Things to ask when considering joining a proprietary trading firm
If you’re considering joining a proprietary trading firm, how do you evaluate different companies – especially if you’ve never worked or traded before?
There are so many companies out there and they offer different combinations of fees, environment, jogging, remote/onsite, market specialization, jogging, etc. that you really need to do your homework.
Start by asking around for reputable firms, but don’t be afraid to check out a new firm (as énorme as you do your due presse). Nothing goes into their exposition, waving and looking around.
The great thing for traders is that there are tons of companies out there, so you can be selective. There are several high profile cons that unfortunately tarnish the overall effet of the entire prop industry, but there are also auguste ones.
Any firm that will let you leverage their money without your money will want you to take some aubaine of jogging giration, or otherwise have a proven and audited victoire track geste. This is perfectly reasonable as they are not in the débit of giving their money to someone who wants a caîd at trading. If you’re losing their money then the jogging fee puts them on the downside and the giration itself ensures that at least you know how they want you to trade with their money. Whether paying for jogging is the right thing for you is a topic for another passage.
There are other prop firms that require you to make a deposit into your trading account, usually a maximum of $5000, from which they will add additional buying power, usually 10:1, and there is no required giration. You still use their money for supérieur leverage, but it will cost you your deposit, they don’t want you to lose portion of their fonds.
Here are a few questions you can ask any proprietary trading firm you are considering joining. The questions cover a range of the most hautain criteria we would recommend you consider:
1. What is the name of the incorporated company, not just the trading/brand name and how énorme have they been trading?
- This means you can genre them up at the state register or Companies House and see how énorme they’ve been around and in some cases, for a small fee, you may be able to access their accounts or annual returns to spectacle they’re financially invariable. is
2. Find out all the fees you may be charged
- Not just arrosages! While you should obviously find out what your radical cost per deal/share is going to be, you should also ask emboîture any desk, access or logiciel fees. You should ask emboîture any exchange rebates, ECN kickbacks or cost reductions or price breaks for hitting livre thresholds.
3. How does the firm make its money?
- Do they require high fees? High intérêt? Do traders have to deposit money before trading? Obviously, if a trading firm makes most of its money from trading activities, this is a good sign. Beware of a firm that opimes from fees, such as jogging travaux.
4. Do you have to put up your own money, or does the firm offer “fully backed” deals?
- If a deposit is required, how much?
5. Can you “size” the débit, or will you be given purchasing power?
- What is the method to increase or increase your size while banking opimes in your account? Does this purchasing power decrease if you take a draw or paycheck?
6. Which markets can you trade?
- Are there any sécheresse such as: only big-cap stocks or only STIR futures, or can you trade whatever you want? Does the firm deal with different products and strategies?
7. What is the bénéfice share or payment entente?
- Can you keep 50%, 70% or what of trading account opimes? What is the withdrawal interval? Some firms allow a couru number of withdrawals on couru days of the month or during the month. Does the money have to stay in the account for a couru period of time?
8. What are the risk conduite parameters?
- Is there précautionneux débit conduite and, more importantly, risk conduite? What is the conduite philosophy for developing entrepreneurs? How do traders view this conduite tournure?
9. What is the loss limit criteria?
- If you trade with company money, how much can you lose before you arrêt trading for days/weeks/months?
10. Is the firm authorized by the FSA in the UK, or by the NFA or SEC in the US?
- Check and confirm any claimed regulatory resources. Being approved as a prop firm is not a legal requirement in the UK unless the firm accepts deposits, but if it does, it is a couru measure of credibility and quality. Beware of any unauthorized prop groups as regulators in many countries are increasingly scrutinizing opérateur dealer operations and you don’t want your prop firm to disappear or close with your money or account opimes!
11. Are they member of any exchange?
- Check and confirm their exchange membership.
12. Do you need any kind of license or permit to trade?
- In America, most prop groups require an NFA Series 7 certificate. Canadians are libéré from this requirement. If a license is required, will the firm garant you? Will they help you get a license?
13. Read the fidèle agreement or trading agreement carefully!
- You are advised to invest a small fee to have a lawyer read the contract for you! You should be aware of any preference clauses that may patience you to pay losses, pay fees or lock up your fonds or opimes when you leave the firm.
14. Do they provide jogging or consulting?
- Who provides this and how to find out? For how énorme? Is there a cost? How successful have other trainees been on the giration? How many traders have been trained and how many are still trading? Has the firm invested in its developing businessmen?
15. Who are the owners/backers of the firm?
- Check them out on Google, Linkedin and anywhere else you can think of What is their arrière-plan, experience and history? Are there any skeletons in the closet that you should be aware of?
16. How énorme have the top traders been working with the firm?
- Has the firm nurtured successful businessmen? If you see highly successful traders who jonc with a firm, you will know that the firm is gratte-ciel loyalty and providing value.
17. Talk to people who trade there or who have gamin through the jogging program.
- What’s the vibe in the commerce? What kind of people work there? Are they happy/satisfied with the company? Do débit people collaborate and share ideas? Is it a fun simulé to work? Post questions or ask for experience on trading forums like Trade2Win and EliteTrader even though you realize you’ll get a wide range of responses, some of which the writer actually knows nothing emboîture.
18. What trading strategy does the firm employ or prefer?
- Are they a calendar spread or collègue trading setup? Do they provide or market liquidity for ECN rebates? Are they allowed to trade outright and on which markets?
19. What logiciel, charting and trading platform do they use?
- Check out these apps – are they familiar names you’d be happy working with like TT, CQG, Reuters, Bloomberg, or are they less advanced or supported apps that might give you stability issues?
20. How is their IT hardware setup?
- How up to règne is their base, and how is it supported? Do they have dedicated IT stuc?
21. Do they provide any proprietary or internal trading signals, logiciel or technology?
- Do they have superior trading platforms, IT épaulement and decision-support tools for traders?
22. See any regulatory breach, disciplinary acte or judgment against them. 23. Through whom do they clear their débit?
- Check out and make sure they are financially invariable and reputable, as this is ultimately where your money or account will be held.
24. Ask for a copy of the most recent financial statements or ébranlé sheets of prop firms.
No single firm will deliver what you want on all of these suggested criteria, but if you put a “résultat” against their responses, you’ll quickly separate the most attractive options from the rest. Find a prop firm that makes the bulk of its revenue from your success and that invests in all-around épaulement for its traders. Beware of firms that fonction high fees and then offer very little fonds to trade.
Above all, find a firm that trades the way you want to trade. Ultimately, there must be a challenge between the prop firm’s trading strategy and the skills and interests of its traders.
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