Frankly, I am not stressed at all whether I went to Wharton or not, I am just amused. I am amused how we mis-read people on internet boards. Initially, I used to think Maverick is some hot-shot trader making at the very least 500k a year, or more likely 7 figures. Now, I know he supports himself by promoting Patak! That is why I have been suggesting him to open his own combines - he will make way more. And surely I am amused that you are willing to bet 1mm that I didn't go to Wharton. LOL!
Ok GMST, here's my 2 cents on everything. I think I have conversed with you on here in the past. You seem like a good kid so I will try and be nice. No promises. For a new trader/guy with little to no experience, Patak is fine to start out and see if you can make it. Spend a few hundred bucks instead of funding your own account and losing it all if you don't have what it takes. If you are profitable they seem to be very willing to back guys. If you can't get out of the combine then you probably shouldn't be trading. To me their daily loss limits seem reasonable. I think you are hung up on the max position size in regards to $ limits. Well.....nobody is forcing you to trade the max size every trade. Either save your max trades for ideal set ups or wait until you build a cushion to do more max trades. You have to remember, a lot of new traders/wannabe traders out there have no discipline/no risk management skills. While you might think that Patak is being a bit tight, they are teaching you the most important tool of being a great trader which is discipline/risk management. The one problem I do see with their program is the bouncing back between real money and sim accounts. That , in my opinion, is a horrible way to do things. Trading can be a psychological mindfuck at times. If you have a guy on Sim and he does well enough, then you back him, he goes through a drawdown and back to sim, when he is making money on sim the 2nd time he is going to be beyond messed up thinking this should be real money. While I am no fan of sim trading (I have been in the biz 20 yrs and seen so many do great on sim, then get obliterated when it went to real money), if a firm is going to use it, should only be for the initial period. Maybe have the initial sim time a lot longer. Maybe 3-6 months (I can't really see how in 20 days they will know much). Then after that longer time back them. For those who are going to whine that 6 months on sim is too long and they can't afford to live? Boo friggin Hoo. Get a 2nd job while learning. That or cut back on your lifestyle until you get going. All of us traders who have been around started out making squat and having to work 2nd jobs. There is no free lunch in becoming a trader. The other thing which is a concern is the lack of traders making any real money there. Being open for 2 yrs and not having many guys reach 30k implies to me that they don't have adequate funding for their experienced guys. That's a red flag. So now that I have confused you, here is my take: New guys should go there, and find out if they have what it takes. If they don't do well, no big deal...only a few hundo. If they do well, then trade for a year. If they don't back you with adequate capital then take your track record to other firms out there that will. They ARE out there. Just got to look and put in the effort. If you can't get into a firm then show your track record to a friend/family member who completely understands trading and maybe they will stake you. If you are that good, they shouldn't have a problem doing that. As far as Mav. Give him a break. He has been short a ton of JCP stock for a few weeks and is getting squeezed badly. He has the right to be ornery.
You faded him. Brilliant. You remind me of that Sam guy from Surf's thread. Anyways. What's your take on what I said about going from sim-live-sim ? I think it's a bad thing to do. Extend the combine part to 3 -6 months, then back them with adequate capital/room to trade. If they fail at that point, show them the door and move on. They talk about treating it like sports team, but once guys make it to the majors they rarely get sent back to minors unless they are re-habbing from an in jury. The back and forth from sim to live will cause havoc on a new traders psychological condition. Cook County Mental hospital's mental ward must be at full capacity since Patak started.
TraderChi, Good Post! I agree with more than 90% of what you said. If Patak can listen to your suggestions and change his program accordingly, my criticism of Patak will subside by at least 80%, maybe I won't even have anything left to be critical at all! I don't want to involve Mav, I would rather want him to take a break from ET for 15-20 days, go work on his combines ideas and come back with a better product to the market. There is really no reason for him to waste his time on this thread responding for Patak. Let Patak defend themselves, they are perfectly capable of it, they are running a firm and they have 3 guys from their group here, they can surely answer for themselves. Let me take the extra step here. If Mav comes back with a detailed plan for his combines and wants to throw the idea in the open for a discussion to thrash out the final details, I will contribute by asking relevant questions and by giving balanced criticism. And all this without any consulting fees, completely for free! See I have no interest in opening a combine shop. At the same time, I also feel that there should be competing firms in any industry for consumers to benefit. So, I would rather help any guy who wants to set up a competing combine firm. Why don't I do it myself? Well, my goals are different. Personally, I would rather work on setting up my CTA and over the years will look to increase the AUM beyond 1 billion. That will be plenty for me. You know what - given your 20 yrs experience, you should also open your own combines! The product you described in your post - sounds good as a first iteration. Definitely, much more balanced than current Patak's offering. Good Night! Its way too late here - need to sleep. C U tomm.
