I, too, thought this was an important point when evaluating Bright and Echo. (IMHO), it isn't. You can join both firms for $25k (probably less with some negotiating and w/restrictions on trading). If you can't risk $25k, you don't need to be trading. While margin can help you make more money trading, it can also speed up your losses. If you sweep your account regularly, assuming you are profitable, then you tend to keep your risk around $25k. Company goes under, you lose what's in your account. Blow lots of money overnight, you lose what's in your account. The company eats the rest. You may not be trading w/them anymore, however your losses are limited. This isn't the case trading on margin w/a retail broker. Your butt is on the line unless you're behind a corp. or business entity. From my own checking (through a corporate screening firm which performs background checks on potential business partners) I can say that Bright has more money than Echo ... much more. However, Gene posted a message stating that upfront money is important in relation to risk. How much does Bright risk in ratio to their upfront money? How much does Echo risk in ratio to their upfront money? I wouldn't hold my breath on getting answers to these questions. Without the full information, Don's claim that they have $10 mil upfront is a good marketing slogan ONLY. No foundational conclusions can be drawn. Don told me to ask to see Echo's balance sheet. I did ... it's only available to LLC members. Understandable. Echo isn't trying to go head-to-head w/Bright ... that's clear when you step back and compare apples to apples. Until I realized this ... I was following right along with the intent of the marketing ploy ... if Bright has $10 mil and Echo won't show me their balance sheet, then the only conclusion is Bright is the way to go and Echo is hiding something. Gene, thanks for helping me see the light on this. I can take the SUCKER sign off my forehead and pass it on to someone else. It's important to check out everything. Funny thing is when I was at the Bright office in Feb. for the seminar, we were shown the trading performance of all traders for 2000. 2001 wasn't available as it wasn't "prepared" yet. Interesting ...
NO firm wants a single trader to bring down the entire firm. ANd nowadays NO firm will extend any trader any leeway in holding overnight positions beyond their individual account equity. If its $10M or $1M it won't make a difference. Be real!!! If you can't handle losing your deposit, you shouldn't be trading. And if per chance the firm folds and takes your deposit, then shit happens. The trading business is not like it used to be. However, prop firm owners are still the same. You will get straight answers from traders - NOT mgrs or owners.
Not true. I am carrying about 6 times my account equity in positions over the weekend. And because they are fully hedged and I have over $25k in my account, I could probably go 2 -3 x this amount without getting a call from risk management. At Echo, you can carry up to six times your equity overnight without paying any haircut charges.
rcreal - Thanks for the post but let me clarify a few things for the readers of the board. Terri Kirkland owns and operates a meeting planning business and has done so for over 4 years (Before I even joined ECHO.) Terri was contracted to handle all administrative, organizational, and billing for the ECHOtrade workshops. Terri earns less than a McDonald's employee for her time spent working the registration for the workshops. Good thing she has other clients that she works for. I wish we had 20 attendees a month, there might be some better traders out there as a result. (IMHO) Since majority of money generated by the workshops is used for travel, hotels, and auto rental for the speakers who generously give up their entire weekends to come in and speak and contribute. I know that some of the money was used for some tee times for Aly The other moneys are also dedicated to advertising in the IBD and other locations, which are not free, just ask IBD their rates. Not to downplay the profitability that workshops and seminars have the potential for... it is just not goal of the ECHO workshop, otherwise, we would not limit attendees to 15 per workshop (paid or unpaid), and not fly in speakers that are TRADERS with the firm. (Do not read this the wrong way - turning a profit is essential for the viability of the workshops, but nobody is buying vacation homes) If we were trying to make a living on workshops, the Brights and ECHO would not be charging $1,000 when their are similar workshops (but not as good IMHO) that you can spend 3,000.00 on. Are we underpriced or should we be trying to get rich on seminars? The workshops are a way for ECHOtrade and Bright to educate their traders as well as new ones. That is also why both workshops invite attendees back at no charge. (No edge or profit in that) I trade for a living. PERIOD. The traders that sit around me everyday trade for a living. The workshops are