Why would a prop firm steal your deposit?

[Cutten]

Quote from eagle488:



Your money is yours. Do not trust it with anyone even when there is a verbal agreement and written contract.

If people listened to this advice, then no one would ever open a bank or brokerage account, let alone actually speculate in financial assets.

The fact is, you trusted your money to people with no track record of honesty, credit-worthiness, or professionalism. Surprise, surprise, some of them turned out to be dishonest, or bad debtors, or people who behaved in an amateur fashion.

The lesson is not to hoard your money like a Chicken Little (where it will get stolen by inflation anyway), but to establish the character and reputation of individuals and companies before entering into meaningful relationships with them. This applies to life in general as much as it does to financial issues.

 

[niceneasy]

you put up $3000 or $5000 and get 40 to 1 or whatever and pay almost no commission to some company site unseen and are surprised you arent getting your $ back?

 

[giggollo]

Quote from Cutten:


The lesson is not to hoard your money like a Chicken Little (where it will get stolen by inflation anyway), but to establish the character and reputation of individuals and companies before entering into meaningful relationships with them. This applies to life in general as much as it does to financial issues.

Agreed...thats good advice...

 

[giggollo]

Quote from niceneasy:

you put up $3000 or $5000 and get 40 to 1 or whatever and pay almost no commission to some company site unseen and are surprised you arent getting your $ back?

Its not a matter of being surprised...the question was more like "if a firm is making $5000 in commissions per month from you, why would they steal your $5000 deposit and cut off that income stream, and jeopardize other similar commissions income streams from other traders..."

 

[Moneyball]

Quote from giggollo:

Its not a matter of being surprised...the question was more like "if a firm is making $5000 in commissions per month from you, why would they steal your $5000 deposit and cut off that income stream, and jeopardize other similar commissions income streams from other traders..."

The answer is they wouldn't. The only time you read about people not getting their deposit back is when they are leaving the firm. In that case, the income stream is already cut off, so these sleazy "firms" are just trying to get a little additional $. I'm not justifying what they're doing by any stretch, just pointing out that they wouldn't cut off $5K per month for a one-time payment of $5K.

 

[ElectricSavant]

Business exists to make a profit. A business will take from you more than it gives you, as it exists for that.

What makes one prop firm different from another? If they have a better name or more established can they offer you a more safe and secure position with more security and income?

If these are just businesses that collect "independent contracting traders" without offering training...leverage....etc...then what can they offer?

Even if a prop shop has a good name...the rules of the industry do not allow them to offer what others cannot...its an even playing field...

Michael B.

 

[romik]

You own a fridge, a TV set, a car, a hat, a camera, clothes, etc., but we don't own money, Huh?

 

[ElectricSavant]

A business exists to make money off of you...or else they would not have a profit...they exist to make a profit...

If they make 10 bucks off of you they surely would not give you 12....

It seems to me that a prop firm has leverage to offer...if you can get enough of the use of their money, maybe it would be better to work with them compared to the amount of your own capital...you must do the math....100% of 50k is the same as 10% of 500k.

What else can a prop firm offer a successful and profitable trader with his own systems?

Michael B.

 

[rateesquad]

Quote from ElectricSavant:

A business exists to make money off of you...or else they would not have a profit...they exist to make a profit...

If they make 10 bucks off of you they surely would not give you 12....

Well, put.

Exactly, Capitalism ladies and gentlemen. Do not forget in this capitalism way of life, there is nothing free. Unless, it is ofcourse something one person gives to another....i.e. Education like on this website.

Although, businesses are more evil. LOL. They tend to give you something for free but still try to profit from you. For example, they give you charts but they still want to charge you for commission.

Capitalism is the greatest. Thank you, Adam Smith and the Industrial Revolution.....thank you very much.

 

[tradecrumbs]

Quote from jem:

to supplement RMs response I would like to add never trust someone who says trust me.

First first day of law school my first professor said he had 20 years experience doing contracts in Chicago.

he said when someone says "trust me" translate it as fuck you.

Some of the best advice I ever had as a lawyer.

And never trust anybody that says "I swear to god".
They are lying.