Echotrade: is my capital 'at risk?'

Discussion in 'Prop Firms' started by deadreader, Mar 13, 2003.

  1. Would my initial capital contribution be 'at risk' if several or many traders at Echotrade got blown-out? That is to say, if Echotrade goes bankrupt, am I going to lose my capital contribution even though I had nothing to do with the losing trades?

    Also, can anyone here comment on whether they think Echotrade is going to even be around in its current form 12 months from now. Is it a stable, well-managed, financially sound firm?

    Thanks in advance.
  2. Trajan


    Yes, but, maybe not all of it..
  3. EchoTrade is one of the leaders in the industry, they will be around for a long time.
  4. rs7


    Not to single out Echo Trade, but being a "leader in the industry" has not meant a whole lot over the years.

    I think EF Hutton was "a leader in the industry". If not for Shearson coming to the recue, they would have gone under. And if I remember correctly, Shearson had just been aquired by American Express very shortly before. Along with Lehman Brothers. Dean Witter? Sears bought 'em before they got taken by Morgan Stanley. What ever became of Loeb Rhodes? Too many to think about. The name changes can get me dizzy.

    This has happened to too many firms to even think about.

    Other than Merrill Lynch, I cannot think of a single Wall Street firm (wirehouse) that has not merged with another, been aquired by another, or in some way changed as a company over the past 15 years. I imagine there are some regional firms that managed to stay intact. Not sure. I have not heard the name Hannifen Imhoff lately. AG Edwards? There must be some. But to my knowledge (limited to my feeble ability to remember much these days), not a single national firm has remained intact as it was. (other than Merrill).

    These were not day trading firms. There have been quite a number of day trading firms to outright fail.

    What matters is if your account is insured.

  5. Risk / reward. Yes, in theory your $ is at risk with echo, bright(no matter what he may say) or any other LLC. And in return for that risk you get increased leverage, bullets, strategy etc.

    I've been with Echotrade for about 1 yr and at this point I feel confident that they have a good risk management department. In fact I've even had some experience with them. One day I mistakenly went way over leveraged in a single position. My phone was ringing in less than 60 seconds. The risk manager was very professional simply saying, "Do you know you have this position here and it's past your exposure limits?" And we took care of the issue.

    Is it possible that there are people taking too much risk? Well, that might happen anywhere. But it's a risk I'm willing to take with my "risk capital".

    Happy Trading.:D
  6. CalTrader

    CalTrader Guest

    Yes, depending upon the firm you could lose some or all of your capital - although I think this is unlikely at major firms.

    If the firm has very good first line management and excellent internal compliance systems and a good financial history over time then the odds are that they have no more chance than any other firm of going under: If you really are worried ask to look at their financials for the last 12 -24 months ..... although you might not get much unless you are bringing $'s to the table ...

    If you ask the right questions to the right people at echotrade (or any other similar firm) you should be able to get an idea .. .Key points are how they manage traders and how they handle compliance, and how good their automated compliance systems are ....
  7. It's really very must have copies of the Firm's balance sheets....and see that they have placed $millions of the owners capital at risk between any of the traders.

    Yes, Uptick, I have never said that our traders are never at risk, it's simply that we insulate them better than most firms. The balance sheets of many "leading" firms may show a very small amount of "owner's capital" between traders. I've seen many of them.

    Never join any firm, or go into a partnership with anyone unless you see and understand the financials.

    Tune in today to the chat session, and we can go over this some more if you like. Invite Vito or someone from PAX to comment on EchoTrade/VanBuren's position on all of this.

  8. It's very simple to answer:

    is your money in an account with YOUR name on it at the CLEARING FIRM..?

    ...If not your money is at big risk to 1) Blow ups 2) company closing 3) the owner of the LLC or company disappearing to the Bahamas' with a boat load of traders cash......

    I am not saying that they would do that but is is a realization.
  9. mjt


    I had some discussions with another trader on this website, and he mentioned that he was considering trading with Echotrade at one point, but there was some way in which the contract was worded that made him think his capital was at risk more than with some of the other pro firms. I still haven't been able to find the exact phrasing he was referring to...
  10. Anytime you trade with less then 25k and try to skirt the PDT rules you are going to be at put it plain:

    If you have 10k...and a firm tells you they will give you 50k or 100k in buying assured your money is NOT in your name at the clearing is grouped together in a larger account (LLC) comoingled with other people money....I know nothing about Echo, but I would reccomend that if you are going to go this route, listen to ol' Don and use a firm that is large and reputable....Echo may be so please don't think I am taking a shot at them.
    #10     Mar 13, 2003