Important Things to Know About US Prop Trading in India

This is a matter of fact that apart from ordinary traders a huge number of organizations, businesses, and corporations too fiddle with daily stock market activity. And the reason for that is quite clear, they are quite aware of the financial instruments that can be used instead of the client's money to juggle profitable trades with them available in the market.

However to understand how US Stock Market Prop Trading in India is possible it is quite vital to understand prop trading beforehand. 

When a financial services company like a commercial bank, a broking business, an investment bank, or a hedge fund indulges in an act of trading and investing in the stock market it is known as "prop trading" or many times also called "proprietary trading." 

Or in other words, it would be quite apt to say that when a trader belonging to a financial institution, brokerage company, investment bank, hedge fund, or other liquidity source uses the firm's money or balance sheet to execute self-promoting financial transactions, that is also recognized as prop trading. So, the very definition of prop trading highlights the fact quite vehemently that prop trading is not just the client's money that is used for trading. It is the aggregate wealth at the disposal of various financial businesses and organizations to capitalize on their worth by carrying out bulk trading or high-frequency trading in the market. 

Various strategies and tactics are used by a prop trader to increase profits. As a professional art of trading in the financial market, it is now possible to get well-versed in Professional Trading in Mumbai or Delhi through a standalone trading desk like BearStreet. 

Some of the famous techniques used in prop trading are volatility arbitrage, index arbitrage, global macro trading, and merger arbitrage. Along with that to be precise enough in delivering clear-cut judgments there are also various high-tech and advanced tools and databases that prop traders have access to; for carrying out their act of trading or investing meticulously. 

What are Proprietary Trading desks alike? 

The main role of a prop trading desk is to act as buyer or seller in a situation when a client wants to trade a highly illiquid security amount or a large amount of single security. Juggling the roles, the desk initiates the client trade from the other side. 

Mainly all the trading desks work as an autonomous and responsible body. It acts responsibly on the part of managing a portion of the institution's financial revenues. Trading desks are pretty much viable to cover their clients from various potential risks. 

After Volcker's rule had come into being it used to be almost impossible for companies and organizations to take part in US prop trading directly from India. And things had even become more complicated after the great recession of 2008. But a Trading desk like BearStreet in an authentic manner has made it possible for various financial services-related organizations and businesses to take part in prop trading in the US market like NASDAQ and Dow Jones. 

What is Volcker's rule in prop trading affairs?

Based on the name of former US economist Paul Volcker, the Volcker rule is a crucial regulation. After the world economy had bent down to its knees in 2008 he stated from his studies that investment banks with their speculative investments were responsible for the financial crisis that further escalated the entire global economy and tore it down. 

Volcker's rule as a regulation prevents banks from indulging in some of the particular speculative transactions that exclude keeping in the loop their depositors to get benefited from them. It more focuses on the individual or customer importance other than the banks or organizations. It identifies prop trading as a tool for financial services only to pump their wealth without sharing any benefits with their customers.

How is prop trading different than hedge funds?

There is a thin line of difference between prop trading and hedge funding. In the matters of hedge funds, the fund managers or their associates act as the investors' agents. While as, in the case of prop trading the bank or the financial service agency or organization by itself maintains overall surveillance and remains in charge. 

One of the biggest advantages of prop trading is that companies can risk with high trade without being accountable to their clients, as they use their own money. As such they are equally responsible to reap huge gains or boring greater losses on the account of their discretion in initiating the trades in the financial market. 

Prop trading software is not something that a usual trader can have access to. It is solely utilized by prop trading organizations. In comparison to common retail traders, they utilize automated and algorithmic trading systems for high-frequency trading.