Proprietary trader Commission % on profit

Z

Zhuge

I was offer a proprietary position with a trading firm.

They offer me a commission structure with these rules.
I am require to make a minimum of 5k a month and whatever I make on top of that I get 30% of it.

So say I make 10k, they keep 5k, I get 30% of the other 5k.
Which leaves me 1.5k, and they get the rest.

To sum it up, they get 8.5k and I get 1.5k out of the 10k.

I like to know if this is a fair offer they are proposing?

Should I be negotiating for something better then this, or would this commission be the standard payout for prop traders?


Thank you for any input.


Zhuge
 
Are you crazy? Hell no.What are the other terms?
Commission rate? Capital contribution? What happens if you go negative 9which you surely will), etc etc
 
Terms like that makes me glad I work out of my home for myself. When I sold real estate I had to split 50-50 with the broker. That's another career that makes you feel like you're driving with the emergency brake on.

Yikes.
 
I have never in my life heard of such a shitty prop deal.
Do you even know what kind of commissions they're taking?

Here's the sadest part: All the prop firms out there are either belly up, or no longer hiring beginners. If you've got no cash at all to put up, you might as well take that lousy deal and learn on their dime.
 
thats absolute BS- which firm would make such a lousy deal to its traders?? i would run far, far away from that one- thats pretty laughable for them to think that they will be getting a safe 5K/month and 70% of what you make over that. What kind of commission rate are you getting? Do you get any kind of salary along with that?? It should be free to trade with that kind of deal. I can't even believe that is being offered to you- do they think that you or anyone else for that matter is naive enough to take that deal? remember, you are in this game to make money for yourself, not to give the lion's share of the profits to the firm. If you have any money to put down of your own, say even 5-10K, there are firms out there that will throw cash on top of yours, give you decent BP and you can keep 100% (or very close to it) of your profits. Keep in mind too that this is a tough market and few are able to net 10K/ month after commissions- especially if you are a beginner.
 
OK I like to add some more info that I missed out on.

First of, I am not require to make a deposit, therefore I am at no risk if I lose.

Secondly I do not pay any commissions for the transactions.
So I can trade as much as I want.

The negative part is they keep 80% of the profit, I get 20%.
But at no risk to me.

I think I get a salary on top of this too, but I will have to confirm this.

So it's very much like a job, I am an employee trading for them using their capital, and I get a 20% commission, with possible salary on top of it also.

Feel free to comment.


Zhuge
 
That deal is lacking the essential part of a good trading structure..The COMISSIONS.. hello !!! wake up dude. get those fees down and then let us in on the details
 
F1trader- he said in his last post he pays NO commissions- thats good.....

If you get a salary too then that might be OK if the salary is decent- it would be like you are trading for an institution with large buying power, you get a salary and a production bonus based on your profitability. I would want a salary of at LEAST 45-50K year in that case though.....

Is the 20% that you take home based on your net or your gross??

Also, what is the name of the firm that offered you this deal- just out of curiosity (you can PM me if you do not want to provide it on this thread)
 
Originally posted by Zhuge
OK I like to add some more info that I missed out on.

First of, I am not require to make a deposit, therefore I am at no risk if I lose.

Secondly I do not pay any commissions for the transactions.
So I can trade as much as I want.

The negative part is they keep 80% of the profit, I get 20%.
But at no risk to me.

I think I get a salary on top of this too, but I will have to confirm this.

So it's very much like a job, I am an employee trading for them using their capital, and I get a 20% commission, with possible salary on top of it also.

Feel free to comment.


Zhuge
More...

Zhuge,

Dude, you gotta read the contract VERY VERY careful before you sign on. That's a pretty low payout for a prop trading firm. And in todays' tough market, it's difficult to make $10K/month.

The only exception is if it's a bona fide institutional proprietary trading desk(i.e. Goldman, Bear Stearn, Solly arb, Susquehanna,etc.) /hedge fund job. Then go take it.

Because if those places usually pay you a base salary of typically $100-$350K(more experienced people) and give you a cut of trading profits which even at 20% or even less starting out of 10% it's still a good deal because

1) you get a steady salary and benefits(boy, I miss my institutional days! hehe)

2) a chance to execute your strategy on a large, large scale - like a few hundred millions. So, 20% of a few hundred millions is still a nice paycheck compared to 80-90-100% of a few hundred thousands if no salary is involved.

But if it's just a "normal" prop trading job with no salary, benefits and just capital to trade, then you should look elsewhere for a better deal. Though I don't work for these firms Echo and Worldco seems to have decent packages(i.e. high payout, and low comm.) as it's posted on this site. You need to contact them for details.

good luck!

trader99
 
You're probably paying very low ticket charges. It's probably $6 or $7 all in (per 1000 shares). Then you might get a monthly draw (around $2,000 per month) that you have to pay back from your future profits. That's NOT a salary, but you don't have to pay it back if you quit.

The payout % is very low but then again, you're not risking a cent and you're getting paid to learn how to trade. The low payout kind of offsets the low tickets. This is a very similar deal to Tradescape's when I first started out (3 years ago). Tradescape's payout was based on your ticket average. You could be paid anywhere from 10% of net profits to as high as 55%, depending on how efficient you were. But the ultra low ticket costs made your net P&L much higher. These kinds of deals are now extinct since the markets are more difficult. Nowadays, prop firms require a capital contribution and they pay you 80-90% of profits. The catch is that your ticket charges can be as high as $18 all in (including SEC, ECN fees). This makes it tough to be profitable.

Assuming your firm has a good training program and seasoned traders to learn from, it's a good place to get your feet wet. Don't worry about the low payout because you won't be profitable for about a year. Then when you feel confident in your trading abilities, you can jump ship to another firm.
 
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