I wholeheartedly agree with you, Don! Alot of sub-LLCs are backed by dubious firms that are not financially sound. When you join a sub-LLC, make sure that it is backed by an industry leading firm (like Momentum, which has a Wall Street respected management team and significant investment from Softbank Japan) or the few other firms like it (i.e., Heartland). Sub-LLCs don't open their own offices because it is cost prohibitive to do so. It is much cheaper to utilize the backing prop firm's real estate, T3 lines, Bloomberg terminals, PCs and other systems resources and administrative staff than to put up hundreds of thousands of dollars to get it done. The sharing of broker licenses is also another way of deferring start-up costs. If the sub-LLC grows large and profitable enough, THEN they can open up their own shop and invest in office space, systems, NASD licenses, etc. Sub-LLCs are a great, cost-effective path towards becoming a full proprietary shop or hedge fund (for the few that succeed).
Just another comment, why would the main company not simply open the offices themselves? These "franchises" have proven to be a bad deal (in Texas like Block etc.). Most of the "nasdaq" and "soes" houses have gone "bye bye"...but if you have do the same due diligence on the main firms as I described before, then you may be ok. Please don't get me wrong on this....I'm not being "territorial" or against other businesses at all....it simply has been a nightmare in the industry with all lawsuits, fines, penalties, closures, and all the rest from these little firms. Again, if anyone has questions about details, I can help on the phone, but I can't do it here. Good Luck...and remember, we (BT) want the industry to thrive ...with as many viable firms that can make it work!! Don *Check financials for all entities, no "introducing brokers". no subs if at all possible*...Heck you're better off remote with a good strong firm than in an office with a questionable one.*
Maybe some prop firms don't want to open additional shops because of the costs involved and also because the market is not that great. Is it wise to be opening branches left and right in a recessionary environment with a weak stock market? The only thing fueling this hypergrowth is hype, clever marketing and naive people who don't mind losing their shirts chasing the American dream! Once aspiring traders realize that some firms don't have monthly desk charges and oppressive education fees, how will all of these branches stay afloat? It's better to have fewer branches with a sound business model that places traders' interests ahead of the firm's desire to generate commissions at all costs. People won't stay ignorant forever. "A fool and his money are easily parted."
All I know is I would never join an sub-LLC. I had a friend a few years ago who loined a SOES shop (YES is was right in the middle of the bubble). After following this string I called him last night and asked him some more questions about that shop...it <was> a sub-llc, he got quit badly burned when he lost HIS money from one of the other traders blowing up and collapsing the firm (his story not mine), he himself lost about $45,000.00 and has never seen a dime back.......................I agree with you Don, it seems way to risky to join a sub-llc. OH as far as education cost GOldenArm, I know for a fact that ALL my ongoing educational cost's with Bright Trading are free for me, now that I paid for the initial week long training class, that is just ONE of many reasons I choose BT to trade with. Good traing all.... mrktwiz
You have actually supported my reasoning...the actual firms won't open shops themselves, but will "label" someone else, with little or no money, and allow them to use the same name without assuming any risk. I won't debate you any more on this, my intentions by pointing out the pitfalls are honorable, and we have to say "caveat emptor" at some point. If you're going to risk everything this way, at least take out every penny of profits, daily if need be. And, as always, good luck and make some money, we're all in this together!! Don "...and How did that Fool get his money in the First Place?"
Don, Would a example of a sub-LLC be Domestic Securities of Attain Services? Or Generic Trading and Carlin Group? Just curious. Axe
It seems Im the first one who seems to know the background of the guys who started Lions Trading. Im surprised Don has not heard of them because Im sure they must have shopped around when they left Worldco. There are many guys who is involved with that venture, Dave Perrault being the main guy who orchestarted their departure from Worldco. When he left, he took with him about 60 - 80 traders. The reasons he left is probably best left unsaid but he is a very savvy businessman and a great trader. Along with him, the top producers at the group are probably guys named Serge (not sure of last name) who can trade 100 open positions at once - serioously, Keith Espinoza (MOC specialist), Steve Chung - Bottom picker extraordinarre and Dave Perrault - another classic bottom picker. They all made between $1.5M - $2.5M (their takehome) in 2000. How do I know? Im not sure how I can convince anyone really...suffice it to say, I have no agenda and I have seen the numbers...and I have sat near all of them (except Serge). Some of the guys are nice..others are not...but I believe that once you turn into a businessman of running a daytrading company, its business first - nice guy second. They need to be judged based on their merits just like any other trading firm you would consider joining. Yes - Dave Perrualt is one of the nicest guys I have met in this business...but that was when he was a trader - not an owner of a company. Since he left Worldco, I know many of the traders broke off with him for many different reasons. Whether Lion's Group will be something better than the firms that came before it remains to be seen. It would be nice if somebody actually came through on their promises - big and small. Good luck to Johhny LoudCloud...You'll need it.
I'm not criticizing Bright Trading. They (and other similar firms, e.g. Carlin, Generic, Echo) are aligned with one kind of business model and other prop firms (Momentum, Hold Bros., Heartland, Sonic) subscribe to another. The marketplace will determine which model prospers in the long run. If you're happy with your experience at Bright, then more power to you and I wish you the best! I'm just trying to let people know that there are other options out there. As for your friend who lost his shirt at a sub-LLC, there is a concept out there called RISK MANAGEMENT. Traders should not go unmonitored (no matter how seasoned they are) if they are trading firm capital. At the first sign of trouble, someone should be on their backs to lighten up or exit their positions. Sometimes the "best" traders in the world fall victim to their egos and it's up to management to make sure they don't self-destruct because of stubborness. As I said before, some sub-LLCs are sound and some are not. Be sure to do your due diligence before you join one. "The fool obtained his money through honest means."
I hope I wasn't sounding like I was personally atacking you. I wasn't and I completely agree with you on the importance of RISK MANAGEMNT, this was another KEY reason I choose Bright Trading to join. I <again> talked to my friend, and asked him what form of "risk managment" was being used at the SOES house he was trading in....<GET THIS> I can't believe he said this, he said....and I quote....."what is Risk Managment?"....enough said..........I actually felt sorry for him. Back in the good old days, (he actually was trading in 98 & start of 99 before the BIG BLOWOUT occured), I KNOW there was at least 20 - 30 daytrading shops here in Silicon Valley/San Jose area , and their was one here in Santa Cruz where I live. There isn't one left that I know of. It's possible that there are some prop firms locally but I just don;t know of any. HEY, if anyone knows of any proprietary trading firms with offices in San Jose, Santa Clara, Sunnyvale, South Pennisula (i.e.Palo Alto, Redwood City) area of California, would you please PM me and let me know of them, thank you. Take care Goldenarm.......no offense meant. Good trading all..... mrktwiz
Ah ha! So it seems I was correct in my assessment that there are several people walking around at Lionâs Group who possess the demeanor of millionaires. DayTraderNYC has confirmed my suspicion that I will be surrounded with talent. If I am unable to make a decent living in an environment surrounded by traders of this caliber, then I doubt I would be able to do so trading anywhere. DayTraderNYCâs comments only solidify my sentiments that I went with the right firm. Now, if only I can be this prescient at picking the right stocks to trade. Thanks DayTrader for wishing me luck, as I know I will need it. Where are you currently trading Mr. DayTrader? I know I may regret asking the following question, but information is the key to success: Why did you choose not to trade with LGT? I look forward to my first day of trading, which I expect to be within the next month (after I pass my Series 55). I will share my impressions and experiences as soon as possible. Thanks for your input and warnings DayTraderNYC. Don, thanks again for your helpful comments too.