Image Day Trading Stock Tip Lesson

Sign up for our free announcements so that you will be the first to know about new articles which will help you with your day trading!  
First Name:

We promise to never sell, rent, or give out your e-mail address to anybody!

Day Trading Stock Tip - Comparing Proprietary Trading Firms

Questions To Ask When Comparing Proprietary Trading Firms

Are you considering day trading stocks with a proprietary trading firm?  If so, you will have to run some figures during the period when you are evaluating the choices of proprietary firms.  Having these figures will help you make the most educated decision and what is the best overall choice for your particular situation.

Will you have to be licensed?  If so, which exams do you need?  Who will pay for the exam fees?  Who will pay for the annual regulatory agency fees?  Who will pay for continuing education fees?  Make sure you get the answers to these questions and factor in both the financial costs plus the costs of not trading due to studying, taking exams, and having to wait for all of the compliance paperwork to be completed.

Does the firm require that you meet daily, weekly, or monthly minimums?  These are minimums in terms of the number of shares (or contracts) traded or the number of tickets (completed transactions).

What is the percentage payout you will receive?  Does the percentage improve with your tenure with the proprietary trading firm or your performance?  Does the payout percentage include all commissions, ECN/Exchange fees, and software fees?

Do you have to pay for trading software fees?  If so, do you need to pay for just one software fee or are there additional software fees you must pay?  Do they provide you with a computer or must you purchase/lease one from the firm?  Are your software fees waived if you trade a minimum number of shares or transactions each month?

Do you have to pay commissions, ECN/exchange fees, and any borrowing cost fees such as a fee for shorting a particular stock?  Do you receive ECN rebates (if applicable)?  If so, when and how are they rebated to you?  Do you have to pay any extra fees for certain amounts of intraday leverage?  What about the ability to carry an open position overnight? What are your limits and restrictions, and do you have to pay any additional fees?

Once you have the answers from each firm you are considering, create a spreadsheet with various columns.  Be sure to include a column for each possible fee, even if you leave it blank during your analysis.  Then create some hypothetical scenarios about the number of trades you make each month, the average number of shares you trade per transaction, your average gross profit per day, and other such values.

Run the analysis and derive what would be your "most likely" scenario for take-home pay after all fees and percentage payouts are accounted.  Then factor in the "intangibles" such as a mentoring program, success rates of current traders at the firm, geographic proximity, and which clearing firm(s) the firm uses.  You might be surprised at which firms make the grade and which do not!  Again, choose those firms which best suit your particular overall situation.



Day Trading Book

Day Trading Stock Tip Recommended Ebook



Search This Site


Related Products And FREE Videos


More Articles

Online Trading Daily Psychology Self Suggestions Part 2

... in order to overcome any fear of not being able to take the trade 16) Get out of the trade when the symbol's movement tells me 17) Cherry-pick the best trades for my style 18) If I notice any emotional problems, acknowledge them and then do something constructive ... 

Read Full Article  

Online Trading Daily Psychology Self Suggestions Part 4

... results 33) I enjoy the process of self-analysis and learning about the mind 34) Confidence equals expecting a positive result 35) Think in probabilities, yet act with certainty -- this breeds confidence 36) I can act and react automatically when it is ... 

Read Full Article  

Online Trading Daily Psychology Self Suggestions Part 3

... ONLINE TRADING (STOCK TRADING, FUTURES TRADING, OPTIONS TRADING, OR FOREX TRADING) DAILY PSYCHOLOGY SELF-SUGGESTIONS - PART 3 Here is Part 3 of this article which offers you ten more suggestions for personal trading psychology statements: 21) Maintain ... 

Read Full Article  

Common Characteristics Of Successful Online Stock Traders

... form of end-of-day journal or trade tracking in order to help you improve and learn every day. 4) They all have some form of WRITTEN business plan. This could be a formal document, a one-page list of rules, or something in between. Nonetheless, successful ... 

Read Full Article  

Why It Is OK To Make Tremendous Amounts Of Money In Online Trading

... Taking the time to enjoy enriching and memorable vacations - Having the ability to help any family with financial concerns - Having the knowledge that I earned my money in an honest, authentic manner - Becoming more comfortable with risk - Having the knowledge ... 

Read Full Article