When you put a deposit into a prop firm, there is no ultimate guarantee that you'll be able to pull it out again..no "SIPC insurance" like in a retail account with Ameritrade or Interactive Brokers. It seems there are few regulations governing prop firms. So it's kind of on good faith when you put a deposit into a prop firm. Because of these realities, the main thing you can do to protect yourself, is to go with a firm that has a solid reputation.
Thanks for the answers, I had a feeling it was just that. Do elaborate on the topic a bit, I have a few more questions. Do the traders usually trade their own strategies or do they trade the firms strategies? The traders receive a salary, right? Like a performance fee based on their results? Is this a lucrative businessmodel? It seems to me that it would be very risky to let some other people trade your money. It all depends on getting the best traders to trade for you, doesn't it? What hinders these traders to just quit and trade their own money? Thanks!
Gee, Mav...you gotta take it easy, my heart your know, LOL (Sorry Mav, I "gotta do it again" LOL)...SIPC is limited to $100K or so. We guarantee $10Million of our money to protect our traders (actually we have several times that in the account as protection). "You need to check the balance sheets of the Firm you put your money with" - have someone review it for you. Safety is a concern, but your comfort level can rise dramtically if you do the due diligence. Don