Prop firm recommendation?

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ElmoTheDestroyer

Hi everyone,

I was hoping someone could recommend a prop firm that has a good reputation that will let me trade equities/CFD's with some of their money. (Not interested in Forex/Futures/etc..)

I know Tradenet exists, however I was hoping their might be a US company that might be more reputable?

I don't need their crazy leverage. I'd be happy to pay $2000 and get a $4000 trading account through a reputable broker with a good platform. That is more appealing than paying $500 for a $14,000 funded account.

The reason I am concerned, is I am forced to leave most of the money I earn in the account until I am consistently earning enough to replace my SSDI disability income.

If I pull funds out before then, long story short I will lose my SSDI coverage. This is also why I can't use a regular broker and trade with my money. Because I would be using my money to make money, every green trade would be considered income by Social Security and I would lose my disability income before I'm profitable.

So, I may be up around $50k+ before I do a significant drawdown on the account. Because technically it's not income till they pay me, I can keep my disability and trade using the prop firms account.

I just don't know if I could trust leaving that much money in my account with a company like Tradenet or if there is a safer, better broker/prop firm I could use. I'd prefer to pull most of the profits out of that account to protect it but it's not an option because of SSDI.

Any suggestions?
--ElmoTheDestroyer
 
I don't think there's a simple, legal, and cost effective way to accomplish this without risk that a 3rd party will screw you over.

I have an idea on how to go about this without a 3rd party and it is legal, but because you would be doing it for the sole purpose of getting around SS restrictions, I suspect it would be considered SS fraud and therefore don't think it should be done and won't go in to any details on it. I would be skeptical of anyone claiming they have a legal way -- it may be legal in and of itself, but because of the intent, I think you would get in to trouble and I don't want to have any part in it.

The cheapest method that I *think* would be OK, but I'm not 100% sure on would be to find someone who is willing to let you trade their account. Have them agree to pay you a percentage of profits only after some criteria has been met (time, profit amount, beat a benchmark by X percent for Y time, etc). In this case, you don't have profit until the agreed upon criteria is met. This reduces the risk to your investor (because they don't pay out until you've shown your worth) and it satisfies the requirement of not having income until you hit some goals. This may require you to be considered a professional and possibly have to register with the SEC or state agencies. I'm not an expert on regulations, so the obligatory advice to consult a professional is appropriate here -- you should consult a professional! The down side is to get a professional opinion on how to go about this legally (if it's even possible) will set you back $. If you do end up being treated as a professional, the market data fees (depending on what you're trading), could be prohibitive.

The other route is what you've identified (a prop firm), but I don't know of any reputable ones. I've seen a number of threads where people are asking for recommendations and it seems like the legit prop firm industry has died out. Those legit firms that remain are probably going to want first loss capital in excess of $2k (I think I read $5k is required with 1 year lock up) and/or a trading history.

Good luck in your search and be very cautious no matter what approach you take.
 
Lee- said:
The cheapest method that I *think* would be OK, but I'm not 100% sure on would be to find someone who is willing to let you trade their account.
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I think this could be fraught with problems and complications, including potential legal ones: wouldn't it be contrary to any broker's terms of service, for a start, because it would defeat the "know your customer" rules imposed on them by regulators, to have another, undisclosed party trading someone's account?

If you can pass a TopStepTrader Combine, you could perhaps get one of their funded accounts and simply elect not to withdraw your share of the profits until they've reached whatever figure's appropriate for you? But (i) those accounts are only for futures or forex, and (ii) it might still be considered a fraud over the SSDI payments, if it came to light later?

I'm no lawyer, but it looks to me like this - in general - is an issue over which you need an opinion from someone who is?
 
Xela said:
I think this could be fraught with problems and complications, including potential legal ones: wouldn't it be contrary to any broker's terms of service, for a start, because it would defeat the "know your customer" rules imposed on them by regulators, to have another, undisclosed party trading someone's account?
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Again, I'm no expert in regulations, but I'm not sure that it does violate KYC rules. IB (and I'd imagine some other brokers) supports friends and family advisor accounts where you can have someone sign up for an account and delegate trading permissions to you. IB then "knows" both of the customers (the one trading and the one funding) as well as the relationship between them (ie customer A has trading permissions over customer B's account).

There's probably other ways to legally trade on behalf of another party, one of which would be creating an entity and registering the account as the entity, but then you're almost certainly going to deal with professional classification and even more likely be required to register with SEC/state agencies.
 
Lee- said:
Again, I'm no expert in regulations, but I'm not sure that it does violate KYC rules. IB (and I'd imagine some other brokers) supports friends and family advisor accounts where you can have someone sign up for an account and delegate trading permissions to you.
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So you can ... good point, and thanks for it; I suspect that they'll require all the details of the person actually doing the trading, but still it could easily be relevant to the OP's situation.
 
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Huh... Interestingly, weirdly enough... I found out that profits made from the market will not affect SSDI at all. Blows my mind, but I guess because it is considered unearned income vs. earned income, they don't care about it, treat it the same as if you had a 401k or something, it has no effect.

I'm kind of blown away, but I called them direct to be sure and the guy I talked to verified it. Kind of crazy because they are really strict about earning money while on disability, but they treat this kinda stuff different than any sort of job/business income.

So, I'm just funding a regular broker account and goin' from there. :) Thanks for the replies!
 
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