Private Trader vs Trading Company

[DSchenk]

Hi,

would like to discuss the pros and cons of trading as a private individual vs being part of a trading company.

Is anyone here who has experience in both worlds? What is the preferred option?

 

As self-employed:

• Challenge to learn everything yourself
• Set-up your own account
• Trade your own money at your own risk
• Take home 100% of the profits, but also be liable for 100% of your losses 

 

I was in contact with a trading company recently (would rather not disclose the name at this point), which offers the below package.

In a Trading Company:

• You are still self employed
• You can trade on their trading floor or remotely
• You need to pay an initial admin fee of £398 for setting up contract, trading account and kick-off program
• The kick-off program takes 5 days and discusses trading + mindset
• Account size they give you: £20k (after 1 week of successful trading on a demo account)
• Profits: 50% to yourself, 50% to the company
• Account:1:3 Leveraged Account (I assume spread-bet, but failed to confirm that)
• Target: 4% growth per month (£140 fee payable if you don't hit the target): (4% on a £20k account is £800)
• So in theory if you hit 4% target you take home £400 in the first month, which makes you break-even on the admin fee

 

Do you think it is worth the £398 going through their starter course to really bring your trading skills to the next level? Or is this more a scheme for them to make money? maybe they let people go through the kick-off program, then they don't hit their account target afterwards, need to pay another £140 and get fired? Question is how much of their £20k have you lost by then and do the maths work out for them if they would play it like this  

If you had an offer from a trading company as a trader at hand, would you be interested in join them or rather keep trading by yourself?

 

[Caseynotes]

17 minutes ago, DSchenk said:

Target: 4% growth per month (£140 fee payable if you don't hit the target): (4% on a £20k account is £800)

I would say they can't really lose can they? you can be sure they will have a very tight rein on their 20k, there will be a max loss limit per day and will probably be very small as well as a max lose amount in total which will be small as well. So you could be paying them £400 to join and then £140 for the month and the boot.

[Caseynotes]

It's worth noting that this firm is looking for new inexperience traders, there are plenty of trading companies around, they are called Prop firms (Propriety) and to start you must submit your trading record first, if accepted you will pay a monthly 'desk fee' of around £500 for all the extras, news feeds and analytic data, ultra low latency connections, exchange fees etc as well as an account to trade and you receive a percentage of profits based on a sliding scale (the better the profit the more the percentage). But even with a proven record the firms Risk Manager keeps a tight rein for the first year.

These guys on the other hand are offering tuition initially, whether it's worth the money couldn't say, but they are still going to have a fairly high failure rate, those who don't make the grade and don't even get off demo.

[DSchenk]

Thanks Caseynotes.

My thoughts exactly.

If there were no barriers in place I could certainly blow up the whole account in a matter of a few days with a 1:3 leverage   

My theory is that only a small percentage even makes it past the demo phase (or first month). Then they churn them out through the back door and get newbies in through the front door...$$$

[DSchenk]

Got a few more details out of the company, which I thought I'd share.

• What kind of trading account do you get?
  They give you a CFD account - this means taxes payable for you - not good
   
• Asked about the requirements to make it through the Demo Phase
  Answer: There are no specific targets, they just want to see if you are able to manage risk and apply what they teach you correctly ... not sure what that's supposed to mean exactly
   
• Once you get your £20k account, how do they ensure you are not blowing it up on day 1?
  Answer: There's a risk manager looking after you. Also some restrictions apply like max leverage 1:3, only trade FX majors in the beginning and don't hold any positions over the weekend. How exactly that shall prevent me from blowing up my account is another question...
  And no, you don't carry any liability in regards to losses on the account
   
• Is there a desk fee payable to trade?
  No, you only need to pay £140 if you don't reach the monthly target

 

What do you think guys, does this business model make sense to you?
I'm still not sure how they can give someone they just met a week ago a £20k account and off you go? But maybe that's just how the industry works.
Think Anton Kreil mentioned at Goldman Sachs you have a 3 month intro course in New York before they let you trade in your main office. Then on your day 1 (after the 3 month intro) they give you £10m. This for real? I mean at least they teach you stuff for 3 months and not 1 week, but are they not afraid the first best nuthead comes around and blows it all up? Or is £10m really just peanuts for them, same as the £20k is peanuts for this trading company I'm talking about above?

[dmedin]

If they already have guys who can provide the 'tuition', why don't they get those guys to actually trade and make money instead of training newbies?  This always confuses me.  A good trader is someone who can make money trading, not someone who can only show you charts of completed patterns and tell you what they mean after the fact.

Edited September 24, 2019 by dmedin

[adish]

these firm are there to make profit and provide trading facilities to new traders,if someone has consistent results,he would not work under any firm,instead he ll open up his own trading venture....thats what m doing right now

[DSchenk]

That is certainly true @adish

Question is, is it better/cheaper to learn becoming consistent at one of these firms, than doing it a) on your own or b) buying Mr XYZs course online

[DSchenk]

Discussed similar with another company.

