Why companies recruit stock trader to trade on their behalf?

#1
Why companies recruit stock trader to trade on their behalf?
Capstone securities pune is one such company who recruit employees and make them to trade US market on their behalf. Initailly amount is given by the company ( say $1000) there is fixed salary per month for traders plus a share from profit what they earned for company. But if there is loss then company bears it? What kind of business model is this.
Does anyone heard something like this?
 
#2
This is very common among developed markets such as US/EU. No body wants to risk their own capital ( which they also might not have ). Also trading floor offers sophisticated risk management and sticky capital :)
 

ash.paul

Active Member
#3
Why companies recruit stock trader to trade on their behalf?
Capstone securities pune is one such company who recruit employees and make them to trade US market on their behalf. Initailly amount is given by the company ( say $1000) there is fixed salary per month for traders plus a share from profit what they earned for company. But if there is loss then company bears it? What kind of business model is this.
Does anyone heard something like this?
''To diversify the risk generated by liquidity issues''.

Dont know about Capstone Securities but in general big funds face problems when they itself become the market. Imagine if you are capable of moving the market when you enter and relatively low liquidity in the overall market makes scarcity of order fill. Therby lack of bids cause market to fall or vice versa.
In general % profit return starts diminishing with bigger a/c size relative to your market. Diversifying/splitting your fund into many differnt traders and different strategies improves effeciency.