Checking the balance sheet is an interesting idea, but Marketsurfer makes a good point.. plus what if the firm doesn't want to provide the balance sheet because they simply choose not to (I bet most won't provide it anyway, why would they if there's no regulation)? How well do I have to know how to read a balance sheet to pick up on the nuances that could indicate bad things to come? or do I have to find an expert from a competing prop firm to read it and tell me what he thinks? Why do I have to check balance sheets of prop firms when I want to open with them, but when I open with a bank or retail brokerage, I don't have to check the balance sheet?
these kinds of jobs are like the non-paid internships advertised all over college campuses. when you are a student you think they are real jobs. later you learn that the companies are just taking advantage of nieve newbies. you are a volunteer. at least you can put "Intern" on your resume to get that real job after you graduate.
well, have a look at the blotters in the pnl thread; most of those guys have put down 5-10k and have access to more or less 1mln bp. of course they prolly didnt get this kinda leverage/haircut off the bat but once they proven 'emselves they got it.
I have 1 Mil BP w/ 5K down BUT.....500k is "soft" BP which is for orders only. In essence I have 500K thats executable (which I never use all up anyways). Most guys cant get this leverage unless, like Bit said, they prove themselves and the firm feels comfortable with them. I dont do overnights; if I did, I would get no where near the leverage I have for intraday.
10k on 1m is huge risk, as it would only take 1 bad trade to wipe out trader's initial cap. That qualifies for 1% drawdown on max position size. I would say having access to 1m does not mean much as logically I would see myself using only upto 50k per position, depending on a proven R:R of course. But saying that, for traders that know what they are doing, that is a fantastic opportunity, how many banks would match those offers of access to capital?
you misunderstood me.....the real prop firms like the gs prop division are indeed true prop.....and retail props shouldn't be able to falsely advertise themselves are true prop......as far as my comment on the 1-2k risk capital......i mean that a firm brings in a new trader without capital contribution and gives him lets say 100k bp to start off but makes it clear that the DD cannot exceed 2k......so the amount of capital truely at risk is 2k.....then as the trader proves himself.....bp and all the rest go up as he develops......but if they can't even afford that then its a purely retail shop and they shouldn't be able to market themselves on monster.com as prop.
i have no problem with true prop firms or even retail 'prop' firms......i just want truth in advertising thats all.
i'm not in favor of SEC overregulating.....just prevent the retail props from using the word prop.....and make them use the disclaimer "this is not a job, capital contribution required, and your capital is at risk of complete loss" or something like that.
FYI guys. There are lots of true prop firms that aren't just divisions of bulge brackets. You just have to search a little harder. They aren't as hard to get into. Still very competitive...but more relationship orientated than pedigree.
Original poster said "no license" and I agree. There are dozens of firms who are not regulated by anyone. Don