers

    What is event-driven trading?

    <p>Making trades based on news events, earnings reports, or other significant events</p> Signup and view all the answers

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