Great Article on Prop firms- Bright, Echo, Maverick Trading, SMB, etc.

[SteveNYC]

Quote from HFStartup:

I used to be a prop trader with Bright. I asked if I could use some kind of real time market simulation (something like NinjaTrader) so that I could practice trading and learn to be consistently profitable without losing cash and then eventually migrate to real cash with 100 share lots and increase from there. They said they didn't believe in that and so I ended up blowing out my account twice learning with real cash. With that said, I recognize that trading with virtual money and real cash are very different, and so they had a point there, but on the other hand, they don't generate trading commissions with virual trades either. It setups a conflict of interest between the trader and the prop firm.

Anyway, they had a voluntary mentor program where the mentee filled out a survey describing trading and risk methodologies and then they matched the mentee with a well established, consistently profitable trader. I entered this program and was matched with a mentor that watched me trade and after I had a 3 day string of profitable days with 100 share lots (most others had been losers), encouraged me to move up to 1000 share lots. I had only US$25K in the account at the time and I communciated my reluctance to do it. Needless to say, I did and lost a lot of money. I requested to be assigned a new mentor.

The second mentor was very different and clearly did not agree with what my previous mentor did. He started at the most basic level with me and limited my trading. I had to report to him every trade I made, why I made it and what my entry and exit rules were. He would yell at me like a drill instructor and made it very clear when I did something stupid based on emotions. I learned more from that man than any other person, book or website. He really cared about my success.

Today, even though I do not daytrade, (my timeframes are much longer), I utlize much of what I learned from this mentor and my experience at Bright (where I learned risk management the hard way) in my trading everday.

In short, I had my ups and downs with the prop firm, but ultimately today, I am a consistently profitable trader. Looking back, I would have preferred to learn on a simulator and save myself hundreds of thousands of dollars. But I suppose that is the way of the path we have chosen...

Good story. Credible. Good to hear a success story.

Did Bright Trading have clean bathrooms?
Were there any traders with pink eye? Hehe.

 

[SteveNYC]

All this talk is like a baby that's babbling.

Somebody should make a black list and white list of prop lite firms. Black list would have shady prop lite firms and white list would have "legit" prop lite firms.

We used to do this with NYSE Specialists. We never sent our orders to specialists on the blacklist b/c they screwed us a lot.

So, make a white list of prop lite firms to weed out the scammers. Problem solved.

No more talkIng and arguing about training, training fees, risk deposits, and so on...

 

[billsafari]

Quote from SteveNYC:

All this talk is like a baby that's babbling.

Somebody should make a black list and white list of prop lite firms. Black list would have shady prop lite firms and white list would have "legit" prop lite firms.

We used to do this with NYSE Specialists. We never sent our orders to specialists on the blacklist b/c they screwed us a lot.

So, make a white list of prop lite firms to weed out the scammers. Problem solved.

No more talkIng and arguing about training, training fees, risk deposits, and so on...

+1

 

[soccerscott]

Hey Steve, Great Idea

Here is the criteria I used to create my white list. My view of prop firms is that they are there to provide a service to you; not, to make you successful. So, the important things are trading platform, commissions, speed of execution, support and the most important thing...do they payout regularly and do they return capital in a timely manner. The firms on my black list are ones that I have heard it is hard to get your capital out (not talking about 1 year lockup which is an accounting law from the IRS that some firms have to follow per their setup).

White List
Bright Trading
Maverick Trading
Echo Trading
Vtrader
Cy Group

Black List
Ifund
VCM
Team Trading
(anyone see a recurring theme here?)

Maverick Trading and Echo trade more than just equities which is why I am with Maverick as they let me trade equities, equity and index options, futures and futures options and FX. At echo I think you can only trade equities and equity options. I believe vtrader lets you trade multiple products but you will have to contact them for that info. Bright and Cy are equity only. Remember they are providing you a service and your trading is what will make you successful or not. Go into this business understanding the business model.

