Quote from gmst: My guess is that above commission angle is way more attractive for Patak than what I have written above. I guess that average trader would be trading way more than 2 round-trips a day. That will double or triple the commission rip-off that is happening at Patak. So, Patak owners are making at least 28k or maybe even 50-70k per month from commissions alone. An analysis of Patak's performance/risk rules clearly shows that rules at Patak have been devised with the sole aim to encourage scalping. Yes, they have been packaged in a NEAT way so that it seems like they are practicing good risk management and keeping a tight leash on their traders. LOL. Alright, lets establish that Patak is encouraging scalping. Let us run some numbers again assuming an average trade has a 50k account with maximum lotsize 5 and maximum daily loss 1000. Again, let us assume the average trader will trade only ES. 1) With 5 contracts and 1k loss limit, maximum stop size has to be 1.75 ES points, because if max stop size is 2 points, your loss is 1k = daily loss limit and according to rules, you would have failed the combine. If you consider a 1 tick slippage possibility, than your max. stop has to be 1.5 ES points. This stop rule is OBVIOUSLY designed to encourage scalping. Now, if you don't want to potentially stop trading after 1st trade for the day, you have two choices. Either use 3 tick stop for the first trade or if you want to use the 1.5 point stop, then reduce the number of contracts to 2 or 3. Or as per the first option, get into a trade with a 3 tick stop! I want to ask traders. Do you think its easy to trade ES with a 3 tick stop!!! Does this make any sense? Won't you keep getting stopped again and again?! So, choices are either trade with 2/3 contracts (why do you need backing in this case, just trade in your own account) or if you want to trade 5 contracts with 1.5 point stop, dont trade for the day after 1st loss. Does it sound attractive!? 2) Now, lets look at the profit aspect. The last line on http://www.topsteptrader.com/fundedtrader states that every trader has to complete this "trading plan". Click on the trading plan and it will open a PDF. In the PDF, point#4 says for a 50k account, once a trade moves 500$ in the money, a maximum retracement of 50% is allowed before the trade needs to be closed. 500$ on 5 contracts means 2 points in profit. So, say you buy ES at 1408 with a stop at 1406.5 (1.5pt stop as discussed above) and it goes to 1410, you must move your trailing stop to 1409. Even if your setup suggests that ES is going to go to 1422 by end of day and you want to give a 1.5 point stop room to your original position hoping that you will catch a big winner, the rule#4 of the live trading at Patak will force you to put a trailing stop at 1409. What will most of the guys do in this case, instead of putting in a stop at 1409, they will most likely close the position at 1410, because the chance of a 1 point retracement is just so huge. Again, this stupidly small trailing profit forces a trader to scalp. 3) In the same PDF, point # 8 states that you have to put in a breakeven order after the trade goes x ticks in the money. This x ticks has to be less than 8 ticks (as we demonstrated above). So, maybe as soon as your trade moves 1 point in profit, move your stop to b/e. This is recipe for disaster. The end result of all this would be small, extremely small profits (like 1-1.5 points). If nothing else, this rule again encourages scalping and more roundtrips. So, both from the profit and stop point of view, rules have been designed that they appear to keep the trader under tight leash, when the real motive is to just encourage the trader to scalp and generate commissions for Patak. 4) Finally, with so many rules, its very much possible that live trader will screw somewhere and Patak will find an excuse to send him back to combine, so that they can again charge him 200 to 400$. So, based on the way rules have been defined, they encourage scalping and my guess is average trader would be trading way more than 2 round trip trades per day, thus increasing commision income for Patak. Always with a large number of traders with a L on the website (live trading) and touts like Maverick and all the other newly registered agents of Patak on ET and other trading websites pointing that so many guys have been funded, Patak will keep on finding new fodder to generate combine income and commission income. I must admit, before I did the analysis, I never realized what an ingenious business model those guys who are behind Patak have come up with! But, so sad its so insidious in its design. gmst- I will try to sum this up point by point. 1) TO answer this. If you trade 5 or all on on your first trade that is up to you, we are evaluating how you trade in the Combine. We are looking for traders that can manage their RISK. So in this case I would recommend sizing down. There is nothing wrong with trading 1 lots, (if your arguement is then trade your own personal account I would say then go ahead, again the failure rate is the same no matter what size position you have, we trying to avoid that by developing traders, dropping certain mindset, etc) If you want to be a size trader that is great, but big traders started off as small traders (1 and 2 lot traders) becuase if you can't trade small you can't trade big. The max position of 5 in the Combine simply lets someone know that is the max if they so choose. Again we scout for trading talent and those who can play WITHIN the risk parameters allotted depending on the account they sign up to be evaluated under. Our popular account size is $50,000, 5 lot max buying power (again 5 max if you choose to max) and a $1,000 daily loss limit. A $1k loss limit in a day is 20 handles of heat with a one lot..