Prop firm raises comm – neglects to tell trader

HungryMind1200 said:
I'm a class 'B' remote trader with a registered prop firm in Manhattan. I've been with these guys for 11 months. The 11 months have been rough, full of ups and downs. Generally I've been very frustrated with this firm and their lack of service & communication, but I've pushed forward regardless. My trading has improved over the last few months as I've been exercising better discipline and self control (i.e.: cutting losses very quickly, entering trades based on a setup and not based on greed or FOMO, or the need to play, etc). Learning how to conduct myself as a trader was an expensive lesson, but I've adapted and I'm learning to subdue my inner fear and greed. I am consistently gross probable. I am not consistently net profitable. I am not trading large size either - every month I trade between 60000 and 120000 shares.


Upon reviewing my prop reports I discovered that my comm rate was increased. This was done without my knowledge. I asked my trading manager what the story was and I was told that comm rates were increased for all traders effective a month ago. He then stated that he would grandfather me back into my original rate.


They would have kept me at the new rate indefinitely unless I spoke up and said something. I feel like I'm being robbed by these people. At this point i'm so turned off that I'm taking a break from trading and I'm considering leaving this place. I would U5 and wait a year to receive my capital contribution back and then register with another prop firm. I understand that I'll have to go through the registration procedure again and get fingerprinted, etc... I'm so disgusted with myself for joining what feels like a bucket shop. I don't even know if I have a leg to stand on - if i want their leverage, then it appears that I am at their mercy. Does that sound about right? What would you do?

Thanks.
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The purpose of a "prop firm" is to make money, a whole lot of it, by charging commission, ergo, a whole lot of commission. Your purpose is to generate that cash flow. Your P&L is irrelevant.

You would be surprised at what you can accomplish w/out that leverage, of course you need to be above that f'ing stoooopid 25K rule BS.
 
^futures can be tough, very tough indeed when swingin' leverage**, particularly for those individuals that are more suited to a return profile of many small losses w/ several huge gainers (as opposed to the perfect opposite of that) &/or that seek an event driven advantage arising from the idiosyncratic nature of equities.
** Presumably we are talking about leveraged day trading here

That and... Personally I quit (day) trading futures because I know that if I try I will be OWNED by machines, feels kinda like this:

(but maybe it's just 'cos I ain't so bright)

But yeah, futures might be an option for the OP
 
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HungryMind1200 said:
The firm that I'm with has a 85% payout. In hindsight, I probably would have been better off going with a firm with a lower payout. Lower payout firms have some stake in you trading successfully, versus churn and burn with commissions.
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That sounds a really interesting point. There's someone who prefers low payout. You mentioned that you only traded 60000 and 120000 shares per month. For such low trading volume, your prop firm must charge you a relative high comm regardless of payout rate. As a result, you are charged with high comm while your payout is low. That would definitely please every broker. Sorry to hear that you decide to break trading for a while. Trading is not an easy job, but you should insist if you wanna succeed in the end. You said that your broker increased comm without notification. That's intolerable. If it happened to me, I would immediately withdraw my deposit and move to a new and trustful one.
 
^ Unfortunately it's not that easy. These guys are a registered prop firm so every deposit is locked up for one year (FINRA AML rules). I would need to suspend my account and wait a year (from the time of the deposits) to receive my capital contributions. Who know's what kind of fees are involved in the interim (acct inactivity fees, purple unicorn fees, etc etc). I may find out soon or I might just suck it up and push on... I haven't decided yet.


Moving towards trading the spoos would not be a walk in the park. Most of my trading strategies could carry over, but there would be a huge learning curve. For me it's easier to look for opportunity when I'm watching a handful of stocks and how they're reacting relative to futures price action.. Only trading the underlying futures would be a whole other horse. Right now markets are stuck in a consolidation range and traders could easy whipsawed and run over. I can usually spot this chop in stocks while I'm sitting on the sidelines waiting for the right opportunity. Futures will be tougher. It would take some time to get my entries precise enough to a point where I can be profitable. This didn't happen overnight for me with stocks and it's still not 100%.


-This is why I'm thinking that I should stick it out -
I've come a long way. Yes, I've given my prop firm a big chunk of my account in comm and fees, but that's the price of admission right? Why wouldn't I gain a little more exp trading stock thus continuing in my current situation, and then move on? -But what does that mean, exactly? What's my exit strategy? Am I expecting to stick around long enough to erase my losses over the last 11 months, or am I expecting to trade until I've churned my account down to zero? Can I go from gross profitable to net profitable? It won't be quick or easy, but I could do it - I'm no stranger to hard work, right? or is the comm rate just too high to sustain with my current trading style..? That brings up a whole other slew of questions...


Obviously I still need to think about this.... In the meantime, I'll continue my time off from trading. Market's not going anywhere.
 
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