How does this deal sound?

Discussion in 'Prop Firms' started by 6ptPrime, Oct 11, 2006.

  1. 6ptPrime


    Hello all.

    An opportunity I'm faced with...

    Futures prop firm that starts you out trading on a simulator, paying you nothing, but letting you decide which product to trade and very flexible as to how you trade it (everything intraday though ofcourse).

    Once you show x amount of profitability in sim mode with 1-lots, you are alocated the firm's capital to trade 1-lots with. This could occur in less than 3 weeks. Then a month or so more of exhibiting profitability gets your size bumped up, and you continue to move up and up so long as you continue to show consistent profit.

    When in real mode, a couple grand a month is taken out of your profits (or future profits) to cover the "desk fee".

    Also, training is provided for an hour or so each day.

    I'm considering this and would appreciate any input or advice re previous experience with a similar setup, questions to ask, etc...

    Thanks in advance fellas...
  2. 6ptPrime


    And the split is 70 (you)/30 (firm) to start out with.
  3. That seems about as slow as simply compounding your own earnings. Why give them a share of your profits? Why not just start out paper trading and move to a 1 lot yourself?

  4. 6ptPrime


    Because i would be trading entirely their capital, minus the desk fee and dollar R/T's to trade e-mini's and treasuries.

    Also, the possibility exists to be trading a couple hundred lot clips + if i show consistennt profitability over time. To me, that seems attractive. The splits become more favorable to the trader as profits accumulate as well.

    So for someone with no trading capital, on one side it seems ideal, yet on the other, there is a significant risk that I might remain in the territory of being only minimally profitable so much to cover my desk fees and commisions for many months down the line and it could never take off.
  5. artis74


    Check the numbers behind that split I highly doubt its 70-30 your way. If you are trading 1,2 or 3 and your desk fee is 2k find out EXACTLY what the commish structure is.

    Trading very small size in and out all day is a very hard way to make cash when your total comish plus desk is 10k a month as a rookie. They will tell you they will let you trade 1000 up to get you in the door, it is all predicated on you bottom line for the firm.

    The vast majority of these places want you to get to scratch asap , and in thier eyes if you lose 1k a month plus your 2k desk fee but generate 5k in comish for them they are happy and you havent earned a darn thing.
  6. 6ptPrime


    Well, the thing is, they said that you will never get to the point where you owe the firm any money, that commish and desk fee will only come out of your pocket IF YOU ARE PROFITABLE, and in that case, it works against your profit.

    So it's def not a decieving setup on their part. Their business works by spending very little at first (1-2 months) on the new trainee to find out if he is any good or consistent, and then they decide to move him to real money. At that time, it becomes the trader's profits against their desk fee and what seem to be very cheap commisions (1 r/t for minis and mostly all ecbot, 2.50 for oil)

    So def not a scetchy setup, just might not turn out to be favorable for the trainee unless he can be very good consistently, at which point the real issue is if they can increase size quickly enough to avoid accumulating debits into future profits.

    This is how I percieved it. Any other opinions???

  7. Drew07


    Can you tell us the name of the firm?
  8. That sounds like a terrible deal unless..

    1. The prop firm actually can train you to be profitable and you couldn't learn on your own.
    2. You're flat broke and absolutely can't afford to fund an account yourself, ever.

  9. artis74


    You seem to have made you mind up but you need to realize for you to make money you need to be profitable 90% of the time which is very hard starting out.

    You will not make $$ the first few months then you will spend the next two months diggin out of the hole. Then 5 profitable months and the year is over and you will get hardly any cash at all. Flipping futures as a rookie is exceptionaly hard especialy in places that wont let you layer in. Good luck but this is not what it appears.