What firm is it?
Prop commission negotiation
- Thread starter HungryMind1200
- Start date
It's unheard of to get zero bp over your capital contribution, as it defeats the purpose of trading prop! Since you have "zero buying power" over your capital, and you can trade a maximum of 1,500 shares of a $6 stock, that implies $9k of equity.
With that type of equity most firms will offer at least 10x, if not 20x. Some firms adjust the amount of firm capital depending on your P&L, in order to keep the factor constant. Say you lose 1k, then the bp goes down by 10k if you're at 10x capital. If you make 1k, then the bp goes up by 10k, etc. Some firms keep the buying power fixed from your original capital even if you take a draw, however in order to prevent the "x factor" from getting out of whack, you would be asked to add more funds, say if your account dropped below a certain minimum.
I'm not sure of the logic your firm is using to justify keeping your buying power the same as your $9k equity, even if it helps to avoid the PDT rule with retail. The $8 per 1,000 rate (not including ECN) adds insult to injury, even for a newbie trader. The $1.50 minimum makes it prohibitive to scalp in/out with 100 share lots, as it would add up quite significantly.
In any case, you are getting a raw deal, period.
The more I read some of these replies, the more I feel like a fool for waiting months to raise a red flag with these guys. This was my first experience with a prop firm, these guys must have seen me coming a mile away. In my own defense, I did research the firm. I checked their filings with FINRA and the SEC. No red flags there. I "interviewed" with another prop firm (T3) prior to joining up with these guys. This firm seemed to have lower costs and more freedom than T3. Perhaps I was wrong.
My initial capital contribution was 10k. Considering software and quote fees ($300/month) and the learning curve expected with using a new DMA platform, my current balance is under 9k. I expected to add more capital to this account after testing the waters with the firm. I'm not too enthusiastic about giving them any more of my money until I get this sorted out.
I agree, what's the point of prop if you're not going to get any access to firm capital? The only way I can rationalize this (I'm trying to look at all possible angles here) is that I came in as a rookie. Maybe there's some kind of probationary period until I have access to firm capital?
I sent my trading desk manager an email... Let's see if he responds. If not, I'll call him tomorrow.
I have a trader exec agreement, but it is very high level and it does not show my individual entitlements. There was another document that I signed that showed all this information. I do not have a copy of it. I will request it asap so I can review.
Thanks for not chastising me too much. I'm tough enough on myself when I make dumbass mistakes.
My initial capital contribution was 10k. Considering software and quote fees ($300/month) and the learning curve expected with using a new DMA platform, my current balance is under 9k. I expected to add more capital to this account after testing the waters with the firm. I'm not too enthusiastic about giving them any more of my money until I get this sorted out.
I agree, what's the point of prop if you're not going to get any access to firm capital? The only way I can rationalize this (I'm trying to look at all possible angles here) is that I came in as a rookie. Maybe there's some kind of probationary period until I have access to firm capital?
I sent my trading desk manager an email... Let's see if he responds. If not, I'll call him tomorrow.
I have a trader exec agreement, but it is very high level and it does not show my individual entitlements. There was another document that I signed that showed all this information. I do not have a copy of it. I will request it asap so I can review.
Thanks for not chastising me too much. I'm tough enough on myself when I make dumbass mistakes.
Consider all of your options before going forward. It's definitely a good idea to see what forms you signed and conditions you first agreed to when you started. You might be able to have your account disabled until the lock up expires if the firm is unwilling to modify the agreement, otherwise you are stuck paying the $300/month in software/quote fees, which will bleed down the equity.
Even if you came in as a rookie, it is uncommon to hear of someone getting ZERO buying power over their equity.
See if you can negotiate some of the terms that will allow you to justify trading. Remember, the prop wants to make money on the markup of commissions. If you quit trading, then there are no commissions, and hence no mark up. Perhaps they can lower the per share rate and outright eliminate the $1.50 minimum.
I'm sure you have certain risk parameters in place to prevent a "blow up" intraday by having a forced stop after a fixed amount of loss. My guess is the firm may have restricted you from trading with firm capital if they saw you were taking excess risk?
The worst case is like you said, take the U5 and move on. The capital will be locked up until expiration, and if you have other capital to open up a new account then at least you continue trading with another firm that offers more competitive terms.
ScalperJoe - Thank you.
HungryMind1200 - no problem.
Looks like my account was still setup as it was when I joined the firm. I came in as a rookie, and I was limited to 10k per position. This limit has been removed and I now have full buying power.
I've also just had my worst two weeks as a trader... Leverage is a double-edged sword... I still have much to learn about controlling my greed. Rough course ahead... I'm sure others have traveled these paths before me.
I've also just had my worst two weeks as a trader... Leverage is a double-edged sword... I still have much to learn about controlling my greed. Rough course ahead... I'm sure others have traveled these paths before me.
You are in one of the tightest / least liquid markets in a long time. Look at how tight the S&P has been since roughly mid-Feb / March until now.
This leads to a lot of whipsawing around. Which in turns means that reversion occurs easily and head fakes come fast and furious.
I trade my own capital on TD Ameritrade with a 70% win rate and my losses are usually the commission since it only has $9.99 commission and nothing else. I keep very tight trail stops and use their "Studies" also to create trailstops. Granted, I also do not use leverage. (I could do 2x, but I choose not to since my account is only $14k... I need to be consistent and get to $25k before I would even consider it.)
I have been looking at possibilities of prop firms: T3 and others. Unfortunately, when I add up the fees etc, even with winning strategies, I would make less with a most prop firms.
(FYI for good risk management, I only do 100/sh at a time and rarely go over it.)
If anyone can point me to a specific forum here which details the different fee/commission structures, that would be helpful as I have not been able to find any here. (Showing things like: base commission cost, ECN items, etc and then their data fee or other fees.)
I hope everyone is having a wonderful and profitable day.
All the best!
This leads to a lot of whipsawing around. Which in turns means that reversion occurs easily and head fakes come fast and furious.
I trade my own capital on TD Ameritrade with a 70% win rate and my losses are usually the commission since it only has $9.99 commission and nothing else. I keep very tight trail stops and use their "Studies" also to create trailstops. Granted, I also do not use leverage. (I could do 2x, but I choose not to since my account is only $14k... I need to be consistent and get to $25k before I would even consider it.)
I have been looking at possibilities of prop firms: T3 and others. Unfortunately, when I add up the fees etc, even with winning strategies, I would make less with a most prop firms.
(FYI for good risk management, I only do 100/sh at a time and rarely go over it.)
If anyone can point me to a specific forum here which details the different fee/commission structures, that would be helpful as I have not been able to find any here. (Showing things like: base commission cost, ECN items, etc and then their data fee or other fees.)
I hope everyone is having a wonderful and profitable day.
All the best!