Icarus, Same as you, just trying to help people make a more informed choice. That is pretty cool about Penson's private insurance, I didn't know about that. I wish I had an account that was bigger than $24.5 mil, if I ever do I'll let you know , I'll send a post in from Tahiti. What I said about LLC members, yes they are equity holders, but what I was trying to clarify is, while they are low on the totem pole, at least they are not dead last (Not implying that retail cutomers are). From what I know, they are second to last. The class A members (principals of the firm) being dead last. I like this at least because it puts pressure on the principals to make sure nothing goes wrong. In regards to why none of them disclose their financials, I guess I should point out that I have never seen anything in writing that says this, just what I heard someone else say once. I would think if it was wrong and they could disclose, at least one firm would. Thanks for your insight, you cleared up a few things for me as well. -Jim
Great Post Jim! However, a few points I disagree with. Some were covered by Icarus. You say, "Now, lets compare that to a regular non-pro firm. From what I understand, anyone can open one of these firms with $5,000 in equity. $5,000!!! That's why on the internet every Tom, Dick, and Harry is trying to promote one of the countless firms that has Realtick and clears Soutwest or Penson. Where is there more financial security, in $5000 or $1,500,000? That is absolutely wrong! Minimum cap requirement is the same for every B/D, and your money is with the clearing firm, which normally has a huge bankroll. As to the 100K SIPC ins. Most direct access brokers have your cash balance in money market, which will be insured up to 24.5 Mil as Icarus suggested. Another point you made, "Harbor was an accident waiting to happen. Ask anyone who traded there what the atmosphere was like at that firm." This is the same language used by the TV station to describe the Atlanta shooting. Accident waiting to happen. Daytrader loses his money and shoots everyone in office, etc., etc., Whenever there is a lot of money on the line, anything can happen. Echo is no different than Harbor in the risk that you could (and you could) lose all your money without making one losing trade. That is a fact. Now let's go back to your question. Would I rather lose $50,000 or wait a year to get my money back from SIPC. Well, I'd rather wait than lose it completely. Here is another one for you. The percentage of prop firms going bust is much higher than the non prop firms who go bust. And that is a fact! How much is a good night sleep worth to you? As to me, I like to sleep well at night. I'd be very worried having my money with someone who can lose it all for me. Fraud and Wall Street are very close. Who says that any of these LLCs doesn't serve as a money laundering service for the mob? Do you see what I am saying? You give your money to someone who can lose it for you. You are a partner in a business that can fail. To each his own risk management and comfort level rules. In my case, the risk is not worth the reward. You give all the traders in the firm 10 to 1 leverage and God knows what happens in the market that day, a major halt and 50% market crash. You can lose all you money even if you were short. In conclusion, it all comes down to sleeping well at night. I will bet that those who traded at Harbor did not see it coming. In fact they saw it the very same way that you do now. You ask how I know this, well, let's just say that I do. The rest of the bull that is told about them by the industry is nothing more than a sales pitch. Bill
Trader J, Or anyone else trading with Echo. I have read all the posts on this thread with great interest and have also learned much about prop vs. non-prop trading. I have traded both but with looming changes and improvements to off-floor prop trading technology, it is worth re-visiting. My question to you Echo traders is simply which trading platform are you trading with? I visited their site for the first time and they indicate that "by far" the "Echotrader is their most popular platform. But in looking at the screen shots I noted that Echotrader is simply the VTS Front End platform private labeled for Echo! This platfrom is the biggest POS I have ever had the misfortune of trading on! I would not trade on it if the commissions were zero cents per share.....seriously! I know no one could make $50,000 a month on VTS unless trading huge size and position/swinging as one cannot trade aggressively (ie high # trades per day)with its POS order entry capability. So which one are you guys using as I did not recognize the First Alert or PEACE systems? Thanks for the insights.