 

[jnbadger]

Quote from SteveNYC:

All this talk is like a baby that's babbling.

Somebody should make a black list and white list of prop lite firms. Black list would have shady prop lite firms and white list would have "legit" prop lite firms.

We used to do this with NYSE Specialists. We never sent our orders to specialists on the blacklist b/c they screwed us a lot.

So, make a white list of prop lite firms to weed out the scammers. Problem solved.

No more talkIng and arguing about training, training fees, risk deposits, and so on...

I'll give it a shot.

I've been with echo for a long time now and have no complaints. No lock up, 100% payout, etc. There is a desk fee, but they waive it if you do enough shares. Not to mention the fact that they are nice folks who will work with you.

What I really like about them is that they have become very strict on their risk management, and buying power relative to account balance. God, I can't believe what our team got away with before. But no more. Extremely low risk now, as far as a rogue taking the whole thing down.

But I got a call the other day from a company called Tradeco. Never heard of them, but I thought I'd listen. 95% payout. No license needed (well, I already have one), a low deposit, and 15X buying power. I tried not to chuckle as I was listening. But after I thought about it, if I was brand new, couldn't get my license for some reason, had little cash, and just wanted to break in, why not give it a shot?

I don't know. Seems shady. Gotta go black on Tradeco for now.

As far as Echo, gotta go white. No bad experiences at all after being there for years. I get the idea Bright is the same way.

 

[jnbadger]

Quote from Lights:



More legit places will take a capital contribution, offer a lower payout but share some risk.

Share some risk? Do you plan on losing money while getting this lower payout? If you're good, why do you care?

 

[Lights]

Because the risk managers who work at these pseudo props do a fantastic job at covering it's customers at market tops and bottoms. I've heard stories of places which promise 40:1 and then re-adjust to 3:1 just when their customer books are overwhelmingly one sided on that particular security and their buyside prop books are on the opposite side.. and need "support" while their customer equity drops to levels which forces the prop to cover margin on their own positions. you get the picture.. if they're not sharing risk, they're against ur risk. it's a conflict.

Quote from jnbadger:

Share some risk? Do you plan on losing money while getting this lower payout? If you're good, why do you care?

 

[jnbadger]

Quote from Lights:

Because the risk managers who work at these pseudo props do a fantastic job at covering it's customers at market tops and bottoms. I've heard stories of places which promise 40:1 and then re-adjust to 3:1 just because their customer books are overwhelmingly one sided on that particular security and their buyside prop books are on the opposite side.. and need "support". you get the picture.. if they're not sharing risk, they're against ur risk. it's a conflict.

All I can use is my gut and brains based on damn near a decade of experience. I have never experienced anything remotely close to these worst case scenarios you keep coming up with.

 

[syswizard]

Exactly. I traded prop with a firm that eventually went belly-up.
It took 8 weeks and a lot of legal work to get my deposit back.
Yes, their technology was also crap....didn't support stop orders of any nature (local, server, exchange).
Then I looked for another firm.....and I came across the SAME PROBLEMS....outdated or unsupported software platforms, capital tie-up, high commission rates, no options allowed, etc.
I got so suspicious I had to visit the shop in-person. When I did that, what they SAID WAS GREAT, but when I got the written agreement in the mail, IT WAS DIFFERENT !!

I gave up looking and went to IB. Now I'm about to purchase the Multicharts Platform for high frequency forex trades and to also do some discretionary options plays.

 

[Lights]

Maybe places you've traded at are exceptions. But I do speak of this behavior as something that happens often. Does your firm get happy when you make. Doubt it. It's simple math.. Out of the tens of thousands of accounts these firms have opened, 90% close out after less than a year or two. Who wouldn't trade against those odds.

Quote from jnbadger:

All I can use is my gut and brains based on damn near a decade of experience. I have never experienced anything remotely close to these worst case scenarios you keep coming up with.