I know a lot of firms in Chicago and none of them have you pay them back if you leave. That is a scam and would not be legal in the US. That is part of the risk of going prop. You give up a large percentage of profit in return they should "teach" you what they are doing and take some risk on you either through draw/salary and loses as you learn to trade. For most companies there are a lot of areas where they make money - commissions, desk fees, and percent of your profits. I don't know why a firm would want to keep you if you were not doing well and decided to leave. You can go in swinging and blow out your acct until they fire you.
I would walk away from them... GHCO are sickos, and deserve to be blown up (metaphorically, in terms of their financial assets, that is )...
I can help you with this. The information you offer is too little to figure out whether this is a good contract or not. Please provide the following info in a PM to me: 1. Is the salary drawn against your future earnings or is it a salary that does not have to be paid back? 2. How much is the salary? 3. Do you have a sample employment agreement that you can answer specific questions from? 4. Will they charge you commission on your trading or will you trade at cost? 5. What is required in order for you terminate the contract? This contract must be "at will". 6. Will there be a holdback on your profits until the contract is fulfilled? 7. What is your cut of profits? These are very important questions. GHCO has a reputation in Chicago for going after their traders even if they weren't happy there. I haven't had direct experience with this, but this is what I have been hearing from others. I guess they prefer to have a disgruntled trader using their risk rather than have a productive and happy trader. Typical prop mentality.
This is a topic that has been debated over and over on ET and all the posts I have read previously have advised against signing on these terms. I know people who have been sued for leaving the firm and trying to get out of the contract. Whether the contract is legal or not becomes irrelevant as the firm will tie you up in legal tape for a long period of time costing you thousands in lawyers fees which individuals find untenable. Further to this, if you do leave and they sue you your trading is then affected while the proceedings are taking place which is never good, we all know the cost of distractions. It's not just good traders who are shackled by this contract it's also traders who do "ok" and who would greatly benefit from switching to another firm with a better split under normal circumstances. Short answer: Don't sign.....
Everyone seems very negative, only thing positive to say is that i have heard the training at ghco is pretty good since they want you there for at least 4 years... Whereas other firms/shops will train you to do as many round turns as possible i've heard ghco traders do pretty well across the curve. Anyone correct me if i'm wrong as i have no experience with GHCO just stories and posts here. FGBS
You quoted question no. 4 in your message, so I'm assuming this is why you ask. GHCO is a futures prop and customer trading firm. You really can't make that much money on commissions in futures. It is not like equities or retail futures. To make money in futures prop, you will want to help your traders use as much leverage as possible to make money and then take a portion of their profits. Most futures props don't charge much more than cost for commissions (cost is exchange fees + clearing fees per contract). For example, for the YM contract, GHCO as a member of the CBOT only pays $0.10 per turn for exchange fees and another $0.10 per turn for clearing. There are no NFA fees because they are a member of the exchange. So their cost is only $0.20 per turn per contract. They might charge a customer 50 to 90 cents per turn plus desk fees to make some money. However, the real money for their prop guys is in the profit split after cost so it doesn't make sense to charge any commission because the split is net of cost. Many prop firms charge 10 or 20 cents to their traders as a commission. But if the trader is not profitable, then that commission is being paid by the firm to itself anyway. There is really no money there. The real money is comes in when the trader is profitable and can be given more leverage. Futures prop firms who charge large commissions to their own traders are penny wise and pound foolish, in my opinion. It makes more sense to support the trader as much as possible instead of sink him in a whole with high desk fees, service fees, commission, etc.