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Prop firms - why the scum bag image?
- Thread starter DEM BONES
- Start date
The stigma arises from industry alone. This industry was not built on honesty. Scams in the industry are in pretty much any sector. Education rooms, chat rooms, prop firms, banks, wire houses, government.
Someone is always trying to take advantage of others. Those firms (prop, chat, etc.) that are legitimate unfortunately get painted with the same brush as the higher percentage of those that aren't, but that's the industry they chose to do business in so they have to live with it.
Firms that treat clients right eventually get above the fray. So the answer is "No", not all are bad, but it will take some time to find the right ones to fit your needs.
Someone is always trying to take advantage of others. Those firms (prop, chat, etc.) that are legitimate unfortunately get painted with the same brush as the higher percentage of those that aren't, but that's the industry they chose to do business in so they have to live with it.
Firms that treat clients right eventually get above the fray. So the answer is "No", not all are bad, but it will take some time to find the right ones to fit your needs.
It's a dying industry, isn't it? Sort of like manufacturers of film for cameras, newspapers, and book printers. Prop firms were for leverage and low commissions. No longer necessary with IB, futures contracts, and portfolio margin. What's left for a prop firm to offer? Camaraderie? You get that in a chat room through Skype. IB is like Walmart. Mom and pop shops can't compete.
most props were not built by financial professionals with any real pedigree. Instead my experience is they're usually ex- russian refugees, ex hvac, insurance/car salesman or garment wholesalers.
Quote from DEM BONES:
I've had some good experiences with prop firms in the past but can't seem to find any now that give me the sense their word is good and can be trusted.Do the guys running these shops all go to the same schyster school?
They can't all be scum bags can they?
Read this thread http://www.elitetrader.com/vb/showthread.php?s=&threadid=213858 especially posts by Martinghoul.
In brief, with the advancement of "discount" brokerages prop firms are no longer attractive to small traders due to lower commissions alone (as whatever is saved in commissions will likely be lost in "desk" and other recurring fees). This also was made more severe by a few popular trading approaches like "rebate trading" loosing the bulk of profitability.
As a result the new business model dictates that the most of the prop firms' revenue comes from other sources than commissions, such as education fees. Naturally, espiring traders who had to pay for a mandatory introductory course may feel a little cheated. A few prop firms are actually open about making the most profit form the "education".
In brief, with the advancement of "discount" brokerages prop firms are no longer attractive to small traders due to lower commissions alone (as whatever is saved in commissions will likely be lost in "desk" and other recurring fees). This also was made more severe by a few popular trading approaches like "rebate trading" loosing the bulk of profitability.
As a result the new business model dictates that the most of the prop firms' revenue comes from other sources than commissions, such as education fees. Naturally, espiring traders who had to pay for a mandatory introductory course may feel a little cheated. A few prop firms are actually open about making the most profit form the "education".
There are plenty of honest firms out there, both arcades and true props. You just have to do your legwork to find them. They are the ones who don't actively seek bodies as they have more then enough people knocking on their door.
Start with this link and do your own research - they are out there if you're willing to put in the effort:
http://www.tradersnarrative.com/list-of-proprietary-trading-firms-735.html
Don't be lazy.
Start with this link and do your own research - they are out there if you're willing to put in the effort:
http://www.tradersnarrative.com/list-of-proprietary-trading-firms-735.html
Don't be lazy.
Quote from Cotton:
There are plenty of honest firms out there, both arcades and true props. You just have to do your legwork to find them. They are the ones who don't actively seek bodies as they have more then enough people knocking on their door.
Start with this link and do your own research - they are out there if you're willing to put in the effort:
http://www.tradersnarrative.com/list-of-proprietary-trading-firms-735.html
Don't be lazy.
Your list is 4 years old. A few of those firms have been found to be scams and are out of business.