Is this a fair deal?

Hi all,

I received an offer to trade firm's capital with no capital contribution. Sounds great, right? Hold on, hear the rest.
There are a few stipulations. Such as :

1) Employee must sign a 2 year non-compete agreement, and
2)Traders will receive 45% payout/net profits(and that's after losses are taking from previous months)

I'm looking for opinions/2cents on this issue. All responses are appreciated.

Thanks

 

if the training sucks. that is a horrible deal. if the training is good, that is a great deal. it is very hard to find good training and someone who is willing to train you.

secondly, the non-compete clause is not enforceable as far as i know. it is more of a scare tactic.

 

1) That 2 year non-compete will NEVER hold up in court.

2) How much are your commissions? They better be really low if you're only getting a 45% payout.

 

is that a 2 year contract you have to sign?

 

Avoid at all costs. Do not sign that non-compete. What they will do is charge you huge commissions (like .008 - .01 a share) and keep you as an indentured servant. You will learn a technique that will probably generate 40,000 shares a day or more after a few months. Their costs are around .0015 per share. By the time you realize how shafted you are on those rates and that horrible payout, you will be unable to leave for a competitive deal. Thus no bargaining power to get your commissions dropped. And believe me, the ability to take your moderate volume elsewhere is the ONLY incentitive they have to be competitive.


I am pretty sure I already know one of the shady firms already, since I've only heard of two that have tried that crap in the past, but who is it? And what commish did they offer?

 

Non competes are not worth the paper they are printed on ubless you develop a proprietary system while employed there.

The 45% is the best case scenario correct? If they want you to trade bond futures or cash bonds they are going to charge ridiculous fees and I would avoid it at all costs. The training isnt worth it considering you will be charged desk fees and commisions.

 

So say after a year into this contract the trader wants to leave and go to another prop firm and put up risk cap and hang his series 7/55 with the new firm and get a better deal

Would he be able to legally do so?

 

please clarify if the non compete is that you can not trade anywhere else, or that you can not open up your own shop

 

I agree the noncompete is probably not enforceable but you will have to disclose it to any probable employer. That is the problem.

 

It depends. The typical contract law says that for it to uphold in court, the contract must be reasonable. Typically, 2 years is not reasonable but lets say you were trading a system that the firm taught you and you left to trade that same system at another firm for a better deal. That would be a breach of contract because you are using what another firm taught you. If you went in, traded your own money, your own system and left for a better deal, that would not be a breach of contract.

Location also has to be reasonable. If the contract is 2 years, non-compete in New York City, that would more likely be upheld in court than non-compete in, say, the entire New England area.

His series 7/55 are irrelevant because those are standard, general exams required for every professional trader in which any firm could sponsor him for. He didn't gain any edge from one firm sponsoring him over another. Hopefully that makes sense.