I'm looking to open a prop firm account. I've been contacted by Tower Hill Trading. It's free to join and I understand the way they set up the BP/share limits. But the contract seems sketchy barring me from trading for anybody else and other stuff that doesn't seem like it can legally be enforceable. So, what firms out there require small deposits of <$2,500 to begin trading? I've been swing trading for about a year now. I opened a $5K TD Ameritrade account and it's sitting at almost $13K. For the past 6 weeks, I've opened a TOS paper money account and have been messing around trading 1 and 5 minute charts. I've been making $1-2K a day for the past couple weeks with 90% of my trades being successful. Was thinking of opening a prop account to day trade with. I'm from the US and do not have a section 7 or 56. Any suggestions? I've contacted G6 Trading and SMB but wanted a opinion from people with experience. I just don't want to put money into something sketchy and end up never getting my money back when it gets shut down or something.
The contract thing has already been debated in other threads of THT. About the section 7/56 is not necessary to trade with them.
I've talked with G6 and since I'm a US citizen, I can only use the DAS Pro platform. The other two require a 7/56 in my country. I read a few threads but found nothing concrete about THT. It was basically he said she said arguments.
There aren't many equity prop firms (if any) that will open an account for <$2,500 to begin trading. Most require a minimum of 5k. Check the threads for "Series 56 firms" and you'll find the list. If you truly want to trade stocks at a firm, then at least go with a U.S. registered firm. If you are concerned about the finances of the firm, then you can look at their recent SEC.gov focus reports and review their capitalization structure (of course, these are for U.S. based firms).
Use the "Search" tab on the upper right. It seems your choices are limited. As stated in my other reply, go with a U.S. firm and get the series 56 if you really want to trade equities with a prop.
How/where exactly do I get my Series 56? My plan was to make enough to open a margin account with Ameritrade then close my prop account. What are the risks of oversea firms that don't require 56s?
Is there anything illegal in using an offshore account? Or is it just the risk of the firm stealing my money?
You can't simply "take the Series 56", it requires sponsorship by the firm. So first you have to join the firm by filling out the paperwork (form U4), getting fingerprints and a background check. Then the firm will open up the window for you to take the computerized test at your local testing center. The results are sent electronically. Once you pass, then you start trading.
There is always a risk with any firm, domestic or offshore. I can't answer whether there is "anything illegal" in dealing with an offshore firm, as I'm not an attorney. Some props may operate offshore for various reasons, it doesn't automatically imply they are illegal. Your risk increases if they are offshore, as you are less likely to seek relief in getting your funds returned if the firm has shady operators, but that is true for any business, not just prop trading.