How to join a proprietary trading firm as a customer?
I was doing an internet search on ways around the $25,000 min acc balance pattern day trader rule, and came across the answer of proprietary trading firms.
The question is, which ones actually allow you to become a customer? I've called up a few mainly Getco and SIG, but they said no. I'm confused because I've seen several forum threads where people were speaking as if they were customers at these firms.
I am located in Los Angeles btw, are there any legit prop trading firms near me? As long as they're reliable I do not care if they are local.
I currently trade with optionshouse and am sick and tired of getting locked out all the time by the new 2011 trading rules that they didn't have back then, and as a result missing huge profits
By definition, proprietary trading firms trade their own money and not customers' money. OptionsHouse is a brokerage firm.
I suspect you misunderstood what people said in other threads, as you do not "trade with" proprietary trading firms.
Not sure what you mean by customer, but depending on that, the possible answers are:
1) If you want to trade yourself, but just take advantage of priority execution of their account, low latency networks, etc. then you can typically set up at an arcade prop shop if you come armed with cash. You might expect to pay about $2k/mo, plus a percentage of your p&l to the firm.
2) If you want to just hand over your money to them, that's probably not going to happen. That forces them to deal with a whole set of regulation and oversight that they aren't subject to when they are just trading their own (firm) money.
I think #1 is what I meant, where can I find one of these arcade prop shops?
http://www.wilmott.com/messageview.cfm?catid=16&threadid=88469
"it generally works like this: You invest $10,000 with them and they will allow you trade up to $100K using their platform. If you make money you keep 80% and they keep 20%. If your losses reach $10K they will kick you out. "
youre thinking of a chop shop.
That's the kind of place I'm talking about. The places I'm familiar with want you to put up $25k, and will let you trade a $250k account. That $25k isn't an investment - it's just a buffer to protect the firm against your trading losses. If your losses approach or exceed what you have in the bank with them, they'll cut off your trading until you re-up (they won't kick you out if you come up with a new cash buffer). And, like Bernanky pointed out, it's probably not even appropriate to call these places prop firms. I referred to it that way because there are a lot of hybrids - small prop firms that trade their own strategies / accounts, but also rent out trading stations to individuals under the above arrangement to supplement the firm income.
where can I find a reputable firm like this which doesn't charge too much in commissions? I only have 10k
dunno. depends on where you are located geographically. google "arcade trading shops" or variations on that.
Are you looking to trade remotely? I know of a couple but the one I am with now doesn't accept US traders though they only do US and Canadian markets. The other is international just opened up to the US.
The firm I am with now gives crazy buying power - like 100 to 1. Its a bit extreme and shocked me. What kinda rates are you looking at? Generally speaking these are the rates I found (varies from firm to firm tho):
20 cents per 1,000 shares but 70/30 profit split $2.50 per 1,000 shares but 90/10 profit split $5-7 per 1,000 shares and 99/1 profit split
Of course the higher in profit sharing you go the more it is like a brokerage giving you tons of margin with the ability to skirt the $25K daytrade rule.
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