"partnership" vs. prop firms

Discussion in 'Retail Brokers' started by ziddey, Jun 10, 2006.

  1. ziddey


    I had a question regarding partnership firms like harmon trading group. I believe there's a difference in that versus a traditional prop firm which screens the traders. Basically, I'm looking for a list of some "good" partnership groups since I'm looking for a partnership to allow for 4:1 margins and a way around the nasd 2520 pdt regulation. The 9.95 commission of harmon trading doesn't seem too bad but the risks of the group blowing up scare me a bit (and I know it's there for all such companies but are there any companies with a longer track record and don't have stringent filtering for traders). I did some searching here and found a few threads but it seems that everyone more or less dances around giving actual names to look for. I was wondering what the reason was behind that and where I'd be able to actually go about finding some companies who would cater to my needs. I am looking into options trading and forex but for the time being, I'm trying to stick to something I've already become marginally comfortable with while I do some research before advancing further along.

    Thanks for any input
  2. A 9.95 minimum commission, if that is what you are considering, is utterly ludicrous. The minimum commission is only one dollar at Interactive Brokers, using IB's bundled commissions charge. If you choose IB's unbundled commissions pricing, and if you develop a strategy which chiefly provides liquidity instead of taking it, your minimum commission at IB would go down to 70 cents, and perhaps even lower after rebates. A new trader needs to keep costs to a minimum, otherwise he will bleed to death very quickly. You need to bleed slowly, paying only small commissions, so that you can preserve enough of your trading capital long enough to stay in the game long enough so that you can learn from your mistakes.

    If you don't have enough trading capital to play the game, maybe you need to be realistic about this fact and focus on increasing your starting capital. The vast majority of traders never become profitable. One of the reasons is that so many of them start with inadequate trading capital. Another is that there are brokers who are only all too willing to take advantage of your desperation and greed, by overcharging you for trading with your inadequate capital.
  3. ziddey


    9.95 doesn't seem too bad to me at all for right now. I'd be coming from Scottrade's 7, and harmon would offer me more services and faster executions with the das.
  4. Rockfish is right.

    With the fragmented markets created by decimalization...
    And becoming even more fragmented this year due to Reg NMS...
    There is ** no way ** one can make a living using a flat rate commission structure.

    I hedge and scalp Listed stocks very successfully...
    And with IB's unbundled commisions pay about $0.0033/share... that's $3.30 for 1,000 share trade.

    At $9.95/trade... I would go immediately out of business.

    Want an education?
    Use the search... and go read all the Rockfish posts.
  5. ziddey


    I'll take a look, but for the time being, I don't think there's a way around a partnership firm. The other partnership I've found was http://www.alldaytraders.com/commissions.html which charges 12.95 + a sell fee. That'd be way too much in my book.
  6. In reality, the "best" commission structure is determined by the type trading one does.

    There are plenty of traders who trade multi-1000 shares per trade. In which case a flat fee of 9.95 is completely acceptable. And likely reduces the traders commissions over other structures. And of course, anyone doing that type of trading will be dealing with a direct-access firm for execution reasons.

    This is not the case with this OP... Small account means multi-1000 share trades are not (unless OTC, LOL). Looking to "skirt" PDT; Unwilling to be interviewed for prop. "Scared" (rightfully!) about partnership trading arrangements. Commissions are the least of this traders worries.
  7. ziddey,

    I think you are forgetting one way around the partnership firm. It is your choice to NOT TRADE AT ALL, until you have enough money to do so without being robbed blind by a broker taking advantage of your greed and desperation. You might, while you are waiting, do some swing trading of odd lots, wherein you will trade so infrequently that the PDT will not be a problem for you.

    If you want to become a successful trader, you must develop the mental discipline to see when you are wrong, and to change course where necessary. If you are going to insist upon trading, even when you are undercapitalized, then how are you going to have the discipline to exit a losing position when it proves that you were wrong to enter the trade?

    Please accept my condolences, in advance, for your future loss of your already inadequate trading capital.
  8. Thank you, HoundDogOne, I am flattered.
  9. ziddey


    well put!