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I also saw their website. I haven't heard anything about them, but I can
tell you what "professional status" means. I have been a "member" of another
firm that is created as a limited partnership.
These firms create a professional trading firm, created as an LLC, to trade
the markets. All "members" are "limited partners" of the firm (without
voting rights). They then have the right to use professional leverage, which
is about 10-1. This is why they state they do not accept retail accounts.
They are not "brokerage firms," rather, professional trading firms. In
order to qualify as a professional trader, you must have a Series 7 (some
will accept a former Series 7).
The advantage of this arrangement is you get more leverage. The disadvantage
is you are not covered by any insurance (like SIPC) if the firm goes belly
up, because you are not "a client" of the firm. You are a partner of the
firm. Your capital is at risk.
The reason they can offer 20-1 leverage, I think, is that not every member
is using their 10-1 at one time, so therefore, as a whole, the capital of
the firm can support some members using 20-1, while others are using 5 -1 or
less, as long as the entire capital pool of the firm is using 10-1, they're
okay. BTW, you are not subject to Reg T calls, for the same reason. As long
as the capital of the firm is not over the 10-1 leverage they have, your
trade has no effect if you overtraded.
IB also offers 1 cent a share, but with a $1 dollar minimum. There you would
be a retail account and covered by SIPC insurance.
Hope this helps.
Gila
----- Original Message -----
From: Mudit Wahal <mwahal@xxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Friday, August 17, 2001 10:36 PM
Subject: [RT] ECHOTradeOnline - Van Tharp's brokerage office - anyone knows
about it ?
> Hi all,
>
> Any info on Van Tharp's day trading company ? Offers 5 to 1, 10 to 1 and
even 20 to 1 leverage.
> http://www.echotradeonline.com/our_services/
>
> Commissions are 1 cent per share. For NYSE/AMEX, never more than $25 per
trade. When they say
> 1cent per share, they mean it. 5 shares only costs 5 cents (as per their
example).
>
> Seems like they will give you a professional trader status and make some
sort of limited partner
> in the firm.
>
> Anyone heard about them ? Good ? bad ? etc etc
>
> Thanks
>
> Mudit
>
>
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