Proprietary Trading (Prop Trading)

Trading conducted by a firm using its own capital rather than client funds, with profits and losses accruing directly to the firm. Before the 2010 Volcker Rule restricted proprietary trading at banks, Wall Street desks like Goldman Sachs' principal strategies group generated billions in prop trading profits. Today the term is more commonly associated with independent prop trading firms that recruit and train traders, often providing them with firm capital in exchange for a share of profits.