From what I read if you are classified as professional you are stuck with those data fees for your personal trading accounts also. Is that correct? Also, how big a pain is it to revert back to non-pro if you stop trading under the professional label? I tried asking the CME and did not get any real concrete answers. thanks
1. Yes, you will be stuck with higher fees for everything. You go into all the exchange databases classified as a "professional," and probably stay there until you die. 2. It's difficult, if not impossible, to go from pro to non-pro. I remember a story here on ET about a trader that started their own trading LLC, and was categorized as "professional." He gave up on the idea... and could not get his status back to non-pro. I can't find it; I'm still searching. Also, as a pro, you may also have additional regulatory and tax scrutiny. Market players don't want the retail guys doing professional things. They want you gambling; making rash decisions, and basically handing your money over to them. They'll add additional cost if you identify or even start trading like a pro. imnsho, unless you want to trade others' money, or form a hedge fund, stay non-pro.
Yup just as I thought. Once you go pro, you don't go back. I mean think about it. If they can charge you higher fees, why would they give up on that just based on the fact that you tell them you are no longer pro? Otherwise it would be too easy. Everybody can just claim they are no longer pro and not pay for the data fees.
Thank you, that is the impression I got in terms of being able to go back. The guy at the CME sounded like I was asking a crazy question when I asked about returning to non pro. I had an offer to trade and work with a couple of other traders, but it would involve joining a firm and trigger the pro status. For me it would have some benefits, but I'm not sure enough that I want to deal with it. I'd get a paycheck based on success of the traders I'd work with, plus the usual split on my profits without my money at risk. A couple of other plusses, but at this point in life not sure I want to deal with any crap that may go along with it.
You may have to get licensed, and they'll have to sponsor you. You can somewhat circumvent this by joining as a Technologist; you're not a trader, you're in IT. In my last company they actually created a separate legal entity (corporation of some type) to house all the tech folks. I was paid by an entirely different company; my checks had this odd name for the Payee on them. Then there was a legal veil of separation between pro and non-pro. The tech people could do tons of work, but couldn't actually trade--that had to be done by the licensed Trader. In some cases, this was literally just entering the trade into the terminal an clicking a button. You may be able to do this: have them hire you into Tech, or form your own LLC named "Tango29 Technologies" or something, and have this company hire you as a "Software Engineer" contractor. On the job set up a portfolio, and they pair you with a Trader. Then you can stay non-pro, and still effectively trade, but not be categorized as Pro. Pro traders also have to report their personal trades, and there are often time limits attached. It's a lot of cost and hassle... regulatory stuff.
I was classified as a pro based upon account type (partnership). Once the partnership dissolved I was able to revert to non-pro in a new account with IB.
Only the trader is stuck with "pro" data: It means if the trader is a company, the individual is not a pro, except if she or he asks for.
I asked about having to be licensed and was told for the situation it isn't required. Apologetik, how did you go about changing your status? Was it a paperwork situation, or?
Depends on the broker. With Dorman I just had to sign an affidavit that I was only trading my own money, and that was within an S Corp. I understand IB is stricter with regard to pro status. Alternatively, make enough money so that fees are immaterial.
Had the same experience with another broker, trading thru a company but in the deed of incorporation was mentioned that the company would only trade own money. So no professional fees.