Question - What does it matter what class member I would be? B or C?
itradeRisk:
Read post #47, and use the .005/share figure to develop a profit model as to what you'll need to make to justify your variable and fixed costs.
At $250/month in platform fees, you'll bleed $3,000 or 60% of the initial $5k annually (not including commissions), so if you're not making profits up front, then you will churn and burn the initial capital rather quickly, and you'll have to top off the account.
I do agree that trading from an office will have its advantages, since it will feel more like a 'real job' working in a professional environment where you can bounce ideas off other traders, rather than trading remotely from home.
I'm not sure about the mentorship program, it's subjective and you'd have to get a feel for it once you're in the game.
Ask the manager about the traders who are making $1k/day: how long they've been trading, how much capital they are currently trading with (not buying power, EQUITY), and how many times they had to refill their accounts.
Just separate the fantasy from reality, and you'll be fine.
At most prop firms desk/ software fees are waived after certain volume eg at Bright & Echo it was 200k shares a month ( when I was with them don't know now) which is very reasonable for a day trader.
Yes, 200k is average of 10k/shares a day, not excessive at all for a daytrader. However, even if they waived the $250 platform fee, at 200k/shares/month and .005/share, he's going to spend $1,000 in commissions without considering the cost for ECNs. Since most new traders will NOT be adding liquidity, his true commissions are around .008/share, or $1,600 monthly at 200k shares. A person putting up $5,000 trading 200k/shares would bleed the account dry within a few months on commissions alone unless he makes a 32% return on equity in his first month. At Bright, you had at least $50k of EQUITY to justify the volume of shares traded, a newbie with $5k doesn't.
Besides, he doesn't imply what volume he'll be trading, other than to say it won't be "high volume" which is relative. This implies he will probably have to pay the $250/month platform fee regardless of any potential volume waiver, at least to start:
"The fee's are a bit (in my opinion) high .005/share with about $250~ a month in platform and data fees. I wouldn't be coming in trading with high volume to start so I'd be getting that price."
As Maverick74 correctly stated many years ago, there's a reason Don Bright did not take $10k accounts, while virtually all of his competitors did. While there are always exceptions with any equity prop firm where a newbie with $5k can create a livable income stream, Don knew the statistics, because the stats don't lie. R.I.P. Don Bright.
Guys thank you for all of your input.
It's been awhile since I've posted in here so I figured I'd share some info from my meeting and give some insight.
Sat down and had about an hour and a half convo with the manager of the firm here in my local area. Got some basic information that's been covered here in this thread and some other fine details. The fee's are a bit (in my opinion) high .005/share with about $250~ a month in platform and data fees. I wouldn't be coming in trading with high volume to start so I'd be getting that price. $5k minimum capital contribution (was recommended 10k) locked in for 1 yr. 90% payout on profits. I also have to get my series 57 license. All relatively standard stuff. That's the basics.
My main thing was getting a feel for the traders and the trading floor. I was trying to gauge whether or not I'd be able to become a better trade, gain an edge, and figure out what advantage (if any) I'd be gaining. When I was there a lot of the traders were on vacation so I didn't really have an opportunity to meet or talk with any. According to him, I'd be gaining an edge by just being there on the trading desk talking to people 5 days a week and hearing out their calls and suggestions. I'm (obviously) newer to the professional side of trading and I'm looking for a bit of hand holding and guidance. Maybe I "sold" myself enough or something because he mentioned a couple of times he personally felt I wouldn't really need much hand holding. My gut says I would need it.
We talked about a possible mentor ship program with one of the head traders. What that would entail would be a one-on-one interview with him closer to when I'd want to come on board to determine if he'd be willing to take me on. Also, I'd have to up my capital contribution to around 15-20k and my payout would be dropped to 80%. According to him the reason behind that is to ensure I am committed and not here for a 4 month flier and then leaving, wasting his time. I'm certainly not wanting to take a 4 month shot at this.. this is a 1yr shot. Then re-evaluate. To me I was a bit skeptical about that..
Here's where I am at... to me I get the business model of these "prop firms" but at the end of the day he did a decent job at selling me the idea I could be successful. Turn over rate is about 75% there he said. I have to be dedicated and work hard otherwise I'll be out the door. He wasn't selling me yachts, gold watches, unicorns, rainbows. But he was bragging about how good some of his traders are. (aka: making 1k a day). But on the flip side he did talk about how a newer trader wasn't doing well at all.
I'll come back in here and explain more in detail where I'm leaning and give a bit more background to where I'm at in my trading skill/career so maybe I could get some insight from you guys what I should/shouldn't do.
Thanks for reading.. long post here.. just getting out a lot of thoughts.