I disagree there is a symbiotic relationship between trader and prop. A successful trader will not only do more volume but will also be around eg. I traded capital contribution model prop for 7 years at 2 different firms we not only got 100% pay out but also got the rebates and software/ desk fees were waived after a realistic volume threshold. It is my belief that if one asks the 7 questions I have outlined earlier and lands with a reputable prop they'll be fine.
You said two things that are interesting... The first is: I'll be subject to their rules including getting permission for outside activities such as my current job. Personally, I don't plan on returning to my place of current employment AFTER I receive my 4 months leave. However, if I were to secure any type of part time employment I'd have to get permission? The second thing is: If I open a customer account I wouldn't have to get licensed, won't have capital held for 1 year, etc. I've never heard of something like this. I'm not sure if this is something they would offer so I suppose I'll ask. Thanks.
I dive deeper into the questions you suggested I ask... This firm is a pretty well known prop firm here in the US. They are licensed broker-dealer and a member of one of the larger exchanges here in the US. So the capital contribution is tied up for 1 year and held in the states under regulation. (If I'm missing anything lemme know) Question - What does it matter what class member I would be? B or C? 2nd Question - What does X-17A-5 form show? Income/Expenses of firm? Thanks for your insight!
NOT a customer account with a prop firm, just a customer account on your own WITHOUT them. Prop firm don't offer customer accounts directly.
This is their focus report. It shows their capital and sometimes their income statement. They are very hard to find online, often very old and to get an up to date one, you'd have to ask them. Here is an example from 2012 for JPM. https://www.sec.gov/Archives/edgar/vprr/1303/13030777.pdf A prop firm will never offer this much detail.
Yes, your capital contribution will be locked for a year but you want the firm to be financially healthy and your capital contribution to be there unless you lose it trading. Where your capital contribution is held tells you how much protection you have from sticky fingers. Clearing firms enforcing settlements, accounting rules etc., keeps the firm and your money safe. Anyone other than class A members will not be protected by SIPC thus class B or C determines where you are in line as a creditor should the firm go belly up. At a prop firm you are not only exposed to the market but also other trader risk. Most likely unless you are contributing a ton of cash the firm will not let you see the form X-17A-5. BREAKING DOWN 'SEC Form X-17A-5' This report is used to determine the dealer-broker's financial condition. Section 17 of the Securities Exchange Act of 1934 Rule 17a-10(a)(1) requires all broker-dealers to file Form X-17A-5. eg Clearing firm Penson seems to have difficulty supervising their charges.. 1) https://www.elitetrader.com/et/threads/sure-trader-has-been-a-fbi-sec-honeypot.301433/#post-4308679 2)https://www.elitetrader.com/et/thre...-and-disclosure-failures.294386/#post-4179471
Hi ItradeRisk, I thought I would share my thoughts on the trading part of your venture, rather than the prop firm part: 1. It is great you are even asking these questions. You seem open and like you want to do it right. 2. Also excellent that you were successful at poker. I think the two can be well related. 3. You seem to have a good sense of the risk which is a good place to start from and really key. 4. You have already decided to take the risk and know this is your dream. So many people don't even know what their dreams are or are too scared to follow them. (If you don't try, you will never know!) Your friends maybe worried for you, and also not understand from your perspective. 5. Running a successful business probably won't translate over to trading. 6. Suggestions: have a plan B. Give this venture a certain amount of time and money and expect it to succeed, but have a plan if it doesn't. 7. Create a complete trading plan (vision, goal, strategy, risk, max losses, etc.) like a business plan and follow it to the T. Make sure that your strategy and risk management together will earn you a living if followed. 8. Notice anywhere you don't follow your plan. This is where the mindset comes in. I believe it is by far the hardest and most important part of your trading. If you don't follow your rules, find a way to solve this. 9. Track your trades in a journal. 10. Track yourself in a journal! Feelings, thoughts, body sensations. 11. Use yoga, meditation, and other processes to calm the mind so you can follow your plan, if that is an issue. Good luck! I hope it works out for you.
These two are pure nonsense. Not trying to bump heads with you again Andrea, but I would advise developing traders to avoid misinformation like this. No offense, but if you want to help them start by showing them how to quantify their methods which should help them think in probabilities. For quantitative reasons, tracking your trades in a journal or spreadsheet is definitely a must. Your body sensation/ feelings and trade plan following will encounter zero issues with a proven/large sample real-time traded method that produces 3-5% a month. What kind of idiot disconnects the power to a money printer?