They have a slightly different model.

• 4 weeks intro programme
• But way more expensive:
  • £2500 to begin with
  • Then £750 desk fee per month
  • Also 50% / 50% profit split
• You start with a £10k account and can use 100:1 leverage
• Your target is to hit 6% over first 3 months
• Afterwards target is 10% to unlock more equity to trade with
• Your account has a max drawdown of 4%, then you get kicked-out

 

Not sure about this company - if anything the first one sounds better. Lower leverage, bigger account size to begin with and not as expensive.

I assume nobody in this forum has any experience with any trading firms like these?

[adish]

i can teach you at lower cost...within 15 days ...ll teach you one of the top strategy we use for trading intraday...using volume and price action so that u can become independent trader once you understand "how to enter at the same time when big funds are entering and make profit with them".plz let me know if u are interested....

 

[adish]

first of all ,let me clear,,m not a salesman.....strategy in the market is made by lots of experience from different mentors ,ur own efforts and dedicating most of ur time to it,,,,,,i offered to teach someone,who is eager to learn,not to lazy freebies....sorry if its harsh..

[Caseynotes]

24 minutes ago, adish said:

first of all ,let me clear,,m not a salesman.....strategy in the market is made by lots of experience from different mentors ,ur own efforts and dedicating most of ur time to it,,,,,,i offered to teach someone,who is eager to learn,not to lazy freebies....sorry if its harsh..

Hi @adish, be aware that offering commercial services on the forum is against the rules and Trendfollower above is just trying to set you up to get you banned.

[adish]

20 hours ago, Caseynotes said:

Hi @adish, be aware that offering commercial services on the forum is against the rules and Trendfollower above is just trying to set you up to get you banned.

😁

[Caseynotes]

1 hour ago, TrendFollower said:

@Caseynotes,

Please I am doing no such thing. I think my questions are perfectly valid as @adish initial post was not clear so we had no idea. 

He has since clarified it. End of. 

Thank you Adish for answering my questions. That is the end of it. You are now stirring and just trying to cause trouble. 

Haha, you know it's against forum rules because every time someone has tried to offer a pay for service on the forum you immediately flag it up to admin, "sir sir look sir". This guy hints he might have a service to sell and you jump in to ask what it is and how much will it cost. Total setup, you are just so transparent it's laughable. 

[Mark27000]

11 minutes ago, TrendFollower said:

@Caseynotes,

 

I am a big baby . I am a horrible person 

Good honest posts at long last

[Caseynotes]

6 minutes ago, TrendFollower said:

@Caseynotes,

If you know it is against forum rules then what are you doing about it? Do you not have a moral obligation? With 6000 posts comes great responsibilty.

I am a big baby but boy are you childish. I am a horrible person but boy are you immature. For you it is all about one up man ship. 

I suggest you concentrate on trying to get to 10000 posts and 1 million likes. 

lol, he only hinted, there was nothing 'to do about it', so YOU went fishing to try and catch him out. Total setup, pathetic.

[Caseynotes]

1 minute ago, TrendFollower said:

@Caseynotes,

I suppose for someone who is supposed to be intelligent your behaviour is pathetic. You just want to bury me and that is your motive rather than concentrate on quality posts. Why don't you show how good you are rather than waste time with this?

you are back to the usual diversion tactics when caught out being a weasel again. the holier than thou pretense must be really hard to keep up.  

[Caseynotes]

1 hour ago, TrendFollower said:

@Caseynotes,

Forget any course. What do you think of trading as a private trader vs trading company? That is the core subject area of this thread? So forget any course or anything of that nature. What you do think?

Just to start off there are different advantages to trading as a sole trader to trading within a company structure. Of course I am sure you will know that the taxation rules have to be known and understood. Which do you favour and why? I am not asking you any personal question or to divulge any personal information, just what your thoughts are?

As I've stated in other threads there are plus's and minus's to both so it will depend on an individuals situation but young go-getters definitely queue up to be interviewed to work for prop firms.

Team approach, large accounts of other people's money, all the extras like news feeds, low latency connections etc.

Personally I prefer the individual 'own boss' approach.

[DSchenk]

Threads seem to escalate quickly recently...

After considering this question over the last week since I posted it here on the forum, here my conclusion.

I'll stick with trading by myself.
Rationale:

• Can use a spread-bet account, meaning don't need to deal with taxes
• Don't need to pay administration fees, facilitation-fees or desk-fees, etc.
• Can trade whatever, whenever I want it and not bound to company policies, etc. aka "be your own boss"
• Don't run into any scams potentially

On the negative side of trading by oneself we have:

• Higher risk of burning through accounts quicker because you need to be your own risk manager
• higher risk of never becoming profitable if you're not able to figure it out by yourself

Cons outweigh pros here for me at the moment.
Doesn't mean I wouldn't accept any offers from Goldman Sachs if you're reading this and happen to have any available