DISadvantages trading with a pro firm

Discussion in 'Prop Firms' started by mjt, Jun 12, 2001.

  1. mjt


    What disadvantages do you have if you trade with a professional firm like Echotrade? Here are the two I know about

    1) Can't use SOES
    2) Have to pay professional exchange fees (not sure if I'm correct about this one. If I am, do you have to pay these fees again if you use any third party analytics that require exchange fees?)

    Any others?
  2. Well let's see.

    No SIPC insurance

    Lack of SOES as you mentioned. Professional fee's (if you use a seperate quote provider) I suggest having a girlfriend pay for a seperate provider

    Having to own a Series 7

  3. Disadvantages:

    No SOES, until Supersoes

    Higher commission rates vs. customers.

    profit split with company

    And I feel this is the worst: No Freedom

    you get locked into contracts, some with real poor payout times, for example, getting a months pay spread out over the next two years to lock you into the "golden handcuffs".

    I feel that a customer at a pro shop is the way to go if you can come up with the money and have the balls to risk it. If not, prop is allright.


  4. Speedracer now this I have to address.

    MJT said such as Echotrade. Well I'm with Echo and will speak for them very quickly.

    Proprietary and Professional are two different things.
    Your thread above is about Proprietary.

    First I have no profit split with Echo. I keep my total profits and all my losses. I'm a profitable trader and prefer that.

    I have no contract with them. There are no golden handcuffs. I can leave the firm whenever I want with my money.

    My commissions are less than a penny per share.
  5. mjt


    Will SuperSOES eliminate the SOES disadvantage?
  6. Robert, I apologize, you are absolutely correct. I misread his thread. I thought it was disadvantages of proprietary firms.

    Disclaimer: I misread the thread title, and posted referring only to disadvantages of propriatary trading. I am sorry for my screw up and meant no ill effects on Echotrade.

    I know of few disadvantages of trading as a customer at a pro firm. Unless it is a firm that requires a series 7, IE echo, then you can also use SOES. I fell that trading as a customer at a pro firm is the best choice for anyone with the money to do so.
  7. tom_p



    >I know of few disadvantages of trading as a customer at a pro firm. Unless it is a firm that requires a series 7, IE echo, then you can also use SOES.

    >Higher commission rates vs. customers.

    By pro firm, I presume you mean a firm that has both prop and "private" traders, like Hold and many others. Are you saying that prop traders are paying higher commissions than private people at Hold?
  8. yes, prop traders pay more than customers of similar ability and trade volume. At certain breakpoints it gets close, but I know of no prop traders who are getting better rates than customers. The firm put up its capital and therfore risk, the prop pays more for the peace of mind of not losing his own money. If there are prop traders who are getting better rates than customers at the same volume, it is staying under raps. Props don't have the freedom to take their business elsewhere, customers do. Customers get better deals, and if you can do so, that is the way to go, IMHO.
  9. mjt


    Let's say you open an account with someone like Echotrade that requires a Series 7 exam. You're a professional trader, and you have to pay professional exchange fees. Does this stay with you even if you leave the firm? Would you be stuck paying pro exchange fees all your life because you once traded with a professional firm?
  10. I think the THE problem with prop firms is that they brainwash you into following a strategy which involves making excessive trades thereby filling their own pockets with YOUR dollars.

    Just ask some of these "prop" traders how many hundreds of trades they make on average every day.

    Ask a prop firm if they mind you doing 0-5 trades a day and watch their response;)

    #10     Jun 30, 2001