held at ECHO (and Bright for that matter if Don agrees with me) for 2 reasons: 1. Educate attendees about trading- pitfalls, styles,and strategies 2. Get people to know the firm and professional trading Every attendee walks away with more knowledge that he came in with here at ECHOtrade. Just ask any attendee and there are many here on this board, some active, some that just read the posts. I respect your opinion if you choose not to trade, but the "edge" is not in workshops and manager fees, (which are well earned by the way - ask any trader/manager). The "edge" is found consistently by traders in this office as well as many others across the country...otherwise we would not be trading. Long post and I apologize - There is so much Bright vs. ECHO bullcrap out there I encourage everyone to do their own due diligence and make a decision, Bright's way, ECHO's way, or rcreals way... Please feel free to email me if you have any other questions. Regards, JK
It's interesting that a couple of you do so much research about our inner-workings, yet are so bias in your comments that it outweighs any logic. The $$money in a firm reflects stability, very simply their ability to stay in business. We know the facts about Echo, and many other firms, and all we suggest is that they (echo) make those facts known to others. I like Robert Tharp, and Jeff Dewit is a good trader and all.....so my comments are directed to all firms. Our "edge" is having traders do well, make money and stay with us...simple as that. When I see the "sour grapes" brought up on this board it makes me smile and say to myself "here we go again." Regarding my other companies involvement, one was formed to assist in the development of Zap Power Systems and other clients I had been involved with. Investor Awareness was formed so that we could actually do these trading seminars, etc. Since we are heavily regulated, we thought it wise to diversify. And if anyone really thinks these schools are of a "cash cow' type of benefit to me or Bob, get real.....We also teach 5 week classes at the Community Colleges and stuff....I suppose we need the money. Anyway....trade wherever you like...just be happy and make money...and don't everyone be so negative all the time....I may have to call Hitman back for support!! Don
My thoughts exactly. We'll have to start keeping stats on how many times the same questions and same threads pop up here every 6 months or so. I don't think Bright or Echo should take any of the comments here personal, everyone knows they both have built good firms and those who don't like them don't have to trade there. I do not think either firm will lose much sleep over rcreal not wanting to trade with them. Speaking of things that repeat, anyone else sick of that stupid Aflac duck that pops up on CNBC 300 times a day?
I'm sorry, but sometimes the stuff that pops up here is just plain infuriating...and I sometimes succomb to it.... Jeff, Robert, Mr. Kirkland, et al....good luck!! Don
I have 964 Posts as I write this. I'd say a good 300 easily deal with Professional firms as I've talked about it pretty well on this site. Personally I think the board has seen the benefits /drawbacks of what they can be and can imagine they are rather sick of reading about Professional Firms. If you guys want to ask questions how about first reading this article. http://www.daytradersusa.com/tharp.html than just email them to me, Don and Gene or whoever.
I made this comment some time ago about size of a firm vs stability. I think that is what this thread is really about: Size of a firm vs risk management/stability Just a note on L.L.C. risk management . I know some traders think that firm capital equals stability , but capital alone does not tell the whole story. How many postions does the firm carry overnight? Does the firm have all their L.L.C. positions concentrated in a risk/arb position or carry alot of matched pairs? Would a smaller L.L.C. that carries limited overnight postions with less exposure be a better place to trade? Lets take two hypothetical firms: Firm : A 1000 traders 100 million in firm positions(matched pairs) 40 million of firm conversions or hedged positions 2,000,000 month overhead-high overhead Firm has leased space for 100 offices-owners must force traders to overtrade to stay in business because their commissions are so low-now .005 per share! If traders do not trade 100,000 shares a day , they are beaten!(just kidding). 20 million in owners class "A" L.L.C. capital Firm: B 130 traders 4 million in overnight positions 2 million in coversions or married puts synthetic call etc(hedged) 90,000 month overhead- 60% of traders are remote-low overhead 1 million in owners class "A" L.L.C. capital What firm would you consider to have less market risk ? I'd pick the smaller firm B, assuming they are at their risk management stations. Remember in trading, many times the bigger they are the harder they fall( though not always!). Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stockatrade.net