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SgtSlottter
Registered: Aug 2011
Posts: 116 |
05-30-12 03:19 AM
http://www.sec.gov/divisions/marketreg/bdguide.htm
That is your guide to if they should be registered as a broker dealer. If they make money off of your trades - aka transaction based compensation (and putting money down has nothing to do with it) - than they should be registered with the commission. There isn't a securities attorney in this country that will disagree with that statement. And at .0035 they are making money off the transactions, so connect the dots.
if you've committed to 2 years in the business, spend the time and the money, take the test, find a registered firm (they're not all perfect either, but at least they're accountable to someone).
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traderchi128
Registered: Feb 2012
Posts: 341 |
05-30-12 04:06 AM
Quote from ksmetana:
Yeah, sounds really good.
They hold some of your profits to create an account that becomes equal to 3 times your largest 3 day drawdown. So they use your profits to manage their own risk. Clever...
This is how prop firms should be. Instead of ripping all their traders off, they should back them. Rather than make money off their failure, make money off their success.
You said they start you off trading very light as far as BP. How light are you talking about? I have heard a similar deal like this but the amount of size traded at the start was laughable.
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ScalperJoe
Registered: Mar 2010
Posts: 608 |
05-30-12 05:23 AM
Quote from ksmetana:
They say you do not need the licenses because you are trading their capital and they are taking all of the risk.
.0035 commission, ECN pass through to trader
I suppose they use commission to earn extra money off your profits.
If they're not marking up commissions, then it's possible you're trading a master account with an LTA (limited trading authority) agreement, either as an independent contractor or employee, and splitting the profits.
As Sgt Slotter pointed out, if they're marking up the commissions, then it's obviously a form of transaction based compensation, which according to the link, requires registration as a broker.
A firm can't have it both ways. Either they are marking up commissions, or they aren't.
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hitnrun
Registered: Sep 2011
Posts: 514 |
05-30-12 05:52 AM
it's only good if your profitable & if you can get a profit payout ?
take a shot & see what happens , your wasting valuable time just thinking about it
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operator
Registered: Mar 2008
Posts: 494 |
05-30-12 08:23 PM
Quote from traderchi128:
but the amount of size traded at the start was laughable.
What do you expect them to start a rookie out with 10MM? They are going "start" you with something small and as you do better they will increase your size. I see nothing wrong with that...
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ksmetana
Registered: May 2010
Posts: 507 |
05-31-12 01:40 AM
There is no training cost.
You are an independent contractor. They create a sub-account and you trade their capital.
They are charging you commissions on their own capital... maybe that is the catch?
If you lose, the commissions don't matter. If you win, the commissions eat into your profits, profits made with their money.
I don't know.
Every prop firm has a degree of shadiness, but some are bigger crooks than others.
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