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

Quote from MachTrader:

Haha! These message boards are so absurd. I just put out a post saying how I read through these boars and people jump on and say scam this and scam that and how they are just people that don't understand the business.

In just two posts, here they come. Scam this and scam that. How lame. Didn't they read the second article where someone logically breaks down the advantages of prop trading versus retail trading? Don't you understand the cost benefits from prop trading with lower commissions, ECN rebates, access to short stock, etc?

But as I said, it always comes down to upfront money. Someone please tell me how a prop trading firm who requires a risk deposit/training for 5K and will provide you with 25K buying power is a scam? That sounds like a pretty good thing to me. Oh wait, remember what I said earlier?

If they have a risk deposit, they are a scam

If they have a desk fee, they are a scam

If they require training, they are a scam

Here they come out of the woodwork just like I said they would.

Again, it all comes to upfront costs. Please someone explain to me how the prop model is a scam? They bring you in, provide you with training (I guess if the training is not good it might be), provide you with way better software than retail, provide other traders to interact with, provide better liquidity, provide better commissions, give ECN rebates, etc in exchange for a fee. I guess you want this all for free.

I think where people are getting confused is that all a prop firm is doing is providing you a service, just like a broker dealer like eTrade, TOS, Interactive Brokers, etc. Whether you succeed or not in your trading isn't the fault of your broker...It's yours. They provided you the tools to get into the business like you wanted but the results are all yours.

I think people are getting caught up with the implied idea that if you join this firm as a "professional" trader, you will have success. But guess what? Everyone does that! All brokers advertise about how their system is the best and has the best tools and if you had it, you would be a master trader. All software companies advertise their products and imply that if you use this product, you will be a great trader. Hell, even budweiser commercials give me the perception that if I just drink a 6 pack of bud that I will attract the hottest girls and have the time of my life. It's called advertising people. Yet, no one calls Think or Swim a scam or even budweiser a scam. They are a company providing a product or services, just like a prop firm. What you do with their product or service is up to you.

I am pretty sure that this post was a complete waste of time and wont stop the Scam, scam, scam talk. Oh well. Hopefully rational people can get some meaning out of it.
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You said a lot things that make sense and true BUT you don't sound like a trader who has traded at prop firms. You sound like prop firm manager or someone who recruits for prop firms. I have talked to these people and you sound like them.

You have never mentioned the most important thing at a prop firm. HOW ARE YOU PAID and HOW OFTEN? Prop firms don't seem to care if their traders make money or are paid. They just want the commission that traders generate. I find it amazing how they expect traders to keep trading without getting paid. Payout structure at prop firms are not uniform. There's so many different structures. Some firms withhold pay. So, if you make $100,000, you might not get entire $100,000. Unreal but true.

The talk of buying power is irrelevant. You could always negotiate whatever buying power you want as long as you don't blowup.

So, with 5K, I could get 1 million in buying power if I don't blowup or lose money consistently.

The prop firm is mainly concerned about commission generation. They don't care about anything else.

So, if I trade 10,000 shares and make $10,000 per day, THAT IS BAD and frowned upon.

If I trade 1 million shares a month and make $0.00, I am a superstar and prop firms will love me.

This profit structure is weird. It's like these prop firms don't invest in their traders. A salary is an investment in the trader.

There's other stuff but don't have time for that.

This said, I bet there are a few decent prop firms out there.
 
I can't disagree with anything above.

If you want to sound credible, you (MachTrader) should name a few firms that aren't shady.

Also, you mentioned the training that you get with a $5k risk deposit. Which firm offers a training that is ACTUALLY PROFITABLE and not geared to generating massive commissions by churning a lot and sometimes burning a lot.

I say screw training and get into a good group of traders and make money. Also, don't get screwed with a laundry list of fees. AND MAKE SURE YOU GET PAID!!!!!!!


Now I can see why the word arcade is used to describe shady prop firms. It's like going to an arcade with $5,000 in quarters and playing video games.
 
You are right on.

Your post reminds of these lyrics lol:



Industry shady it need to be taken over
Label owners hate me I'm raisin' the status quo up
I'm overchargin' niggaz for what they did to the Cold Crush
Pay us like you owe us for all the years that you hold us
We can talk, but money talks so talk mo' bucks


H to the izz-O, V to the izz-A
Fo' shizzle my nizzle used to dribble down in VA
H to the izz-O, V to the izz-A
That's the anthem get'cha damn hands up
H to the izz-O, V to the izz-A
Not guilty ya'll got-ta feel me
H to the izz-O, V to the izz-A
That's the anthem get'cha damn hands UP!
 
Quote from MachTrader:

I guess friendly discourse went out the window. This will be my last post.

The first thing you need to understand is you are not being hired. You are not getting a job. You are not working on the desk at Goldman.

And concerning training, where in your entitled little fantasy world do you think that training guarantees you success? Guess what? I went to 4 years of "training" at college, spent $35,000 and learned some truly worthless stuff. In my opinion, it was mostly a waste of time taught by people without any real world experience. But guess what, I don't come on to message boards and proclaim, "College is a scam. Don't go." I took some really great things away from my experience such as finishing assignments, learning how to study, etc. All college is is information given to you. What you do with it is up to you. That is all that training is.

