Ok now most Prop Firms want a 25k capital contribution because they are not getting fully funded and most of the traders lost them money and walked away with huge losses because of taking on huge bets leaving the prop firms holding the bag. And if you joined one its all a matter of the arrangements (very difficult to find a good deal). Before, many prop firms gave traders money without having to put up a dime. So now, it's somewhat easier to get into a prop firm because you have to put up capital. BUT, is it fair that you have to put up 25k? It is like you are really not a prop trader? And is it fair that the firm is required to hold your capital for a year? This is just not right!!! The firm can play with my money and tie it up and do whatever they want with it while the trader gets screwed? This is really like a personal account with leverage and much higher commission and fees. And it gives the firm the right to control your success and failure and play with your money without the trader even realizing it. And now the SEC wants prop traders to take a new license? seriously? And whats the deal with all these firms having sub accounts of sub accounts? To give those groups the right to charge a higher commission and have the trader churn and burn? And why are these prop firms registering with the CBOE and not FINRA? How are us traders protected? My point is our success is controlled and where is the structure in this industry? The government has had years to fix this. If Schapiro can't handle her job then leave!! Find someone to fix this nonsense. In My Humble Opinion
With 25K and 20:1 you're getting a half mil in buying power. With the "no money down" (lol) firms, your split is usually 50% vs 85-90% with firms that take in the capital contribution $. I'm not a prop trader, but am considering it. Let's see what guys here say who do trade prop.
"most Prop Firms" do not require 25k. It's been posted on different threads that Bright Trading requires this amount. If a prop firm has adequate risk management, then "huge losses" are prevented since most firms require a capital contribution which serves as a hedge against losses. And if you joined one its all a matter of the arrangements (very difficult to find a good deal). Before, many prop firms gave traders money without having to put up a dime. So now, it's somewhat easier to get into a prop firm because you have to put up capital. BUT, is it fair that you have to put up 25k? It is like you are really not a prop trader? [/QUOTE] Actually, there are "good deals" posted, of course, it's also subjective depending on what you're looking for in a prop firm. Again, the 25k amount is not correct, unless you are opening a PDT retail account. And is it fair that the firm is required to hold your capital for a year? This is just not right!!! The firm can play with my money and tie it up and do whatever they want with it while the trader gets screwed? This is really like a personal account with leverage and much higher commission and fees. [/QUOTE] It's a rule, SEC 13c-1, fair or not, the SEC wants the CBSX regisitered firms to have this rule so that they maintain a minimum amount of net capital. Some props that are well capitalized don't impose this rule, as they keep enough funds in a segregated account to accomodate a trader's withdrawal request (example: Bright, Echo). It's not a personal account, it's a sub-account of a prop firm, not a retail account. True, it's with leverage, but not sure what you imply by "higher commission" as prop commissions are usually lower than retail and you get to keep the ECN rebates. And it gives the firm the right to control your success and failure and play with your money without the trader even realizing it. And now the SEC wants prop traders to take a new license? seriously? [/QUOTE] What? You are responsible for your own success, the prop firm is responsible only for providing the tools necessary (platform, tech support, buying power, etc) and of course the access to your profits. Regarding the license, you're right, prop traders are supposedly going to be required to take a new exam for joining a CBSX firm (however from articles posted on the CBOE site and on the net, it's going to be an alternative and less detailed than the Series 7). And whats the deal with all these firms having sub accounts of sub accounts? To give those groups the right to charge a higher commission and have the trader churn and burn? [/QUOTE] It's true that some shops operate as a "sub" of one sub-account. However, you can go directly to the firm itself instead, make a capital contribution, and sign up as a regular "Class B" member and open a sub-account. Usually, a group can get a deal if they do enough volume, so if you join a group (as a sub of a sub-account) then it's possible to get even lower commission. You're right about "churn and burn" as that's just the nature of the biz. And why are these prop firms registering with the CBOE and not FINRA? How are us traders protected? My point is our success is controlled and where is the structure in this industry? [/QUOTE] It's probably less complex for the firms to maintain their levels of compliance regarding audits and fees. For example, FINRA will charge a trader with a sub-account around $500 bucks a year, would you rather pay such extra fees just to trade? And besides, whether your sub-account is with a prop firm registered with CBSX or FINRA, it's still NOT insured by SIPC protection. Only a retail account offers this protection. The government has had years to fix this. If Schapiro can't handle her job then leave!! Find someone to fix this nonsense. In My Humble Opinion [/QUOTE] The governement can't fix health care, they can't handle their own debt, prop trading is the least of their worries, lol!
"And whats the deal with all these firms having sub accounts of sub accounts? To give those groups the right to charge a higher commission and have the trader churn and burn? [/QUOTE]" "It's true that some shops operate as a "sub" of one sub-account. However, you can go directly to the firm itself instead, make a capital contribution, and sign up as a regular "Class B" member and open a sub-account. Usually, a group can get a deal if they do enough volume, so if you join a group (as a sub of a sub-account) then it's possible to get even lower commission. You're right about "churn and burn" as that's just the nature of the biz." This is what I needed to know. Thank you so much!!! THe last person I spoke with I wont name any names wanted me to put up 25k and I believe was a subgroup. I forbid to join any subgroups. I want to go directly to the firm itself. So Class B member instead of Class C? All these subgroups don't care on the traders success nor care of the risk of getting shut down, they just close and form a new group. I prefer to stick with the Parent firm because then I know the firm will not want to fail. All these franchise sub groups are a joke and should get shut down. They are nothing but a nuisance to the trading industry.
Sure, no problem. The sub-group is usually the Class C, and you'd be an associate of the sub-group, so they can dictate their own terms. There are many dog and pony shows in this business, but there are also many legit firms as well. I also agree with your logic, go to the firm itself and negotiate the best deal you can as a Class B. The sub-groups are created as it helps the parent to generate more volume, and of course volume equals commission, that's the name of the game on Wall Street. As another post once mentioned, "it's written in the scrolls."
Prop firms is not quite regulated by the government unless they have their own in house managed department (hedge fund). Those prop firms that are not regulated can do whatever they want to do. Remember this, more than 90% of twenties yr old prop traders lose. They just lose!!