I am looking for a trading position in Chicago (STOCKS ONLY), I have a profitable intraday system that I'd like to trade but I only have about $7k that I can comfortably deposit. Does anyone know of any LEGITIMATE firms that accept a small deposit AND give a decent % payout? I have an interview with a prop firm that would fully back me, but I would rather use my own money in exchange for keeping a larger % of profits. I don't want to make 100k this year and not have anything to show for it. I already know about Bright Trading (they told me a minimum of $15k) and EchoTrade (big desk fees, would be forced to trade too much size). Does anyone have any other good recommendations on companies??
No prop firm is going to let you in and give you leverage for only 30k shares a month. Unless they charge you over .01 per share and you pay all the software and data fees, and even then it is doubtful. For only 30k shares a month the firm isn't going to make any money, so why should they give you leverage and take the risk? Sorry.
If I'm profitable and they take a cut, then of course it's worth it for them. Even if they're getting 10%, it's still a good deal for them if you're a superstar.
There have been significant developments in the industry. One of the main sticking points with regulators is that "prop" firms operate under their stated business purpose. That means that you will in most cases be trading firm capital. If you wish to trade your own with less then 25 K you will most likely be required to buy into the prop firms LLC. As a shareholder you will have certain obligations regarding your contribution to the firms capital account. The firm will already have a brokerage account which they will authorize you to trade and allocate buying power at there discression. You will not be "deposting" anything. Secondly 10% is not realistic expect the firm to retain at least 15% to 20% of your profits. You should try to save up a few more thousand and look for a reputible firm.
Thanks for the info, I know there have been some recent investigations into prop firm business practices but I didn't have too many details. So are you saying that firms like Bright Trading will now require you to be somehow vested into the llc now? I don't really follow what that would entail specfically.
In some cases yes. It is not a a complicated process. You buy a percentage interest in the company. The $ amount and percentage interest will be recorded in your firms capital account. The firm will authorize you to trade their brokerage account and allocate buying power. Your pro rata share share of trading gains, rebates, commissions, data fees and retained profits will be added and deucted from your capital account. Prop firms must live up to there name and that means trading firm capital. You recive a form for partnership income at the end of the year that you can file with your normal tax return and will most likely enjoy better treatment from the IRS as a professional trader. The firms operating agreements should explain withdrawl of capital and share redemption. Firms like this can not be operated by FINRA affliated or registered persons nor can they recieve transaction based compensation. However it is possible that there broker may rebate portions of the firms commission dollars. These "soft dollars" can be used to pay the firms operating expenses. As far a Bright they do not operate under this structure and I belive they are members of an exchange. They require a license as well. They are certainly reputble. As are many other prop firms. The shady ones are disapearing. The B/D's and clearing firms are taking alot of heat and are montoring their clients prop firms operations and shutting off those that do not comply.
what kind of return on invested capital/month are you expecting? suppose you had $63000($7000 leveraged 9:1) in the market what would your estimated profits be after commissions?
I'm not sure where you get your info on Echotrade. I've been with them for many years and have never been ''forced to trade " anything. And the desk fee is zero. I do have a data fee that gets fully rebated.