yep
Contracts
- Thread starter nkotb
- Start date
yepContracts seem to always favor the company and hinder the freedom of the trader. If you can get in without one, take the chance. If you have to sign one, you an always get out with the right lawyer anyways if you don't like it.
Several people have made statements to this effect, but I must be missing something.
Consider the following two scenarios. (To make things quick, I'm ignoring the existence of labor laws and any other presumption of terms in the absence of writing, since all of that varies widely. I'm sure similar examples can be constructed for any given jurisdiction, dealing with issues that are not covered by them.)
A. Trader ABC becomes a member of DCH**, LLC., without any written agreement as to terms. 30 days later, ABC wants to withdraw some profits from his sub-account to pay his rent. DCH tells him he can only withdraw money once every 90 days, starting at day 90. In addition, 90% of the deposit must remain in the firm until its dissolution. DCH has ABC's money and, absent any written agreement, can do as it pleases. ABC becomes homeless.
B. Trader DEF wants to become a member of SEA***, LLC. Prior to joining, he gets a copy of the contract that states the rights and obligations of membership. While reviewing the contract, on page 9, DEF discovers that he may only withdraw funds 6 months after his initial deposit. It goes on to explain that he only gets 5% of his profits, but must take 100% of losses, with his soul as collateral. He chooses to trade at GGT****, LLC, who has much more reasonable terms. DEF lives happily ever after.
Yes, SEA, LLC's contract is horribly stacked in favor of the company. However, it's out in the open. If you don't want to join under those terms, you can go somewhere else.
On the other hand, DCH, LLC is just as bad, but ABC doesn't find out until it's too late, because he thought no contract was better than one that was in the company's favor.
Every attorney I ever knew said "get it in writing", the first couple of times with "dummy" appended. I learned after that
Notes:
** DCH: Dewey, Cheatem, and Howe, LLC
*** SEA: Skin Em All, LLC
**** GGT: Good Guys Trading, LLC
alanm
i think you are missing something
a) is the trader experienced to the extent he makes money from day one - in which case he should absolutly make sure everything is in writing
or
b) is the trader unexperienced and he is going to be allowed to learn and use others money to learn
it takes at least a year to learn, but if it takes longer or shorter does not matter - the minute the trader starts to make money is when he should get a contract - he is then in a better bargaining position and the company giving him the contract know what they are getting as well
i think you are missing something
a) is the trader experienced to the extent he makes money from day one - in which case he should absolutly make sure everything is in writing
or
b) is the trader unexperienced and he is going to be allowed to learn and use others money to learn
it takes at least a year to learn, but if it takes longer or shorter does not matter - the minute the trader starts to make money is when he should get a contract - he is then in a better bargaining position and the company giving him the contract know what they are getting as well
Alan has good points....all of you are responsible adults, and I am sure would rather read some details of what you're getting into...regardless of what the business is. We as a firm are just as concerned about "full disclosure" to the traders since it is this same disclosure that protects both parties.
We currently have traders engaged in conflicts (with previous firms) amazingly similar to those described by Alan, and it's always the lawyers who end up on the winning side. Some of our traders are still waiting for release of funds, etc.
Just get a good deal, read it, sign it.
We currently have traders engaged in conflicts (with previous firms) amazingly similar to those described by Alan, and it's always the lawyers who end up on the winning side. Some of our traders are still waiting for release of funds, etc.
Just get a good deal, read it, sign it.
I started out prop at a big scalping shop at the time, I don't want to name names but the initials are HB. I understood what I was getting into and paid the higher rate while learning and still made good money scalping Nas in fractions. Then decimals came. Spreads went from teenies to pennies and the bastards wouldn't lower my rate. Customers rates dropped in half and these are the guys I compete with for a buck. My rate was now 4 times the customers rate. I couldn't make money when I needed 4 cents to break even and my competition needed a cent to break even. I talked with the company and they offered a lower rate but I would go from 90% payout to 45%, so that did me no good. After my office manager, and the brother owners all lied to me and never made things better, I was left with a decision. Stay and make no money or move my family out of state where I could get out from under my contract. The contract prevented me from making a living where I lived and wanted to stay at. It wouldn't allow me to even become a customer at another firm down the street. Therefore, contracts trap new traders into poor deals for the benefit of the greedy bastard brother owners and they hurt the traders abilty to make money when the market changes. And the market rules seem to change every few months latley. Don't sign one unless you have to.