You sound like a very entitled little boy who thinks that trading success can be found in a book or free on the internet. It comes from getting your ass kicked time and time again until you finally figure out not to do it anymore.

By the way, I have traded with both Bright and Echo. Both firms have delivered exactly what they promised: software, capital and training. Their training was ok but it was just info. I ended up losing money at Bright but I admit it was all my fault due to lack of consistency. I didn't come on to a message board and cry like a little bitch that Bright took my money. They provided exactly what they said they would. I have been with Echo for 3 years now and am doing ok. Not because of Echo...because of me.

I am not going to engage any more in this discussion since in has degraded just like I predicted in my first post. Isn't the internet wonderful! Good luck to all.
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You are not understanding the poster. He feels that prop firms don't deliver on their promises and that's why it's looked as a scam.

And comparing 4 years of college at the cost of $35K to a few weeks of training for $5K is an apples to orange comparison. They don't compare.
 
I started as a brand spanking newbie...I'd guess that a lot of us prop traders here in Canada did. My firm was 100% legit, and I know many others that are as well, but very few of them will provide much training. Hopefully there are experienced traders there that you can learn from (one of the best perks of being in an office). Of course most people don't make it...that's the nature of this business. The firm gives you the OPPORTUNITY and it's up to you what you do with it. Most people just aren't cut out for it. I know firms that are scams as well, and others that are just managed terribly. But just because you have to put up a deposit (most do this now esp if you trade remote), pay a small desk fee every month and don't have someone holding your hand doesn't make it a scam and anyone who says it does doesn't know what they are talking about. I'd much rather send a newbie to a place where I know the managers are honest and willing to take on inexperienced traders with a true passion to learn, than a place where they will pay for training. Nothing can replace the hours of screen time you need to learn anyway and most people just don't stay in the game long enough to learn that, no matter how much training they get.
 
if ib,tos, all the others that let you open an acct with 5 or 10k are legit,and as far as i know they accept every one who has the money to open an acct,how are the prop firms less,if they offer more for the same downstroke..the main reason is because they don't let you trade for free..which is a main reason you would go to a prop firm instead of on your own..because you don't have the money to trade...so the cash problem lies at the traders feet...but it's always been popular to transfer blame away from one' self
 
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...
 
Traders are this board are talking about "legit" prop firms that don't require a risk deposit or training and that they are the prop firms you want to trade through. The problem is these kind of firms are super-exclusive and are very difficult to get into. These firms typically recruit high level math kids out of college and have extensive tests to pass before being offered a seat. They don't offer remote trading which means if you don't live in NYC or Chicago, you will have to relocate. You usually have to start as a junior trader for at least a year before you get any capital to trade. You do get a salary and a percentage of the senior trader's profits that first year. This is the "legit" prop firms people are referring to. I would guess that 99% of all posters at Elite Trader would not come close to qualifying for a position

So, for the other 99% and for people who want to trade remote and not relocate or commute into an office, prop lite is what is available. Is it as good, no. But its the only thing available to you. You will have to put up a deposit and will have to go through some training. If you don't want to do it, then don't. Many people have found some great experience through these kind of prop firms and some people haven't. I love how traders on this thread keep advising people to go to "legit" firms like they have a choice. Prop lite is the only choice they have other than trading retail.

Anyway, good luck to all and happy trading
 
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.
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Just my opinion; but i dont think you should be going prop unless you know you have an edge (preferably demonstrable using real trades over a substantial amount of trades; just backtesting wont cut either).

Now if you expect someone to teach you to trade at a prop firm and teach you to make money conistently for the rest of your life; something is wrong from the equation. Why would someone who actually really knows such a thing teach you (or anybody) to do that? Say there are santas in the real world; even then the chance that you learn to have the same intuition as this "santa" is very slim to none. You better figure it out for yourself.

The whole argument that the main reason to join a prop firm is so you can learn to me sounds like agenda pushed by prop firms selling educational material. These firms are in business to make money. Not to make you money; they provide a very valuable service by providing leverage for customers; and in return they get commisions and possibly a cut in profits. Thats about it.

Just my 2cents.

-gariki
 
Quote from niccia:

I started as a brand spanking newbie...I'd guess that a lot of us prop traders here in Canada did. My firm was 100% legit, and I know many others that are as well, but very few of them will provide much training. Hopefully there are experienced traders there that you can learn from (one of the best perks of being in an office). Of course most people don't make it...that's the nature of this business. The firm gives you the OPPORTUNITY and it's up to you what you do with it. Most people just aren't cut out for it. I know firms that are scams as well, and others that are just managed terribly. But just because you have to put up a deposit (most do this now esp if you trade remote), pay a small desk fee every month and don't have someone holding your hand doesn't make it a scam and anyone who says it does doesn't know what they are talking about. I'd much rather send a newbie to a place where I know the managers are honest and willing to take on inexperienced traders with a true passion to learn, than a place where they will pay for training. Nothing can replace the hours of screen time you need to learn anyway and most people just don't stay in the game long enough to learn that, no matter how much training they get.
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I don't know niccia but I am finding that I get shit and grief for $5K.

It's not the $5k per se that piss me off. It's what I get for $5k that piss me off.

One usually gets horse kaka plus wierd shits for $5k. It's a raw deal. Don't be delusional. Face reality.
 
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