I have backed guys through partnerships. Bad bad bad bad idea. Did I say how bad of an idea that was? It was bad. LOL.
I think it's a pretty illuminating discussion on the fiscal realities of this business. There is an awful lot of whining on here from traders about this or that fees and this or that cut, with little information coming from the other direction, ie, what's involved in financially backing "experimental" tradrs.
Mav..If you think you can't make money trading then no plan will make sense to you except the type of deals that are already out ther.e Think about this... I start with 1 million dollars... that allows me to fund 166 traders Let's imagine they only as a group after all expenss/failures/etc only make my business 30% return.. that's still better then many funds... I'm not stating that I wouldn't go broke but it could work... I think if anything.. it is more likely I wouldn't find any recruits. but the ones I did find could be very strong traders... now to make full use of that I'd need several million to back them. I'm pretty sure I'm better then many pro traders out there.. I've not been discovered. I'm sure there are more. well could be more.
At my old firm we backed a lot of market makers in options. This worked OK because we had some edge and spread our risk out across a lot of baskets of stocks. But even that, even trading with an edge at almost zero cost, we had to shut it down because of the overhead. Ended up taking a bath actually. That was a harsh reality.
Lucias, you are dreaming man. A 30% return? Are you f*cking kidding me? You are going to let 166 guys take directional punts at will with a million dollars and you think you are going to make 30%???????????????? Oh dear lord. Reality is not even a word in your vocabulary is it?
Mav... these guys had ot do a 6x return and meet my objectives to get to trade... if they do 6x return under tight risk controls then why don't u think they couldn't make 50% live? I also never said 166 guys... I said 1 million would allo wme to fund up to 166 traders.. I doubt I could find mor then 2-3.. in that sense it might not work... but the few I did find would be worth backing.
lol ya 30% ummmm no!!! where did u come up with that figure ? 90% losing traders and somehow your are gonna make 300K on your 1 mil? including overhead? you will need more than yourself to run the business. i think we all learned...if you can trade well make as much as you can and retire when you feel comfortable...starting high risk businesses is for people who think they can do something no one else can...its like a woman thinking she can change a guy and make him a respectable man....not gonna happen!! LLOL P.S I love trading
For the reasons everyone here has stated. Most guys shit their pants the second they are on the clock. Crispy was nice enough and honest enough to come out and say it. Most guys are like him. Pressure kills people. I can throw a damn tight spiral in Lincoln Park on a sunny afternoon. But put me in Soldier Field with a real NFL pass rush, guys that 6"6 275 and ran a 4.6 40 and get them after me, I'll be soiling my pants. I don't think I could hold the football without shaking much less stay in the pocket for 5 full seconds, look for a guy down field and complete a pass. Pressure changes everything. My mom could make money on a simulator. Why do you think guys fail at trading? Because they don't have the magic "formula"? LOL. They fail because of pressure Lucias. And your little simulator is not going to fix that. They will knock it out of the park on the sim and when they go live they will have to replace their Depends every hour on the hour.
Mav.. now you have made a first valid point. That's a valid point. There are a few ways to deal with this.. 1. I could put them on salary and give them a bonus structure. Cost a lot. 2. As noted, I could keep the trader unaware at all times if he were live or sim during training and then when going live.. I could randomly switch him in/out of live/sim.. he won't know and I can evaluate whether it effects him.. gradually I will show how his live performance is and over time I transition those that do ewll to 100% live trading. There would be a phase where he's really on SIM and knows it and then a phase where I say.. you're going to be on sim much of the time but not all of the time.. and if you continue to do well then you'll get more and more live time. He won't know until after the fact he was live.. and he won't care when he finally goes live.
You want to add a salary??????????? LOL. Lucias, thank god we are playing with monopoly money. Man you have no idea how tough this business is. Holy shit. Dude, you need to have your cost and your overhead as close to ZERO as possible. And you need to have your risk as close to ZERO as possible. And even then, even under those conditions, prepare to go broke. Those are the facts.