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There is a lot of discussion about Echotrade at
http://www.elitetrader.com/
>From what I have gathered, most of the "good" comments mentioned in various
messages posted there are made by a person who is actually an office manager
of some sorts of Echo trade itself, so one should take it with a grain of
salt, and do some more due diligence.
Other than the leverage and margin advantages mentioned so far, these types
of outfits also have a scheme called "bullets", where one can short stock
regardless of the uptick rule.
With the Aug. 28 date looming, when the unbelievably ridiculous and unfair
new rules for daytrader margin requirements go into effect, a lot of small
daytraders are looking for ways to avoid the 25K minimum equity requirement,
so these type of "professional" firms look attractive, but some heavy duty
due diligence is in order since there are a lot of fly-by-nighters and/or
plain illegal or fraudalent operations out there.
Regards,
Levent
----- Original Message -----
From: "Brock" <brock@xxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Saturday, August 18, 2001 3:28 PM
Subject: Re: [RT] ECHOTradeOnline - Van Tharp's brokerage office - anyone
knows about it ?
> 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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