With an unending supply of people and late night infomercials that want to help you learn how to trade, one option you might consider is a proprietary trading company. Proprietary trading is an old concept that is resurging in today’s complex financial environment.
Why? Proprietary trading companies give investors an opportunity to learn how to invest by providing everything they need to get started. And when we say everything, we mean everything – even the money! Imagine – you can actually learn how to invest on someone else’s dime. Proprietary trading firms like ApiaryFunds.com are giving inexperienced investors a chance to learn how to trade like the pros by providing the systems, the technology, training and funds needed to learn how to invest successfully.
Proprietary trading companies are money management companies who search out successful investors and provide them an opportunity manage their fund. In the case of the Apiaryfunds.com, they bring on board inexperienced traders, show them how to trade their system, and then when the investors invest successfully, they get to keep a percentage of their profits! This way new investors can create an income while they learn to master different investment strategies and systems.
According to Shawn Lucas, head trader at ApiaryFunds.com, choosing which proprietary trading firm to work with can be tricky and offers this advice:
-When you choose a proprietary trading company, you want to make sure that your incentives are aligned. There are five ways that proprietary trading companies make money: education, risk deposit, commissions, fee’s, and performance. You want to make sure business is structured to provide the you the best systems, technology, resources, and compensation to help you trade successfully.-
Fortunately, you don’t have to look too hard to discover the proprietary trading company’s motivation. Here are a few rules Shawn Lucas suggests when choosing a firm to work with:
Education Costs. How much does the company charge to help you learn how to invest? It’s reasonable to pay a little bit for training, but try to avoid companies that charge more than a couple thousand dollars for their training.
Risk Deposit. Does the company require a risk deposit? A risk deposit indemnifies the company against any losses generated by your trading activity. When you lose money, the company will deduct the loss from your risk deposit first. Here again try to avoid companies that charge more than a couple thousand dollars in risk capital.
Commission. Does the company charge a transaction markup? You should expect to pay a smaller commission rate than your typical retail brokerage firm – not more. Some prop firms are just glorified brokerages who charge a markup fee on any trade you place. Try to avoid companies that charge high commission rates.
Desk Fees. How much does the company charge for monthly technology, data or desk fee’s? There are significant costs in running a money management firm and its reasonable to ask traders to help offset those costs, however, the fee should be less than a couple hundred dollars a month.
Performance. What percentage of profits does the company share? You don’t want to work with a company that gives you 100% or 0%. When it comes to profit splits, we suggest the 80/20 rule – look for companies that payout less than 80% but more than 20%.
Proprietary trading can be a fun and exciting way to learn how to invest successfully. You will be working with people who know how to trade well. You will have access some of the best tools, resources and information in the market. You can avoid the seminar and book club crowd and experience first hand how to manage money in a real-life environment.
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About ApiaryFunds.com – The Apiary Investment Fund uses crowd-sourcing techniques and strict risk management technology to help manage their proprietary trading fund. The fund provides the systems, technology, training and money to help inexperienced investors get started in a successful trading career.
—————————– Christopher Downing is a freelance writer who is recognized for his work in the financial industry. Chris writes articles for financial newseletters, blogs, and corporate communications for companies in the financial industry. Contact Chris at: