Good info, but why would anyone take such a deal? Are we talking millions of buying power, 100 lot blocks of ES? If a person can "net" 500k, you don't need a backer, and you certainly don't need to split 50% of your profits with anyone, especially if there is a "deferred compensation" clause or a 30% retainer of your p&l. It would be great to trade in an office, but those fees are absurd.
Well, most of these guys are not trading moving average cross overs with directional ES trades. They have access to insanely bright programmers who build these guys NASA like algos. Honestly, I've seen some of their operations and these guys really have an edge. I mean we need to keep in mind we are talking a very different game here. Some of these guys trade 10k cars a day at almost zero cost with lightening fast algos. It's a very different game. Many of these guys are trading the basis which involves the cash market which is almost impossible for the retail guy to get access to. Trust me, they can't do this stuff out of their Amp Futures account.
Or they could send the trader the 3k (60% of 5k), and keep 2k in the account instead of the investor taking the distribution. The investor at this point has not taken the distribution, yet is still owed the 2k,which can be taken from the NEXT profit traunch of 5k, thereby still allowing the 2k to remain in the trader's account. If the trader quits, then the investor takes the 2k. If the trader continues and starts to lose money, then instead of the trader going BELOW the starting balance which makes PTP take a realized loss, he goes back to sim if the balance goes back to the starting balance. There could be many names for this, perhaps call it "reverse deferred compensation" or "reverse retained p&l", lol.
Yeah not so sure about that. All the deals I have seen where a trader takes out profits, the firm always wants their cut at the same time other wise you risk the trader walking away with his money and then losing the investors. If I'm the investor, I want to get paid. Either we both take it out or we both leave it in. I just think the model works better for both parties if they can lock in some p&l. Traders are too streaky.
Yeah then there's really no way around the 5k build up, unless it's lowered to say "the equivalent amount of the profit objective of the combine." If a trader did the 2,500 combine, then that's the cushion, for the 3,500, that's the cushion, etc. Given that Patak even stated that traders who pass the combine tend to have their profits "cut in half" when going live, perhaps the best solution is to lower the cushion and increase the probability for the trader to get a check.
I don't think there needs to be a cushion. If any of these guys make money, grab it! Pay the trader, pay the investor. Seriously I've been in this business awhile. It's all good and well to tell guys to build up equity and eat their vegetables but the reality is, these guys are more then likely to give it back. If the investor can take some cash out he can withstand a deeper draw down. It's a win win for everyone. At some point the investor will have enough capital that the drawdown allowance for the traders will be substantial enough for him/her to start pushing size. I don't understand how the investor is OK with traders giving back all their profits. Makes no sense to me. The so called cushion is not a cushion. It's a pile of money begging to be taken away through losses.
Correction, he stated there was a "drop off in performance", not that it was "cut in half" when going from sim to live, my bad.
A buddy of mine who runs the largest option prop firm in the Chicago area gave me his numbers of what happens when guys go from getting a salary and a bonus trading firm money to trading their own capital within the firm to get a higher payout. He said there was a very steep dropoff when guys went live with their own capital vs trading firm capital. That's the thing people are really discounting here. The reality is, most traders trade scared with their own capital. I think he said they make 50% less at this option firm and many actually go back to trading firm capital. I thought that was interesting.
I think you are just trolling now. It does not matter if the trader is up 7 figures and gives it all back because that has nothing to do with how much of the firm's money is at risk. And how will we prove this ? He has already said he will never give you the true statistics about failure rate for the combine. That's all the proof I need for real the real income is from. I'm still waiting for him to answer my questions as well
Probably a higher probability chance than putting $160-$400 up and expecting to be one of the 27 out of 5400-10000 payees who still are not even grossing 30k