Futures commissions at prop firms

Jester,

This is the e-mail I received from Greentreetrading early last week. I am not trying to call you or anyone a liar, but I just want a fair shot in the futures game. Note I asked what kind of deal could be arranged with a 5k deposit (the minimum deposit as per the web site information) These commissions were incredibly high I thought, and that is why I started this thread...


"With $5K we could work with our low margin FCM and get trades cleared for $8 a turn. Margin would be around $1000 per contract. With a $10K account I can get that cost down to $6 bucks and offer the spot currency market to you....
Trade Well...Jeff"

Just for the record.

I trade forex now and the 10 year bonds. The only reason I contacted greentree was due to the fact that I wanted to begin trading the e-mini, but realize it's a hard game to excel in. I was looking for the support of a group of traders and money managers looking after their money (FCM accounts)as well as mine. Somehow, that intent was returned with a sales pitch, which as you can tell from the responses on this thread, completely unacceptable to even the most inexperienced of traders.
 
Quote from zentrader:

No, it was 5%. They are aiming to make 10-15%/year.
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I am not one to say anything negative on this forum, but what you've said makes no sense.

A pro trader will regularly have draws more than 5% many times in a given year.

I personally risk 3% per trade, and have been down 15% in one day about five times per year (that's my cutoff).

Jay
 
If you're risking 3% of your account per trade then there are one of two things wrong:

1. Your account is two small for whatever instrument you're trading; or
2. Your stops are too large

You won't last long trading if you risk 15% in a day either.

Real Pro's don't risk more than 1-2% per trade and 5% in a day.
 
Quote from zentrader:



My understanding of proprietary futures trading seems very different to what is posted on these boards.

I was considering joining a group awhile back. You don't put up any money and are not liable for any losses. They start you off with a certain allocation, and you receive a 20% performance fee (or 2% management/15% performance), ie similar to a CTA. If you have a 5% drawdown you are finished.

These kinds of opportunities are only available to professional traders with very good real dollar track records.

If you are liable for any losses or have to deposit funds in an account, I can't see how it can be considered proprietary trading.
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I generally think of proprietary trading firms as those like you described: The firm has expertise in trading and hires you as an employee trader. You put up none of your own money and your take is performance based.... Lose more than a few percentage points and you risk being asked to leave. Good prop firms have good systems and typically have automated compliance systems so that it is very difficult to lose percentage points of an account: you would already be flagged and be talking to a supervisor about a particular trade and whether the firm would allow you to proceed.

The other tier of firms is where you put up your own money: If you know what you are doing and have access to capital you probably would not be happy with a mere 20% take of your trading profits .... people who have never started their own business often prefer the employee model since it is a model whith which they are familiar ....
 
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