Due diligence for chosing a safe prop firm

C

cyber

The most difficult part of choosing prop firm is choosing one which doesn't default (had bad experience once).

My tools so far:
- prop-trading.com has rating of some firms, e.g.: http://www.prop-trading.com/nevis-tr...group-reviews/
- check on linkedin, like good to chose a firm which is operating since long, e.g.: https://www.linkedin.com/company/united-traders
- ask around ;-)

Anyone has good tips for doing due diligence on prop firms?

Anyone knows since when MGB Trading, SFG Trading or Nevis operates?
 
cyber said:
The most difficult part of choosing prop firm is choosing one which doesn't default (had bad experience once).

My tools so far:
- prop-trading.com has rating of some firms, e.g.: http://www.prop-trading.com/nevis-tr...group-reviews/
- check on linkedin, like good to chose a firm which is operating since long, e.g.: https://www.linkedin.com/company/united-traders
- ask around ;-)

Anyone has good tips for doing due diligence on prop firms?

Anyone knows since when MGB Trading, SFG Trading or Nevis operates?
More...

If you're looking for a domestic (U.S.) firm, then one way to determine the risk of default is to view their annual focus reports that are filed with SEC, where you can see their capital structure and the amount of equity the firm has on its books.

You can go to SEC.gov and search by name of the prop firm, and then view the latest filing in .pdf format. That is an important step in the due diligence process.

Regarding MGB/SFG/Nevis, why don't you just call them and ask, or send them an email? Nevis I believe is overseas and therefore won't have any financials filed with SEC. If you're a US citizen then you're probably going to want to research firms that are registered, which means you'll need a Series 56 license.
 
prop-trading.com is owned by alpha7. That is why the Alpha7 reviews are so high. They came on elitetrader about a year ago pumping their service and pretty much got ran off the site. They have since stopped posting here and I'm not sure they are still in business.
 
ScalperJoe said:
If you're a US citizen then you're probably going to want to research firms that are registered, which means you'll need a Series 56 license.
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Agree 100%. If you are in the US just take the 56 and trade with a registered firm like Bright or JC Trading Group.
 
there's on ly a 1 in 100 chance you need a prop firm to be safe, since the other 99 times you will be losing all your own money anyhow.
 
sec.gov is in fact the right way in US, I guess it helps to check JC trading instead of Nevis. I'll need an international firm though, so I'll keep asking them. Thanks!

Good to know about prop-trading.com, Alpha7 has in fact surprisingly many stars ;-)

stock777, why are you on this forum then? Or just afraid of competition? ;-) Unfortunately I have experienced the 1% chance you mention, just before pulling my money back. And the firms was in US...
 
As for international prop firms I think there is no way you can know anything until they default on your payout. Make sure you make money trading, and consider the deposit as a licence to trade. IMO, you should make just as much in one month as you have in deposit. Then any loss in deposit is just one month loss, hardly any disaster.
 
cyber said:
sec.gov is in fact the right way in US, I guess it helps to check JC trading instead of Nevis. I'll need an international firm though, so I'll keep asking them. Thanks!
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You will not find JC trading in the SEC.gov site. I believe they are a sub-group of WTS Proprietary Trading, LLC. You can check WTS on the SEC site, since they are a registered broker-dealer. So although you can trade with JC, you're still going through WTS. However, check with both firms to get the latest details.
 
So, I am starting to get a flavor of these different firms. I am very familiar with Jea Yu and his strategies. They seem to be good and his association with Alpha 7 seems real as opposed to other firms which i see more as 'prop trader propaganda'. The one thing that seems different with Alpha 7 / Acclaim Capital versus other companies is if you pass their course, you trade firm capital with no personal capital requirement. You are trading their capital and this is all you are trading with them. Is that correct? This is why it seemed like a nice move for me.

I believe the firm which handles the prop side is Acclaim Capital, but I can't find anything on them via FINRA or SEC.

Where would I find out such information? Or is Acclaim Capital a subgroup of another firm? Like JC is to WTS.

Thanks in advance!
 
PropAndProperty said:
Alpha 7 seems real as opposed to other firms which i see more as 'prop trader propaganda'.
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You have it completely opposite!!

Prop firms are real SEC registered broker/dealers that file real FINRA reports. Alpha 7 (I didn't even know they were still around) is just a private LLC unregistered firm that acts like your education fee is NOT your deposit....but in reality it is. It works like this:

You pay them $3,000 for "education". Basically they give you general trading crap you can find on any website. Then you "graduate" (BTW...100% of the people graduate!). Then they give you an account that you can trade 100 share positions at $.005/share and let you lose $1000. So they just made $2,000 off of you!! If you lose the $1,000 (and you will with the high software, data, and per share fees), you can take another course for $2,000!!

You write that you are "trading their capital"....Ummm...no you are not. You are trading off the money $3,000 you just gave them for a copy of Jea Yu's book that you can buy for $20!

Contrast this with trading at a licensed BD where you put up a deposit and all the money goes into your account.

They tried to promote their "program" here about a year ago and got ran off of Elitetrader. It didn't fly then and won't fly now.
 
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