Prop Shop


DEFINITION of 'Prop Shop'

A proprietary trading group that usually trades electronically at a physical facility. Prop shops supply their traders with the education and capital resources to engage in a large number of deals each day.


The term "prop" is derived from a shortened form of proprietary. Prop shops are very similar to trading arcades. Both offer facilities where local traders can engage in electronic transactions and have access to the latest trading technology. However, there is a distinct difference in the trading operations between the two facilities. In a trading arcade, traders will transact for their own accounts. Prop shop traders trade for the firm's account using the shop's capital. By using the capital resources of the prop shop, traders gain access to more leverage than they would with an individual account.

  1. Electronic Communication Network ...

    An electronic system that attempts to eliminate the role of a ...
  2. Multilateral Trading Facility - ...

    A trading system that facilitates the exchange of financial instruments ...
  3. Leverage

    1. The use of various financial instruments or borrowed capital, ...
  4. Broker

    1. An individual or firm that charges a fee or commission for ...
  5. Proprietary Trading

    When a firm trades for direct gain instead of commission dollars. ...
  6. Clowngrade

    An upgrade or downgrade of a security for reasons considered ...
Related Articles
  1. Forex Education

    Market Makers Vs. Electronic Communications Networks

    Learn the pros and cons of trading forex through these two types of brokers.
  2. Options & Futures

    Direct Access Trading Systems

    DATs can dramatically speed up order execution - find out how this system gives novice traders an edge.
  3. Options & Futures

    10 Tips For Choosing An Online Broker

    This important investment decision happens before you pick your first stock. Find out how to get it right.
  4. Trading Systems & Software

    The Global Electronic Stock Market

    The way trading is conducted is changing rapidly as exchanges turn toward automation.
  5. Retirement

    Electronic Trading Tutorial

    Learn about the systems that run the market. Topics include market makers, specialists, SuperDOT, ECNs, SOES, Level I, II, and III Access, and more.
  6. Professionals

    Career Advice: Stockbroker Vs. Financial Advisor

    Read a detailed comparison between life as a stockbroker versus a financial advisor; find out how the two are different and which one is best for you.
  7. Investing Basics

    Why Use a Discount Broker?

    A discount broker is a stockbroker that does not offer clients investment advice, but trades shares for a smaller commission than a full-service broker.
  8. Investing Basics

    What Is A Trading Account?

    A trading account enables an investor to buy and sell securities.
  9. Professionals

    Why Realtors Have Fiduciary Responsibilities

    Find out why real estate agents are considered to have a legal fiduciary responsibility to uphold the best interests of their clients.
  10. Investing Basics

    Understanding Brokerage Fees

    Agents charge brokerage fees for facilitating transactions between buyers and sellers.
  1. What is the interest rate offered on a typical margin account?

    Interest rates on margin accounts vary according to the size of the loan and the brokerage firm being used. Generally, interest ... Read Full Answer >>
  2. What is the cost of a share purchase?

    When investors purchase shares of stock, the price paid includes two components: the price of the stock and the fee charged ... Read Full Answer >>
  3. What is the difference between fee-based advisors and commission-based advisors?

    The difference between a fee-based adviser and a commission-based adviser is that the former collects a flat fee for investment ... Read Full Answer >>
  4. What is the difference between a custodian bank and a mutual fund custodian?

    Custodian banks and mutual fund custodians, commonly known as mutual fund corporations, perform very similar roles for different ... Read Full Answer >>
  5. How does an insurance broker make money?

    An insurance broker makes money off commissions from selling insurance to individuals or businesses. Most commissions are ... Read Full Answer >>
  6. What does the variance between the bid and ask price of a stock mean?

    The variance between a security's bid price and its ask price, also known as the bid-ask spread, represents the different ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  2. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  3. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  4. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
  5. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  6. Capitalized Cost

    An expense that is added to the cost basis of a fixed asset on a company's balance sheet. Capitalized Costs are incurred ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!