(a handle equals 1 point) that is a lot and probably not a good entry on your trade. Trade management and risk management is the core of what we are scouting for. 2) Number 4 of the trading plan is SIMPLY a preserving capital chararctericts we want in a trader. If you are up $500 on the day we want you preserving capital and making sure you go home with money in your pocket. Therefore having a retracement off your high water mark, like 50% off realized P&L high water mark means if I had a realized high water mark P&L of $700 for today, I will then call it a day if I continue to trade (if I so choose) and my P&L drops to $350. We always want to be trading for tomorrow. Our funded traders know when to hold'em and know when to fold'em and this keeps them on track until they build up their account. Once they build up their account these RULES are off. They are proven with us as a profitable trader and we don't watch them as closely. Again it is a prove it business. As for mentioning the 5 lot max again, I would again say why are you maxing your position at 5 this is not trading if every position you put on is at max, you would look more like a gambler to just about anyone evaluating you. 3) SAME AS ABOVE where I mentioned 5 lot and why are we maxing it. 4) To address your final point, a person is our program is not trading their money they are traidng someone elses. So if you trade another persons capital you give up doing it your way and begin to learn another persons/firms way. On a final note to this, if you get sent back you do NOT have to pay for your first Combine back and typically if you did not do well in your first Combine going back from trading live you are a sound trader so your second Combine you will most likely be meeting the deposit rollover requirements, thus not costing you. Those that have been sent back and earn the opportunity to go back live also do NOT have to make up the losses they had when they were live prior. They start with a clean slate. Lastly you need to understand that this may not be a fit for everyone. we can't cater to everyone nor will we try. But if you are serious about trading and getting on a new track rather then the one that is not working for you we ecourage people to start working with us. mp __________________ TopstepTrader is structured to educate, develop and fund traders. Learn more: http://www.topsteptrader.com/. Questions? Contact us: scouting@topsteptrader.com or +1-312-252-9858 . My TST profile: http://www.topsteptrader.com/ViewProfile/NEBRASKA/0/p/0
Quote from gmst: Agreed Combine and Live traders trade very very light. Still, if you pass on the lowest commissions (still charging full exchange fees) I calculated and showed in my post# 2 that every trader on average will benefit between 250 and 554.40 USD per month depending on 50k or 100k account. For a particular trader with 150k account, benefits from saved comms would be >750 USD per month. That calculation assumed very very light trading (precisely 2 round trips per day). For a trader who goes live and trades for 1 year a 150k account, the amount lost due to paying higher comm = 750*12 = 9000 USD. Obviously after 3-4 months of live trading, this trader will also increase size. This calculation doesn't take increasing size into account at all. This is serious cash for a trader to forego! I am sorry but unless you decide to pass on the cheapest commissions possible to your traders, it is hard for anyone to seriously believe that your best interests are aligned with a trader's best interests. My suggestion is to dramatically reduce your commissions, if you want to give a fairer deal to the trader. Cheers. Yes, Combines are refundable. But, a very small fraction of people doing combines will get refunds - and you don't want to highlight that point. Not a good business practice if you just highlight what suits you and don't fairly present the other side of the information - especially in the world of internet, social media and open communication. I requested you to offer some numbers. But you responded with your marketing pitch! Your marketing pitch is very good, I must admit. I was hoping you would give me a serious response where you could have taken the points I made in my post#3 on this thread and refuted them point by point. But you have disappointed me. You know at Wharton - we have a saying. Your words don't count unless backed by numbers! And all over the world, there is a saying - Talk is cheap. So, please for God's sake, confront me on my numbers. You are the CEO, you should have access to all the numbers. Please show me where I am erring in my logic. Btw, Congratulations on becoming an ET sponsor. This will give you a good platform to clearly put forward value proposition of your firm and silence your doubters (like me ) by offering a point-by point response. Cheers. gmst- To answer the