A tight loss limit is not a bad idea. A $30 loss limit is a moronic idea. It basically gives you one trade before you are stopped out for the day, which is ridiculous. You should be able to place at least a handful of trades per day before your loss limit kicks in.
The issue here is the outrageous 12k fee. Not the tight stop. Provided commissions are low to non-existent, what is wrong with imposing a 0.3% stop loss on a new trader with 10k buying power? The point isn't to make money at the beginning, it's to learn to manage risk and calculate position size accordingly. A new trader would ideally learn quickly how to calculate position sizes such that he would have the chance to at least make two trades per day (assuming a $30 loss shuts you down for the day). He would also get a feeling for the dangers of risking the gains made on a profitable trade when after making $50 he increases his stop to $65. If these guys never give you more than 10k BP and never raise the loss limit and charge prohibitive commissions, then of course there is a problem. But what no one has yet explained is whatever incentive program they have to balance out the disciplinary one. How many profitable days do you have to have before you get more BP and wider stops?
I agree that the fee is outrageous as well, not disputing that. I'll tell you what's wrong with it: it's within the range of statistical noise. In other words, even the best trader in the world can be stopped out of 1 or 2 trades in a row through no fault of his own. You need to give a trader at least 5 trades a day (minimum) to see their actual skill level beyond the level of random noise. No matter how good you are, you can't predict how any one trade is going to go, and it's absolutely ridiculous to make a trader stop trading just because a couple of stops got hit. Stops are SUPPOSED to be hit, and $30 is nothing. It's a complete and utter JOKE. As I said, two trades is not even remotely close to enough of a sample size to be able to judge a trader's ability. Any firm with half a brain in their head that wasn't a scam shop would know this. A much more reasonable stop limit would be $100 to $200 per day. It's obvious how this firm operates: they get you to pay an outrageously large "training fee", and then set ridiculous limits on your trading so that you'll eventually give up and quit after a month or two, after losing about $1-2k. That way they walk away with a cool 10 grand from each person. Wash, rinse, repeat.
There is no way to lose 1-2k in a month or two. Remember $30 loss and you are out for the day. Three losing days in a week and you are on DISCIPLINE - which means no live trades for a while. I do not know how long a trader has to stay on discipline before allow to take live trades again. Also new rules Oliver comes up with new rules and restrictions. Very few traders actually makes back their training fee.
well just to defend, for the sake of arguement: 1) training fee could be 1k or 50k. none of us here know what they teach exactly. i'm sure many people would pay 12k since they have already blown over 10k trading themselves, who knows. 2) i'm sure there is some people there who make it. they can't have a firm in the middle of financial capitals, have new traders, and say "right now this floor is just new traders" etc. 2a) if this was like that and it was 99% money grab valez can be taken down legally due to (enter legal word for taking advantage of a person who has very little or no knowledge to what they are signing) 3) $30 stop out is really 2-3 trades MAX stop outs a day. I know all of us here would say $100 would be reasonable. Unless, everyone started off rebate trading, then in that case 30 bucks would be reasonable. 4) shouldn't we be seeing more valez complaints if they were ripping off people one by one and still afford to upkeep prime real estate in major cities? i'm canadian so there is no valez around me. any americans willing to go to their office to infiltrate? lol
I can't say I agree. If you start out trading 100 shares of C, which has an ATR of about 30 cents, you would only get shut down for the day on one trade if the whole day moved against you. On two trades this would take half a day's range... and so on. Most of the mid-day chop in C stays within 10 cents, so even if you made the worst trades possible outside of the open (which you shouldn't be dabbling in anyway) you would still get three trades out of the day. Most people with half a brain would be able to win and lose all day long with this set-up, all the while learning the software, where to place stops, where to TP, etc. Plus, it puts the thought of making money totally out of the picture for the first while since all you're going to be making and losing on a trade is 5 bucks or so. I'm interested in this debate because I'm starting with a firm that imposes a $20 per day loss limit on new traders. So I'm doing a lot of thinking about how I will manage it.
Do the math. The firm in question mentioned in this thread charges you $12000 to trade their money, and then only lets you lose $30 per day. And if you lose $90 over 3 days, you are shut down. Does that sound fair? Sounds to me like a scam to keep your $12k. That's not a lot of leeway for error, and it's designed that way to get you frustrated so you'll blow a little money and then leave to do other things. It's a perfect scam, really. They are not risking anything by letting you trade with their money, because they are not risking more than a few meals at Burger King on you. Don't be an idiot and trade with a firm like this, especially if they are asking you for a lot of money up front. If you want education, there's tons of free stuff around in books and on the net. Hell, there are dozens of free webinars every week. You can also check out these guys: http://advancedtradingworkshop.com They give a free 30 day trial which costs you absolutely nothing. If you like them, you can stick with them. If you don't, you haven't lost anything. I am not necessarily recommending them (I have never signed up), just showing it as an example of something that you can get for free before you blow a bunch of cash on some scam artists. Besides, who in their right mind wants to trade mid-day chop? All the money is in trends, and in the more volatile stocks. With a $30/day loss limit they are severely limiting what you can trade, and therefore robbing you of the ability to trade some of the more profitable strategies. And by the way, even if you trade mid-day chop on C, 3 trades is STILL not enough leeway per day. You should be able to place at least 5-10 trades.
I didn't mean to sound argumentative. I guess I sort of hijacked this thread to talk about seemingly outrageous stop restrictions. Of course the firm in question is a scam. But how much of a scam depends on other factors I brought up that we don't know of yet. The most important is probably: how many profitable days do you have to have before your stops get wider and your BP increased? I have a feeling this place also offers incentives, for obvious reasons that have been mentioned.
If u fast trade 100 shares of C, it is hard to make any money after fees and commissions. Velez commissions are higher than Interactive Brokers for retail traders.