Capital Security

S

SystemsTrader

When working with a prop firm, there is no SIPC insurance so how can one determine how secure his capital account is?

Can anyone comment on the sub-LLC arrangement at Lynx with regards to the security of my capital?

If one trader blows up far beyond their own capital account, what is protecting my capital account from taking a hit?
 
Quote from SystemsTrader:

When working with a prop firm, there is no SIPC insurance so how can one determine how secure his capital account is?

Can anyone comment on the sub-LLC arrangement at Lynx with regards to the security of my capital?

If one trader blows up far beyond their own capital account, what is protecting my capital account from taking a hit?
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If you trade Prop

there is no insurance. That's why we trade with money we can afford to lose if something happened.

Usually their minimum is just $5000.

So come into the firm with the minimum. If that's a lot of money to you than you might not be in the best position financially to trade.

I know all the traders who trade remote with my firm and know the guys in my office well. I've worked with most of them and know their trading style. Nobody holds overnight's about 95% of the time and if they do they have the capital to justify it. Most guys just take small positions many times throughout the day. Not something I'm really worried about.

If you are worried about taking a hit trade Retail

and Lynx does have a retail devision. There is SIPC insurance with a retail account as sign at the front desk says.

Robert
 
So if me and 20 other guys open our accounts with 5k each (total of 100k of trader capital) and then one of these guys takes a 50k hit then what happens?

Does this extra 45k hit go against firm or trader capital?

Would Lynx make available how much capital it has to protect my account from the actions of others?
 
The other thing firms have is their reputation.

Andover has had a few sub LLC blow outs. There is no denying that.

But ask around

Mike P. the owner of Andover isn't stupid. He hasn't lost a trader to a blow out yet. He has brought traders who were hurt due to poor risk management by the sub LLC into another sub LLC of the firms and they didn't take a hit. Andover is self clearing and one of the larger firms around with over 1200 traders compare that to a lot of the other firms.
 
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