Discussion in 'Prop Firms' started by xtrader, Oct 20, 2003.
Let's warn our fellow traders with "pitfalls" to avoid at trading firms.
DON't hand over a deposit check until everything is set up for you.
I signed up with a LLC put together by ex-Worldco Traders(these guys are no longer trading btw).
I had a written commission and equipment "deal" in writing with them. When my license transferred over, the 19" LCDs I requested were replaced with 17" LCDs. I simply held onto my check until the 19"s showed up. It took over a month. THese guys were petty crooks.
Later, my commissions were mysteriously at .02 per share. They said it was a computer entry error. I had all my commissions adjusted. However, I was hit with a $1 ticket charge per trade. There was no ticket charge on my original agreement. They said it was a "well" known and understood practice. Later, I found out most other higher volume traders and the "principals" were NOT hit with a ticket charge.
I left this firm. They closed shop and some traders went back to Worldco and got "burned". I'm glad.
1. Don't put up or keep much capital at a pro firm (hopefully self-evident at this point )
2. Get the best deal as far as commissions, leverage, and bullets as you can (admittedly difficult if you have no track record but ask anyway).
3. Ask about risk management up front (specifically related to things like restricted stock lists... Worldco often restricted the most volatile stocks to senior traders only).
4. Go with your feeling. If it feels like a bucket shop when you visit, it probably is.
5. If they ever ask you to put up more capital, run!
6. Try to find out what the performance expectation is. For example, Worldco wanted to traders to generate at least $2000 per month in commission regularly but rarely told traders up front that was expected.
Look at a firm the way you look at a stock. If it don't look right, don't buy.
Here is another recommendation: In addition to getting a GOOD contract that puts everything in writing, let the other parties know that you are a pro, know what you are doing, and would look very un-favorably on any type of unprofessional business dealings. They will get the message. If they dont agree to a fair contract that details their responsibilities and your actions in the case of their failure to perform or if they then decide to walk away after your putting them on notice that your expect honorable behaviour and performance on their part then understand that they most likely had every intention of ripping you off.
it is good you are speaking out but why not name organization who burned you? where is head of orgasnization currently located
every other experience was (is) great
i wouldnt know where to start ...the place was bad news from top to bottom
besides the good points that have been already said:
if u have to go prop then
go with a well known, reputable firm with good remarks.
and i think it's important to remember that a prop firm is a brokerage firm... they are essentially there to assist u in your trading, and they get paid a commission by u to do so. so if they're not doing a good job for you then it's time to move on.
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