Proprietary trader vs. retail trader

More from Dennis Dick's article - Staying a Step Ahead:

The world of day trading has had quite a shake-up in the past few years thanks to high frequency trading (HFT) by computers, which can respond in milliseconds and can process thousands of orders per second. It's been especially hard for retail traders vs. proprietary traders - The difference is the former is the average individual, while the latter is a firm, such as a large financial institution.

There are a number of reasons why retail traders have been struggling in this environment while proprietary traders are still enjoying some success. The list reads as follows:

1. Training;
2. Access to capital for trading strategies such as 'opening only' and 'market on close';
3. A different commission structure which allows for 'scaling' into or out of positions;
4. Direct market access which prevents flashing;
5. Access to information.

Proprietary traders enjoy a number of advantages over the retail trader, but the majority of proprietary traders struggle to make it in the HFT world; it's even harder for the retail trader.

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