first part about commissions. We are not a discounted brokerage house. We can not compete with those commissions. This is what Patak Trading Partner has worked out with our clearing. It is fair. If we have high volume traders(which we do not) then we can go back to the clearing firm and work something out as we will work to retain any talent that we find. That is not in the cards at this time. To add to this, there are no platform fees cost for squawk, or any other tools as a funded trader (excluding the advanced charting option that the platform provider debits the trading account of the funded trader if they request that they want it). hopefully we can lay commissions to rest. Now to the next part: You mentioned: Yes, Combines are refundable. But, a very small fraction of people doing combines will get refunds. We have a large amount each day become eligible for a refund, I am confused on your speculation by saying a small number do this? If it was something I said earlier please let me know. Those that become eligible for a refund roll this over to start a new Combine after discussing what to work on with the scout who reviews them. We rarely get recruits asking for a refund, most rollover and continue to work on their trading. On a final note: TopstepTrader, LLC. is an trader education and recruiting firm. The talent TST finds goes to PTP (and other interested parties). PTP is strictly proprietary trading firm. These are two separate entities with two different business models just an fyi. mp ps. the last part of you prior post I answered by quoting your #3 post and tried to go point by point.
Quote from Maverick74: For the most part, yup. I've been in Chicago for 9 years so I can only speak about how it works here, but like NY, it's really a "who you know" kind of town. That's not to say if someone who obviously can't trade has a lot of friends at prop firms that someone will hire them. It simply means if 10 guys all have some kind of a track record, the guy who is connected the most from those 10 will get the job. I'm sorry but this is how the world works. Don't blame me, I didn't build this world. And like Michael said, daytrading is a very different apple. If you come to me with sheets from 3 years ago it will say nothing about how you are able to handle "this" market. I'm happy if you made money in 2008 but a lot of guys that did can't string together two consecutive profitable trades in this tape. TST, like most firms want to back guys that can make money NOW in THIS tape. Not in the tape 3 years ago. Just like in sports, The Bears have to win the Superbowl with the 2012 team, not the 1985 team. Maverick good points as I was going to reply to the track record post as well.. We receive these and other prop firm owners I know receive these but all share the same thought that they really don't care to much about track records (or what you did in 2003, 08, or two months ago). Ya it means something but it doesn't mean you are profitable trading today and that is what counts. What you are saying when you apply for a trader position with any firm is hire me because I can make money in today's market. Firms know this does not hold true more often then none and therefore many firms start traders on an under review type status (that is after you go through training or classes for 3-8 months) trading the absolute bare minimum before ever giving them more risk. Maverick... it is the end of the week. You mentioned you are in Chicago?... for the beating you took and gmst's popular thread I do offer you both a drink at Ceres cafe sometime soon. I am betting we would all have a good time talking shop. Take care everyone and have a great holiday weekend. mp
Quote from SUPERIOR1: Patak, How do you keep traders from taking their capital and making it on their own? What is the agreement? Is it a contract? If I had to sign a contract, I would never do TST. I can't find info on this on your website. It sounds like if someone can meet the criteria on the website, that they can take their earned capital and become much richer than they would be working for a firm no one has heard of like yours. Besides, who wants to work for a futures prop firm for any length of time? I don't get it. I don't know who is successful as a futures trader and doesn't work for themself or for a big institution (like UBS or FNYS). I don't hear anyone walking down Michigan Ave saying "yeah, after that tough day at Patak we went over to Goosefoot in his new 458" ??? All funded traders with Patak Trading Partner sign trader agreements to trade with PTP for at least 1 year (this is completely standard with all prop firms). Each year we renew and if a trader is very profitable and wants to go on their own we will do what we can to keep that talent with PTP. TopstepTrader found the talent. PTP will do what we can to keep it. We try to get our traders to think of themselves as athletes that are extremely good at what they do. Like sports, your current organization that found you will offer what they can to keep you but ultimately when your contract expires you become a free agent and can do what you want. mp
