Q: how to choose a prop trade firm
- Thread starter Leo Chu
- Start date
Hi! I am relatively new to stock trading but had an issue with choosing prop firm.
As I am not US citizen my choise was not so big. I was looking into feedbacks, how long the company exists, the commisions. The payout is not priority #1 for me so far (my company gives 85%).
The platform and tech support were also important for me.
Ask some questions to the tech support of the company you are considering, see how professional and fast they response, it may help as well.
And the last thing important for me was that I can refund my deposit while 95% of other props do not allow that.
rmorse
Sponsor
I assume you are asking about a prop firm where your capital is first loss. Where you have to register as a member of the firm with a U4. IMO, the most important thing to consider is the financial health of the firm and who the managers are. Your capital and trading business will be locked for one full year where you must follow their rules both in and out of trading.
You will want fair commissions, payouts and leverage, but if you can't trust them to run a business where you can thrive, you will be very unhappy and not perform.
rmorse
Sponsor
That might be because that firm is not registered in the US. For those in the US, be careful dealing with unregistered prop firms where they use your capital for their net trading capital. The SEC/FINRA is monitoring these firms for violations.
I'm not familiar with securities laws outside the US.
Yes, you are right, my one is not registered in USA. This was the one I found that returns initial capital.
What if u have choices between a well-known firm and a small firm, but the bigger firm charges much higher than the smaller one and anything else is quite similar?
Do u think that it's important for such firms to register in USA? As I know, many of them choose to register in some islands for tax consideration.
I definitely would not choose the company if it exists less than two-three years at least, but actually nearly all of the props do not charge high fees. I was choosing between 0.2/100shares and 0.4/100 shares, but 0.2/100 shares prop team exists about 5 years meanwhile one with 0.4 - around 15 years at least, but I chose 0.2, understanding all the risk)
If you are outside US so you most likely would have to choose something outside US, as from Russia for example I found only one team registered in US working in my country. But if I lived in US I definitely would choose company registered there.
It is 0.2/100--0.4/100, or 0.2/1000--0.4/1000? The former range is quite expensive.