Well in my situation, I trade with Worldco, I started with $1000 and lost $4500 before I turned it around (some traders go into firm capital by as much as $20K+ before they turn it around). Half of each one of my checks goes into my capital account until I reach 35K, which is my money and built from firm capital anyway. I have a 94% payout and IB equivalent of commission rates, 4 monitors, bullets . . . Worldco is self-clearing and with 500+ traders, branches all over the place, that is stability. With the exception of unforeseen legal issues this firm will be around for a long time. Although if you are already trading profitably Echo is certainly a more attractive choice. I think they provide better equipment / software, very competitive commission rates, nice rebates, and 100% payout. I talked to a few traders there online and I visited their web site and I definitely like the way they do things. Certainly the number one firm on my list to check out if I ever leave Worldco. For me it is the toss-up between the ability to go into firm capital and the appreciation of Worldco giving me a chance to succeed in this business to begin with versus the 6% extra payout, the rebate, the $25 cap (trade 10K shares at Worldco at .75 per share which is lowest commission possible it is $75, at Echo it will not exceed $25) and in my opinion better software . . . FOR DAY TRADERS OF ALL STYLES: For anyone who CAN trade at a professional firm like Worldco and NOT giving it a shot, if you are just starting out as a newbie and especially if you have less than 25K, is ABSOLUTELY STUPID . . . For anyone who makes less than 100-250K a year (if you read my July thread, I consider that to be the "you have truly arrived" stage of trading, and no I am not there yet, hope I will be when the year is done), and CAN trade at a professional firm like Echo, and NOT giving it a shot, it ABSOLUTELY IGNORANT. If you are making 250-500K a year, and seem to hit a ceiling in your income potential, give bullets a try, you won't be disappointed. There are too many pros and too few cons of being a prop. trader, there are very very very very few prop. traders who would switch back to retail trading, I personally don't know any (unless they changed trading vehicles, or major life style changes, that's a different story), do you? There are many retail traders from this board thinking about switching to prop, very few (if any) reverse examples, don't say the grape is sour until you tasted it.
>For anyone who CAN trade at a professional >firm like Worldco and NOT giving it a shot, ... {snip} ABSOLUTELY STUPID . . . {snip} ABSOLUTELY IGNORANT. Well, I can see that that hatch still remains pretty tightly closed. At the moment, the periscope may even be retracted. JB PS: Perhaps he told us somewhere, but I'm new here so I'm just gonna guess...Hitman is in his twenties. In my twenties I always thought there was only one non-stupid, non-ignorant way to do things as well. Age is a wonderful thing -- I wouldn't want to go back to twenty for nothing (well, I'd take the body...I'd save my knees the second time around) JB
Turok: I am 21. Instead of trying to act like some senior citizen about the good old days, give me one SOLID argument on my statement below: For anyone who CAN trade at a professional firm like Worldco and NOT giving it a shot, if you are just starting out as a newbie and especially if you have less than 25K, is ABSOLUTELY STUPID . . . Yes, it is the ONLY way to go IF YOU HAVE THAT OPTION, give me any other way that is superior to this before you attack my argument.
lol, and how big is your unit I guess all those who traded at Harbor were SMART according to you. Is that a good enough argument? No need to reply. Bill
Scott, I feel the same way about Tim Zhu's crappy software as you do, but then again I feel that there are some posters here with financial interest in the prop firms who are pumping them, so I wouldn't expect them to agree with what we are saying. I know many who are in the business and their model right now is to agressively go after the under 25K trader because of the new rules. The discussion board here is just one way they are trying to do so. It is a very smart campaign, because this is their opportunity to get business away from the competition in a market that is very tight on supply of new traders. Anyhow, this is what I hear. Bill
I am very sure there are many retail brokers who blew up too and took its client's money with it, what's your point? Besides, at Worldco NONE OF YOUR MONEY IS ON THE LINE, that's right, NONE in the beginning. Even if for some unthinkable reason the firm blows up, what do you have to lose? By then you are probably way past your learning curve. Believe me, Worldco is a bigger operation than Harbor ever was, and they have been in business for 7 years, with traders lasting that long behind it. The pros far exceeds the cons, it is about showing people the best way to get started in this business. Most new traders on this board will probably fail miserably in their venture (myself included, as until I make 100-250K a year I won't consider myself truly arrived), there is no if's and why's about it, I am offering a solution with a much higher survival rate. Why grind it out in a small potato IB account when within six months at a prop. firm you can start playing with real money and real size? If you are already profitable? Why not go for bigger sizes and bullets? Both of them are essential to break into the higher income brackets in day trading? If you are already making more than half a million a year then that's a different story, but I would bet you would have got here a lot sooner had you started with a prop. firm.