Looking for a Proprietary Firm...

Discussion in 'Prop Firms' started by Julian, Sep 20, 2001.

  1. Julian


    Anyone know of any firms in the Minneapolis/St. Paul MN area?

    Or any firms that allow trading remotely?

    Very dedicated and disciplined trader, but not enough capital to trade.

    any ideas would be appreciated


  2. Interesting article this month in Active Trader on prop firms. Basically it warns you against "the catch" at prop firms . It reminds you not to buy into the hypes.
  3. To review that article........

    They talk about a firm that charges $25,000 a month in expenses?

    From margin interest, desk fee's, training, trading expenses?, and than takes 20% of your gains?

    Which firm is the article writer talking about? Hitman has summarized that WorldCO doesn't have fee's near that range?? Echo doesn't, Bright doesn't , Schonfeld doesn't, Stocktrade.net, ETG doesn't??......and I'm not as familair with some of the others but am very sure they don't.

    If the article had facts behind it would a trader really stay as such a firm when the other LLC's don't have such high fee's. Competition would have them pummeled to the ground.

    Would Hitman still be at ETG for over a year if that was true, me at Echo, Fletch and a few others at the Bright offices if the fee's were that restrictive? I think Gene can say he has traders who have been at his firm for quite some time.

    The article doesn't mention any firms that he is saying this happens to. I wish he would though. Maybe he is talking about some of the retail trading offices that are falling apart.

  4. vvv


    hmm, they do not claim in the article that a firm would charge $25,000 a month in expenses.

    for an excerpt of the article that however contains the salient points.

  5. Bryan Roberts

    Bryan Roberts Guest

    tweak the payout percentage a little and you've got a firm that sounds very much like ETG.... i.e. at one time they had $2000 desk fee's, $19 ticket charges plus a penny a share, 50% payout and training video's that were painful to watch. then after all that they tried to keep starving trader's from taking withdrawals of their own money. some might argue that the desk fees were only $1000 a month, but since this amount was taken out of the net instead of the gross, a trader would have to gross $2000 a month after commission and ticket charges, just to break even. they also had a 2 year contract which they forbid people to make a copy of for themselves. so you see this is not exactly the same as the firm mentioned in the article, but i think the spirit of the article captures the ETG management mindset.
  6. jmi0493


    Yes ETG is probaly the WORST out there. They take total advantage of the young, excited trader thinking he's getting a good oppurtunity. There practices are so immoral and wrong they should be shut down. Nothing but a bunch of thieves and crooks with a con artist as a president and his daughter following in his footsteps. I hope they get what they deserve....
  7. For some reason your link VVV isn't working right now. NOt sure if website down or not.

    I'll try it in a few hours though.
    The quote I'm talking about is near the end of the article in the highlighted section.

    Maybe he was referring to ETG. They were being slammed here on the broker ratings till they complained to Baron and were taken down. That doesn't mean all firms are like that article.

  8. vvv


    i'll just paste it here:

    Active Trader magazine

    Read the fine print

    Some proprietary trading firms may give traders access to money, but not the ability to fully profit from it. Understanding the conditions of your agreement is crucial to your financial health.


    To some traders (and would-be traders), proprietary trading sounds like an ideal situation: limited risk, plenty of training and support, and the opportunity to trade the firm’s money while enjoying a share of the profits.

    Not all proprietary trading situations are created equal, however. Some proprietary trading arrangements are good opportunities, but others — because of potential tax pitfalls and other problems — are more trouble than they’re worth. Accordingly, traders need to understand all the details and carefully consider the substance of these arrangements before taking the proprietary-trading plunge.

    The pitch

    If you only have $25,000 to trade and don’t think that’s enough to do it successfully, you may be enticed by a firm that will take your $25,000 and give you a chance to trade as much as $100,000 of its capital. You are further led to believe the firm will pay for training, provide space on its trading desk alongside professional traders, and supply you with equipment and services critical to success.

