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firm takes risk deposit legal or not ?
- Thread starter jetmacrotrader
- Start date
Quote from Don Bright:
The question about putting down a "depsoit" can best be addressed in the way that the broker dealers do it (not just Bright). The capital belongs to the trader...the trader becomes a member of the Primary Firm's LLC (vs. a "sub lllc" or other entity). This is basically the traders "account" - to add money via profits, or to deduct money with any losses...just as with any account anywhere...IB, Schwab, etc...
really. so, each of your trader's accounts are segregated and are SPIC insured?
Quote from propseeker:
really. so, each of your trader's accounts are segregated and are SPIC insured?
Not needed or used for reg t or Net capital requirements. SIPC is retail, and rather limited. We place a minimum of $10million cash from our side of the LLC directly with the traders side, to offer much more protection.
Feel free to PM or call to discuss at any point. 702.739.1393.
Don
Quote from jones247:
How do you avoid the self-employment tax when trading with a prop firm?
thanks,
Walt
I can't speak for all firms of course, but we made the IRS election with our LLC arrangement to have "Distribution of Partnership Income" as exempt. This can basically save $15K or so on a $100K income per year.
Don
i see. so, if i have 500k in my "acct" at bright, and someone blows that 10M out. my money is 100% segragated from that blowout and 100% safe rgt? what if it were a 20M blowout? what happens when the blowout is more than the money in the LLC acct? i'm not really seeing how this type of acct would be at all similar to an acct like IB or Schwab. were you just saying that they were similar because you can put money in and take money out?Quote from Don Bright:
Not needed or used for reg t or Net capital requirements. SIPC is retail, and rather limited. We place a minimum of $10million cash from our side of the LLC directly with the traders side, to offer much more protection.
Forgive my ignorance, i am a newbie here, isnt this very similar to a Ponzi scheme ? As long as the market holds, your deposit would be safe,in am ideal market .. someone has to loose money. Image you trading with 25K and you blow , you suffer the consecuence by taking the loss yourself. Now expand this by 20X leverage as most prop firms offer, wouldnt that do more damage ?
This looks like a house of cards ready to collapse, i wont be suprised if we hear about one or two prop firms coming down in this market.
This looks like a house of cards ready to collapse, i wont be suprised if we hear about one or two prop firms coming down in this market.
It does not really goes that way.Quote from karth:
Forgive my ignorance, i am a newbie here, isnt this very similar to a Ponzi scheme ? As long as the market holds, your deposit would be safe,in am ideal market .. someone has to loose money. Image you trading with 25K and you blow , you suffer the consecuence by taking the loss yourself. Now expand this by 20X leverage as most prop firms offer, wouldnt that do more damage ?
This looks like a house of cards ready to collapse, i wont be suprised if we hear about one or two prop firms coming down in this market.
1- Most traders dont use all their, ammo.
2- In prop trading I think most traders dont do overnight so they get liquidated when they blow it.
3- We did not hear of any blowout here in the last year so I think things are under control.
Quote from total_keops:
It does not really goes that way.
1- Most traders dont use all their, ammo.
2- In prop trading I think most traders dont do overnight so they get liquidated when they blow it.
3- We did not hear of any blowout here in the last year so I think things are under control.
Exactly. A trader should not be allowed to blow out any more than he deposited for trading purposes. If the firm has any type of decent risk control at all, there is no way a couple traders would blow the entire firm up, they would simply get shutdown by the system and their positions would be liquidated.