Be careful when trading with prop's?

Discussion in 'Prop Firms' started by lojze, Jun 6, 2002.

  1. lojze

    lojze

    What for needs to be careful when dealing with prop's?

    Where are possible problems?




    Lojze
     
  2. The prop firm has poor risk management and one or a few traders blow out the firm. Then you being a member of the LLC will lose your capital contribution.
     
  3. This really is one of the biggest problems with some prop firms. Not just the risk management, but the lack of capital that does not belong to the traders (owners capital) to protect the traders from each other.

    As always, check all balance sheets to see that there is a big chunk of the owners money involved.

    Don
     
  4. lojze

    lojze

    Hi Don,

    And what's situation with your company?


    Lojze
     
  5. Since you asked, we give all of our traders full financial disclosure, and guarntee a "minimum" of $10Million of the owners money at all times. It is actually several times that, but we keep the minimum at $10Mil.

    Don
     
  6. bone

    bone ET Sponsor

    Insist that you have your own account number at the firm, and specify that your funds are held as "segregated U.S. customer".

    I can't go into all of the details, but these two items are huge. Just ask the guys who traded at Griffin.
     
  7. lojze

    lojze

    Hi Bone,


    What means "segregated U.S. customer?"

    And, what was wrong with Griffin?


    Lojze



    06-07-02 06:07 PM

    Insist that you have your own account number at the firm, and specify that your funds are held as "segregated U.S. customer".

    I can't go into all of the details, but these two items are huge. Just ask the guys who traded at Griffin.
     
  8. None of this applies to professional, proprietary firms. Each trader becomes an actual partner in the firm, with all the benefits included. You are way past being a "customer" of a brokerage firm.

    Don
     
  9. bone

    bone ET Sponsor

    I call B.S. on you, Don Bright. I have personal friends who have gotten blown out by rogues at prop trading firms - namely, Griffin.
    It does indeed apply.

    At least get on with a prop firm that pays out on a credit balance monthly or at the most quarterly. There are firms in Chicago that hold credit balances until the end of the year - and you have to beg for a minimal "draw" against that balance.
     
  10. No need to call BS on this, I am in total agreement about the possibility and even liklehood (with some firms) of having your money at extreme risk. My point was simply that most prop firms don't have "customers" or "segregated" accounts...that is all I meant by my statement.....I agree completely!!

    Don
     
    #10     Jun 8, 2002