What is haircut? - Trading-Lab

rookie · #1 08-17-2007, 04:34 PM

I've read on a proprietary trading firm membership paperwork that they charge haircut fees. What are exactly these haircut fees and how do I incur them? Tnx

Alchemist · #2 08-20-2007, 07:00 PM

put it simply, a haircut is a "risk charge". Haircut is what proprietary firms will charge you to use their capital OVER a certain number of times your capital deposit on OVERNIGHT positions. It is NOT applied to intraday trading.

For example, you have $10K in your account and are allowed to trade 10x that, which is $100K. if your agreement says you will be charged haircut over 3x, that means you will be charged interest fees on anything over $30k worth of stocks or whatever you keep overnight.

ManhattanTrader · #3 08-21-2007, 07:51 PM

it's worth adding that haircut fees vary from different proprietary firms. Some charge different haircut fees based on how the risk capital is used i.e. the trading strategy you employ - risk arbitrage, pair trading, etc

rookie · #4 09-06-2007, 06:55 PM

thanks guys for you definition of what haircut means.

Alchemist · #5 09-20-2007, 02:00 PM

you're welcome. You may also want to check out my latest article on becoming a proprietary trader at http://www.trading-lab.com/forums/so...ader-t133.html

rookie · #6 10-16-2007, 02:33 PM

thanks alchemist, I read that article and liked it very much

Leth · #7 10-16-2007, 03:13 PM

i paid $30 bux for a haircut once (more than once actually)...it was highway robbery. i've since learned to keep my hair extremely short so i only have to cut it 1 or 2 times per month. this way I dont end up having many bad hair days and too much out of pocket expense.

p.s. i now only pay $12 bux per cut

p.p.s. in case anyone is wondering, this is an analogy

ProTrader · #8 10-17-2007, 03:32 PM

ahahah

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#1 08-17-2007, 04:34 PM
rookie Member Join Date: Jul 2007 Posts: 86	What is haircut? I've read on a proprietary trading firm membership paperwork that they charge haircut fees. What are exactly these haircut fees and how do I incur them? Tnx

#2 08-20-2007, 07:00 PM
Alchemist founder of Trading-Lab Join Date: May 2007 Location: New York, NY Posts: 296	put it simply, a haircut is a "risk charge". Haircut is what proprietary firms will charge you to use their capital OVER a certain number of times your capital deposit on OVERNIGHT positions. It is NOT applied to intraday trading. For example, you have $10K in your account and are allowed to trade 10x that, which is $100K. if your agreement says you will be charged haircut over 3x, that means you will be charged interest fees on anything over $30k worth of stocks or whatever you keep overnight. __________________ Happy Trading!

#3 08-21-2007, 07:51 PM
ManhattanTrader Member Join Date: Jun 2007 Posts: 45	it's worth adding that haircut fees vary from different proprietary firms. Some charge different haircut fees based on how the risk capital is used i.e. the trading strategy you employ - risk arbitrage, pair trading, etc

#4 09-06-2007, 06:55 PM
rookie Member Join Date: Jul 2007 Posts: 86	thanks guys for you definition of what haircut means.

#5 09-20-2007, 02:00 PM
Alchemist founder of Trading-Lab Join Date: May 2007 Location: New York, NY Posts: 296	you're welcome. You may also want to check out my latest article on becoming a proprietary trader at http://www.trading-lab.com/forums/so...ader-t133.html __________________ Happy Trading!

#6 10-16-2007, 02:33 PM
rookie Member Join Date: Jul 2007 Posts: 86	thanks alchemist, I read that article and liked it very much

#7 10-16-2007, 03:13 PM
Leth Super Moderator Join Date: Oct 2007 Posts: 621	i paid $30 bux for a haircut once (more than once actually)...it was highway robbery. i've since learned to keep my hair extremely short so i only have to cut it 1 or 2 times per month. this way I dont end up having many bad hair days and too much out of pocket expense. p.s. i now only pay $12 bux per cut p.p.s. in case anyone is wondering, this is an analogy Last edited by Leth : 10-16-2007 at 07:59 PM.

#8 10-17-2007, 03:32 PM
ProTrader Senior Member Join Date: Jun 2007 Posts: 109	ahahah