Quote from gmst: Michael, Thanks for giving a point by point response. The conversation on this thread has led to a much more detailed analysis of the program at Patak than available on the website. I have raised my reservations and you have put forward your points. I think its up to individual traders now to decide if they want to go ahead with Patak or not. The main conclusions are: 1) You are not going to change your commission structure, even if its going to cost 9000 USD or more per year to a successful trader trading 150k account at Patak. 2) I still think Combine objectives are way too tough, especially because performance has to be met on every 10 day/20 day basis. 3) I still think on a 50k account asking a trader to put in a trailing stop after 500$ in profit is nonsensical. This limit should be increased to at least 1500$-2000$ for it to make sense. Remember, in trading we want winners to be 'generally' larger than losers. EDIT: Another way you can define the trailing limit is by defining it in number of points rather than dollars. So, for example ES: a trader must put in a trailing stop after trade is 8-10 points in his favor. My final suggestion to you is that - once a trader goes live, make him adhere to performance objective over say every 50 or 100 trading days instead of every 10 or 20 trading days. This would increase the odds of retention of a trader in live trading by a HUGE margin and you might have a serious business of finding, funding and retaining good traders. 10 day/20 day is just a churning model. Simply because over time, vol changes, market character changes, there are good months, there are slow months. So, "LIVE" traders should be evaluated over a longer period rather than on a 10 day or a 20 day basis for the model to make sense. Ultimately its your company, so you will take the final call. But I think if you make above changes, this program will start making a little bit of sense from traders point of view. Otherwise, it is an extremely lop-sided program as it currently exists. gmst to answer this to the best of my ability: 1) You are not going to change your commission structure, even if its going to cost 9000 USD or more per year to a successful trader trading 150k account at Patak. Yes we will definiely work to get the best for that trader but until you prove that you are the big profitable trader we can not go to our clearing firm and restructure commissions with no evidence. 2) I still think Combine objectives are way too tough, especially because performance has to be met on every 10 day/20 day basis. Combine objectives are fair yet challenging like the markets. We need to find traders that are producing. Our smallest account is 30k account size $500 limit. You would need to have a trading average of $250 and meet the scouting criteria to get financially backed. This is an average. So over the 10 day Combine you need to show you can produce at least $250 on an average and meet at least 2 of the 3 performance requirements (avg win greater than avg loss, total win % greater than 45, and avg win duration greater than avg loss duration). The performance requirements are basics mechanics of trading. We all got in this business to put up this type of money or greater. We don't trade for the sake of trading we trade to make money. The Combine allows the creme to come to the top therefore showing who can trade today's market and giving us a chance to get that person on a funded account. 3) I still think on a 50k account asking a trader to put in a trailing stop after 500$ in profit is nonsensical. This limit should be increased to at least 1500$-2000$ for it to make sense. Remember, in trading we want winners to be 'generally' larger than losers. EDIT: Another way you can define the trailing limit is by defining it in number of points rather than dollars. So, for example ES: a trader must put in a trailing stop after trade is 8-10 points in his favor. gmst- trade how you like. Just meet the scouting criteria and profit of the Combine. My final suggestion to you is that - once a trader goes live, make him adhere to performance objective over say every 50 or 100 trading days instead of every 10 or 20 trading days. This would increase the odds of retention of a trader in live trading by a HUGE margin and you might have a serious business of finding, funding and retaining good traders. 10 day/20 day is just a churning model. Simply because over time, vol changes, market character changes, there are good months, there are slow months. So, "LIVE" traders should be evaluated over a longer period rather than on a 10 day or a 20 day basis for the model to make sense. gmst- When a trading goes live they do not have a 10 day or 20 day objective. They have no profit target. They talk to their head coach each week and the head coach discusses if they are performing and meeting the basic metrics. If you are producing you have nothing to worry about, if you are breaking even you have nothing to worry about, if you are losing in the account and not meeting the performance requirements then yes that is something for a prop firm to be concerned about. mp
Michael, Can you answer the above questions please? I have asked you these questions twice in the other thread - but you have not answered them yet. Also, you opened a new thread with the title "Easy to read Q&A". You are making your thread harder to read by quoting from other threads. Do you want me to quote also from other threads? So, lets keep it clean, and please answer the above 5 questions.