Yes, I agree. I think they should shoot for 6 month combines and give guys one crack at it. I will post my ideas for a combine in the next few days. I think I have a fair model in mind. I think the idea they have behind going back and forth is they are looking at this more like a process. Going "live" is not really the goal. The goal is consistency and that means constantly tweaking and improving your trading. The sim acts like a brake of sort. It allows one to work on the mistakes they make once going live. That's probably how they see it. I have some ideas I'll put forward. Who knows, maybe they will adopt them. To be fair for them, I honestly think this whole combine idea is a work in progress. Probably started out as an idea on the back of a napkin and slowly this is what that idea turned into. This is probably not the end product. Index Elite and Pulsar Capital are both doing something similar. If you check out Index Elite I actually think they made the model worse. Check out their site. I suspect they will be changing theirs as well over time.
Thanks Michael for answering my questions. I think it is a good thing that you don't charge previous traders who pass the combine a fee. However, its not really true that at the lowest level that you fund traders with $1,000. The trader risks almost $200 for the opportunity. He can't guarantee that he'll be profitable at the end of the month. As such, he could lose that money and it is at risk. He only needs to come up with $800 more for same as if he passed the combine. Maverick, I have monitored many systems/traders and results at anything less then 3 months appears mostly random to me. But, if the rules are designed properly then a couple months could be useful. Also, you've seen they only give you 2x the daily risk limit and you've been adament in the past that a trader should only risk 2% of his capital on a day trade. I've tried to show you that the 2% risk rule isn't really true. For my day trades, I just use a max risk limit -- like TST/PTK and I find that works well. I like to keep this max risk below 7%. When I started, I had to have my max risk at like 10%/day but because my account has increased.. I'm only running a bit over 4% now. This is very reasonable level. 50% is not reasonable. The reality is that good traders aren't going to spend 6 months trading on a simulator unless they have the chance to be funded at a significant level. The opportunity cost is too high. Also, when one understands the math then one will see that as the combine is designed today that it is simply easier to make money by taking own capital to the market. Let's imagine it takes 4x to pass a combine (not unrealistic), that's $200*4 = $800. So you are paying in the risk cap you get back. Its not a good deal as it is designed. If a trader makes 4k in combine, he should be funded with 4k. The reality is also that TST/PTK is not funding traders at a level where they can make a living. Michael has confirmed already that he doens't have even 12 traders who cleared 30k. I believe this is because the program doesnt give one enough capital/risk to be successful. I don't see this as being very worthwhile. I will continue to monitor the program though, and if the situation changes then will consider the combine. But, as as structured today it is too much risk for too little gain.
Lucias, then you are NOT going to like my combine. LOL. You keep talking about margin. I think margin is the most misunderstood word as it pertains to futures trading. Going forward, I want to focus on notional funding. If I give you 5 lots to trade, that is 500k in notional funding. Not 2500 or 10k in margin. For example, if you buy one bond future, that's 100k worth of bonds, not 1500 or whatever the daily margin is. So if I give you 5 contracts, that's 500k. If I ask you to make 5k in one month, that is only a 1% return on notional. In the real world we use notional returns. Hedge funds, mutual funds, endowments, etc all use notional metrics, not return on margin. If TST gives you a 100k combine, that's 10 contracts. That's a million dollars. A 10k profit is only 1%, not the 10% on the 100k combine. This is kind of a big deal for me because it shows your risk more clearly. Telling me what you return on margin is useless to me because I can't make a proper comparison to an equity manager or an option trader because each has different margins but equal notional amounts. As I said, I will roll out what I think is a fair combine. Some of the things will be better then TST, others will be worse. I'll let the ET'ers decide!
Mav, I know full well what notional return is. You can't make a comparison anyway because most equity/hedge funds produce value based on time/time in market whereas day traders are only in the market vey short periods of time. As such your comparision, isn't appropriate. A day trader might trade 120k but he's only the market for a few seconds, he has to make his profits from being right. That's 500k only if you allow overnight holds. TST/PTK does but doesn't allow holding over the close. Pulsar does not. It makes no sense. I will give you my version of a fair combine. First, there is only 1 funding level because succcessful traders will be ramped up at any real prop firm. There is no reason for the prop to risk more then required upfront and it isn't honest to ask a trader to pay more for more risk when he'll be ramped up anyway. Here is a fair shot.. but difficult Trades: Minimum 90 trades Time To Complete: 1.5 months. Days Required: 30 days. Profit Objective: Obtain at least 4x the max risk assumed and a minimum of 4x the max daily risk. Objectives: At discretion.. profits can't be too skewed from a few trades. Iniital Funding After go to initial funding.. never forced back to simulator. Total Risk: 6x the max risk limit Max Contracts: 2 Contracts If at any point the trader is down 3x the risk limit then contracts drops to 1 and risk limit is reduced until profits improve. The idea is to keep the trader in live trading. If at any point the trader is down 4x the risk limit then risk limit is further reduced. Time out. Evaluation. Live trading continues. Expanded Funding 2 Methods Method 1 Account Value Increase Every time the trader clears 1/2 the overnight margin then they are allowed to trade those contracts intraday. Method 2 Ramping Up As the trader demonstrates consistency then the trader will be ramped up at discretion to be given more buying power/risk.
I disagree, roc is all that matters in prop. Using your comparison patak is asking you to trade $210,000 worth of es on the smallest combine with only a $500 drawdown and you think that is ok ?