Due diligence for chosing a safe prop firm

t0pd0g said:
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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Ha!! Here is their education that you pay $3,000 for right off their website:

http://alpha7trading.com/education/day-trading-course-outline/level-1-course-outline/

What a joke!! Anyone that falls for their gimmick deserves to be out $3,000.
 
textrader4 said:
Agree 100%. If you are in the US just take the 56 and trade with a registered firm like Bright or JC Trading Group.
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This may be a dumb question, dont you need a sponsor that is already registered with the SEC?
 
Cmoss said:
This may be a dumb question, dont you need a sponsor that is already registered with the SEC?
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Yes, to trade with a real, registered prop firm you need to take the 56 or 7. Bright and T3 are examples of firms registered with the SEC.
 
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?
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I always say to go and meet the partners in person at the main office . I always have the traders meet with me at Chimera to make sure its a fit for both of us
 
murotrading said:
I always say to go and meet the partners in person at the main office . I always have the traders meet with me at Chimera to make sure its a fit for both of us
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I think this is very important. Too many trader here only talk about "the deal", and ignore that they are getting into business with a regulated firm. To me, if you choose a prop firm, do it for the people involved, not to save a few dollars. Many traders make this decision too lightly, then complain about how they are treated for 12 months until they can get their cash out. And some, complain that they can't even get their cash out, but never did proper due diligence.

This is a business decision and should be treated that way. Look into finances of the firm. Meet the people involved. Ask a lot of questions.
 
PropAndProperty said:
So if they are a hedge fund... what makes that worse or better than going through a BD / prop firm?

Sorry for the newbie questions, but I'd like to understand.

Thanks in advance
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If they are a hedge fund, they will not ask for capital from you to trade. You will trade with investor capital and you will be an employee. A hedge fund typically is not a registered broker dealer.
 
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