    This firm will also be your broker-dealer and you will pay it (or its affiliate) brokerage commissions. However, this doesn’t sound like a problem because the firm offers direct-access trading with sophisticated analysis tools and a competitive fee structure.

    You are hooked and sign the contract. You don’t bother to read the fine print, but after all, why should you care? The firm trusts you with its money and pays for your training, salary and expenses.

    It is crucial that traders fully read a proprietary trading contract before signing up and, if necessary, hire an accountant or lawyer to clarify the details.

    The catch

    The reality of an arrangement such as this can be far different from what traders may have believed they were getting into.

    What sometimes happens is a convoluted arrangement whereby the trader opens an interest-bearing, direct-access trading account with $25,000 of his or her own money — risking his or her own capital rather than trading a firm’s money. The proprietary trading firm sets up a separate account for the trader with $100,000 or more of trading capital. The trader’s name is on this account, but technically, it belongs to the firm.

    All expenses for training, equipment, rent and other services provided by the firm are charged to the sub-trading account. In addition, the trader’s salary is drawn from gains to this separate, sub-trading account, and then in the form of a bonus at a predetermined time.

    All trading losses are supposed to belong to the firm, but the firm skirts this responsibility using complex restrictions and termination clauses in the agreement. For example, if the trader loses $25,000 (or whatever the initial deposit was), the firm has the right to terminate trading privileges and seize the deposit. Ultimately, the trader — not the firm — is responsible for 100 percent of the losses, trading expenses and taxes on any trading gains. (And new proprietary traders may find the “professionals” in the office are simply other people just like them.)

    The one benefit to the trader in this arrangement is the opportunity to trade $100,000 or more of capital rather than the $50,000 (including margin) he or she would have had in an individual account.

    Firms make money on commissions, and more commissions are made when traders have more leverage. In addition, some proprietary trading firms can increase their revenue by selling training services, equipment usage, desk space and overhead charges. Perhaps, had the trader realized he or she was buying tons of unnecessary stuff and using leverage to trade at dangerous levels, he or she would have skipped this “job.”

    This an excerpt. For the complete article, see the October 2001 issue of Active Trader magazine. Click here to subscribe.

  9. dozu888


    I think prop firms are blood suckers. An individual can easily put up $5k to trade 1 emini S&P, which is worth $50k right now, you get 10:1 margin right there. And commission is MUCH cheaper than flipping $50k worth of stocks.
  10. Well, I don't know if they are *all* bloodsuckers but I've been in contact with a couple of firms...been thinking about taking the 7 and trading remote.

    I found that Echotrade and Lieber & Wiessman were two good firms...fine print was, as far as my legal skills go, well, just fine.

    Gene Wiessman, who posts on this board from time to time is a perfect gentleman and very upfront. I saw their paperwork and it is all pretty standard stuff. No problem there. IMO, they are a very classy outfit and I would join this firm.

    Echotrade is legendary on this board...saw their gazillion page agrement (all the firms I checked out seem to have agreements of about that size) and I couldn't find anything lurking in the fine print. Rob Tharp is with the firm and he's no dummy...far from it and that speaks volumes for the firm, imo. Another firm I wouldn't mind being associated with.

    Then there's Bright. We've talked that firm to death on this board so I won't go there except to say that they make a ton of loot in their line of work including $1000 tuition to their one week school that, essentially, was a week long pitch to join their firm. That's not to say that I didn't learn anything there..I did and have put some of what I learned to the test and made some money from it. Bright really really wants their traders to make money and that ain't bad. I would probably consider the firm if they were not so down on the concept of remote traders. Lot's more hassle than I want to go through just to trade remote.

    Okay, that's my two cents worth. They're not all blood suckers...but for sure there are some bad firms out there and you've gotta read the fine print...you really do!...before you sign up. And I strongly recommend the article in "Active Trader." It brings some things to light that one should be v e r y carefull about when considering a firm. Really, get the whole article and read it.

    #10     Sep 22, 2001