Monday, August 29, 2011

Information on ECHOtrade, LLC...

Update: ECHOtrade has closed for business, and it looks like that happened around 2013. They ran into some legal issues, and from what I can tell, they had a mass exodus of their traders due to shoddy management. There wasn't much information on the specifics, at least that I could find. 


Over the last few years, ECHOtrade has always been one of the names that has come up in conversations about prop trading, along with Bright and Maverick Trading. Similar to Bright Trading, they have both remote trading and in-office access available in specific locations. Another similarity is that they require all traders to carry a Series 7 unless you've had twelve consecutive years in good standing on an exchange. They also offer automated trading, although from everything I've ever seen or heard, black-box trading will inevitably implode and the traders always end up busted. While it's important to have great and reliable tools, any trader that is going to fully rely on a software to make them money is a fool that will soon be parted with their money, in my opinion. Echo is really not designed for beginning traders, as they don't offer any formal training. The way their trade costs are structured, traders really need to "hit the ground running" and it was suggested to me by one of their representatives that it would be very difficult to make profits without trading at least 20,000 shares daily. I really appreciated this information, as they were neither trying to sell me into something that I wasn't interested in, and they made it clear that they were a high-frequency equities firm (unlike Maverick Trading which I will review next). For me personally, I wasn't really interested in this type of trading, but I continued to ask questions in order to pass on the information here. The customer support is great, but there really isn't much of a community unless you are in one of the physical locations in NYC, Chicago, Phoenix and Boca Raton, FL. They use a number of different software programs which are obviously all directed toward high-frequency trading and will come at a cost of a couple hundred dollars per month to use them, depending which tools you use. The commissions and are competitive with most of the high-frequency prop-firms ($0.004 per share) and there is no profit split. The trader keeps 100%, but they also don't back you with firm capital, only margin. They do have desk fees between $250-$400 depending on the frequency and size of your trades. There is a minimum risk deposit required of $10,000.

Conclusion: Echo is a highly-reputable firm that is great for anyone looking to use technology to maximize their high-frequency trading. They are a well-organized machine. The reviews from traders are mostly positive. They specifically generate profits from traders' executions, so they want as much trading as possible out of each trader. The pros are that you get to be with a good firm and enjoy top-tier technology for your trades. The cons are that you are a small fish in a big pond and you have to have a Series 7 and limit yourself to high-frequency trading. I will say that I was impressed overall, and if I were looking to be a high-frequency trader, I would very likely go with Echo. I give them 3.5 out of 5 stars.