More Advice Regarding Prop Trading Scams
They seem to be coming out of the woodwork: So-called proprietary (prop) trading firms that charge steep fees for training/education and then allocate X thousands of dollars in "buying power" to traders who pay commissions and other fees. The amount of capital actually allocated is a small percentage of the buying power, and it is a modest percentage of the tuition charged for training. Once commissions and fees (and/or losses) eat up the small capital base, the trader's prop career is finished and the prop firm (which never intended to make money from the traders' trading) pockets the fees.Use due diligence and common sense when such firms show a ready willingness to make you "an offer." Whatever this model is, it is *not* proprietary trading as practiced by respected firms. If a firm offers solid education for a fee, that may be a wise investment. But don't let (thin) promises of prop trading talk you into tuition payments you wouldn't be making otherwise..
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4 comments:
Brett,
Thank you for your posting on this! Promisses of amazing returns or fantastic systems are a big trap!
Worse yet are those 2-day seminars, where the instructor shows a "system", that is great in paper, and FANTASTIC in his examples.. What he fails to say is that the system fails much more often than it wins, and that there is a small edge (or no edge at all)..
Well, after you paid tuition, you're on your own again... So it is soo hard to weed out the true from the false education out there..
Maybe others can post their experience, and share what/how did they learn? Where they got their education?
Gustavo
well, your right about the class being not that good. But the real reason it is being offered and the tuition is being paid is so they can comply with SEC rules and/or FINRA rules. If you just put your own money down, then you are a client that can only receive 50% margin rates. If you are an "employee" or a contract employee of firm then you get much higher leverage rates on your capital. The payment for the class if really only a deposit for any losses you may take. Once you lose it, your gone!
Steve,
Thanks for the heads up but if your gonna trade your own capital you better know what your doing. It will cost you money either through education or losing your Arss! And don't believe just because a firm is registered that your safe either. I worked @ Bear Stearns Prop desk...need I say anymore.
I'm not sure I understand exactly what firms you are talking about. Did you not endorse SMB Capital as a reputable firm. This company charges $5000 with an option of joining them. How is this different?
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