Quote from Maverick74: Michael, I'm in Houston at the moment. I'll be back in Chicago next week (Wednesday). I'm going to take you up on that drink! You're invited on the floor as well.. wear business casual and you are good to go. mp
Quote from Maverick74: I guess it's better to let Michael answer this but my guess is they will not cut you off till you go negative. In other words, if you are on the 50k and are up 1800 and you drop 600, you are still good. If you drop 1800, you are probably still good. I think once you go negative, that is when they will have a talk with you. This is precisely why I think they want you to lock in those good days in the beginning to build up p&l so you can trade more freely and not have to worry about being cut off. I'm going to guess if you had 30k in open p&l, they will let you give back ALL that money before they stop you. That's my guess. Now, you should NOT let that happen obviously but I think they will give you the rope if you want to hang yourself. Maverick you are right. PTP doesnt cut you off until the account is negative. When a trader first starts live is the most crucial time for the trader the equity partner and the scout team. Scouts want the equity partner to know they found talent, the trader wants to prove they are not a fluke and the equity partner doesn't want to lose capital. Mp
Quote from gmst: Yes, I see that Patak has sorted out the PDF discrepancy. I am surprised none of the traders who actually filled that PDF noted it before - I guess Patak has been running for probably more than a year now. I am not against trailing stop, but a 500$ limit is too low imo. As I said, ultimately Patak will have to decide if he is ready to increase this limit, its his company. But, I can't buy that a 500$ trail limit is ok. gmst- a scout talks to a trader getting brought up live and goes through the trading plan with them after they submit it. We do omit and edit things on a case by case basis. All traders are not created equal so to speak. Some request certain things. Our goal is to keep you live. It does nobody any good if you go through a Combine, get your deposit refunded which is what you earned, then get on a live account and proceed to lose x thousands of the equity partners (PTP) capital, only to go back to the Combine again which we provide one free after that. It's a waste of your time, TST's scouting efforts and our prop firms capital. Mp
Quote from gmst: Thanks! Alright, good to know clearly that there are no profit objectives but a trader has to watch out for risks. But what is the exact condition under which you cut-off the LIVE trader and send him back to Combine. These set of conditions is not written anywhere on the website. And I think you ought to have a clear policy on this and this needs to be clearly spelled out and put on the website. E.g. if a LIVE trader has been profitable for 20 trading days 2 times consecutively and has made 1800$ till now. If on 3rd 20 day period, he loses 600$, will you send him back to combine? You see what I am saying. The set of rules should be clearly spelled out. For otherwise, your operation smells of a Combine-Live-Combine-Live churning scheme. There is no 10 or 20 day evaluation when you are live. You get sent back when/if the account starts going in the red (below your initially starting balance). Usually this is twice your loss limit amount, but again it is case by case as we work with traders, much like a pitching coach would come out to the mound to calm his talent down who has just given up a bunch of runs. I will look into having the back office clarify this better on the website. Mp