Not sure if you were around in '99, but I was, and I remember when they passed the Series 7 rule. At the time everyone and their mother started daytrading, I mean some serious losers, and thousands of people that had no clue of what they were doing were walking into firms that gave leverage (there were a ton of them back then) and smoking their whole savings/retirement in weeks. Most firms were not doing any due diligence at all on the people they would let trade, and it was causing a major risk to stupid people's money. And as we know of the government, they always step in when stupid people lose money, such as all the subprime idiots buying mansions that our tax dollars are bailing out. So they came in and said if you want leverage on your money, take this test: A - to prove you are not completely an idiot, and B - so you have to work for it a little to get 'professional' trader leverage. Prove that you are worthy of it and will jump a hoop to get it. I am really glad they did it, the quality of the professional trader went way up after that and I think it did keep a lot of idiots out of the game that should never get in the game in the first place anyways. Think back to '99, daytrading was all over the news, everyone was talking about it, quitting their jobs to try it, and most people getting smoked very quickly on it. And there were a lot of smaller/newer firms that were bankrupting and taking the account holders' funds with them. The Series 7 was the best fix they could come up with quickly to make trading somewhat exclusive again and I think it worked great. I'll bet if Don chimes in on this he'll agree that it really only keeps out the riff-raff and the general quality of the traders now is higher since that rule was enacted. It kills me how some people think having to take that test is the worst thing in the world, it's really quite an easy test if you read the book. And you learn some great things along the way.
you completely missed the point of this. why did they not enforce this rule in 1998? or 97? or 96? u get it now? did congress pass a new law in 1999? NO... so therefore by what authority do they have to force us to get a 7? who decides these rules? who do they really represent? the 7 has nothing to do with trading.. it is a farce.. it is for brokers dealing with the public.
do you know how many 7 firms have gone belly up? LMAOOOOOOOO the magical 7 will not protect your funds.
the $500 does not benefit you at all. it is not insurance. with the LLC's you saved more in commission in a month.... not to mention many required very small deposits. therefore your risk was quite small. the 7 is not a piddly test. it is a major pain in the ass.
Good point...but there is a simple fact that many are missing. The rules came into effect ( and there are several more coming down the pike, trust me) becuase it was no longer just some person plunking down 10k of his onw risk capital and then getting blown out....Traders started using firm money and in some cases other peoples money. the 7 is a jok for a trader anyway...35% of it is options and 15% is muni bonds???? they should make them take the series 55 IMO
LOL LOL LOL... i mean no disrespect to Don, but if they were not forced to get their traders 7'd, he would celebrate. if he had a choice and so did the traders... how many would still get licensed? come on... you aren't even making sense now.
we called that time a BUBBLE! you speak of people losing their retirements? ummmm... with that type of money they can open an acct online and lose all they want... if they could go to a sub llc, they would put up a small amount and maybe have some pro's around them. regardless... a 7 doesn't prevent any of these horrors you are so afraid of. it sounds like you want a nanny state... you want the government to save people from themselves? sorry... i want freedom and no govt intervention. mark barton still would have killed people. he did it before he ever traded... don't blame trading on a guy being whacked. if firms want to do background checks.. fine. that does not require a non-related test to do.
Paying the $500 to the exchange each year means that the firm has to then disclose their leverage daily to the exchange, has to file monthly capital reports with exchange examiners, is subject to two regulatory audits a year, among other things. (I do my homework) Hmmmm, that versus saving $500 a year at an unregistered firm which is a couple of dudes with a website and my money, with no one looking over their shoulder to see what they do with my money, and no way to know if they have any other capital in the firm at all besides my money, no audits, no reporting requirements, and the risk that if they are caught they get shut down and what's left of my money goes into receivership for who knows how long. To me, that $500 is major insurance, the best $500 a year I spend. I found it amazingly simple and many other people have sid the same. I did however say it keeps out the riff-raff..... draw your own conclusions.
Did you post this before reading my one above it about 1999 or do you feel my essay on the subject did not fully address it?