By the way, even though I claim the 10k is a "piker" combine, a one lot ES is equivalent to trading 500 shares of SPY, which is not quite "piker" by equity standards. SPY currently has almost a $4 daily ATR given recent volatility, and the historical ATR is $2. What makes it piker is not the 1 lot, it's the limited 10 days of the live account, where you MUST build a cushion, after which your equity balance becomes your maximum trailing draw. If your equity balance is rather low on day 11, then it makes the scaling up rules rather pointless, and thus the biggest flaw of the TST live account.
Thanks Joe for your detailed response. I was kind of expecting more of a bussines plan from a backer's POV, but since nobody else beside you replied, I will share my idea. So let's say, I have a little extra capital and I want to get a 10-20% or even better return and I get the idea of doing it by backing a few traders instead of putting it into funds. So let's say I am looking for 4-10 traders ( too few and there is no diversity and the risk is too much, too many, too much trouble) and on average I would back them up to max. 20 cars on average. Copying the TST intraday margin model, the quick math tells me that about half million bucks would do the job (10 traders x 20 cars x 2000$ average margin) Now you see just how little money can back how many traders. Anyway, as I said in the request post, I want it simple and easy, I don't want to write code, hire lawyers, or spend money on advertisement,etc. So what do I do? I post on the 3-4 big traders' website that I am looking for traders to back. For the interested, I tell them, go to C2, start a system and send me an email when you think that you achieved something to look at. See how simple? PR was free, I am using a cheap and 3rd party simulator (so they won't accuse me of profiting from their trials) but what is best I am not even giving out numbers and percentages. All I would say is that I would like to see longer performances (not 10 days), the more consistent the trading with smaller DD will catch my money for backing. I mean I could come up with some approximate numbers what I am shooting for but the point is that I am flexible, and I wouldn't turn down a guy for missing the profit target by $20, like TST did. Also, I would want at least a month's performance but of course the longer the better. One extra thing I would ask them to keep a trading diary, because I would scrutinize individual trades, and they have to be able to explain why they took this trade or that. Profit share would be negotiated based on performance and individually. A better performance gets a better share. I would say I as a backer would want to keep at least 50% after all I am taking all the risk. So profit share would be somewhere between 30-50%, let's get realistic. Now I think IB has an account type where I can put a bigger capital in and let more traders trade it, so I would use that one. As I see it, my overhead is pretty much zero, and C2 costs only $20 per month for the would be traders. Once they go live, I would have a few rules, but I would try to keep them to the minimal. I would probably willing to lose up to 5K per trader... How many cars a trader could start with would depend on their C2 performance. Maybe I am a simpleton, but I don't see why we need to over complicate life when it is not necessary... This business plan is open for criticism, my main point here is that if a firm/backer is looking for talented traders, the idea can be done on the cheap and can be very simple...
It's hard enough to get traders just to READ all of the FAQ's on TST's site, lol! And you want traders to set up their OWN sim, create their OWN strategy, write their OWN journal, etc. And then on top of that, you want to negotiate separate deals for different traders, AND keep "at least 50%" of the profits, all without "complicated legal contracts." The plan is too disjointed, and I don't see traders going for it.
Create their own strategy? I hope they do have already a strategy by the time they consider my offer... Set up the sim? Have you ever used C2? It takes 2 minutes to get started trading... I might don't want a fully detailed journal, but if I ask a question about a trade(like why did you lose 2K on that trade?), there better be an answer. Anyhow, that is how I would do it... Aren't prop traders are getting different deals? Isn't your broker giving you a different deal based on your volume? So why would I be different? The profit share by this latest firm is way more realistic than TST's. If TST is happy with 20%, good for them, but that is not the industry standard... And if you remember, originally they took 40% a few years back...
The flaw in many "better TST model" is you are assuming that finding very good traders ( according to each person's definition) is a given. The real problem is actually finding very good traders. TST at first put a 40% deal thinking that there were thousands of good traders out there, and have found that this was not the case, and started to sweeten the deal to attract those who could. The next step for TST would be to create $1million combine. Even if it cost 3-4k per combine, this would be a very serious consideration. Now about the LTP : I can not understand why it is a bad thing to check if after 10 days of sim trading, the trader was just not lucky, and can withstand the pressures of live trading.
I think it's been a year or more since I last logged into this site, and many months since I even visited to lurk. Looks like the ES Journal thread is long dead, CL Redux dead for years but the TST thread carries on without missing a beat. Something to be said about its longevity Anyways, it was right here in this thread years ago where I repeatedly proposed TST should end the 10-day timeline and offer an open-ended trial to qualify. Whether those words have any influence or none, the continuous combine came to pass. To scratch one more thing off my proverbial trading bucket list, I just completed a $50k combine working CL only... took me 17 trading sessions to get out of my own way. The first fifteen were all net-profitable finishes, except for two times I second-guessed early wraps for $100+ and $200+ being good enough. Instead I returned to battle the afternoon ripsaws and as is usually the case, both second-dip efforts ended in solid net losses. Last Friday was the first and only true net-loss session where I never had a chance to prevail. It was a dead-wedge event from pre-bell to shutdown. But had I not made my own rookie mistakes prior, would have met all parameters before with a daily 100% win rate. No one to blame for that other than myself. ** So now we'll see what comes next. Being evaluated by the funding department at this time, if they see fit to turn me loose in live fire I intend to pocket the first $5,000 asap <grin>
Congrats Austin! Since we are showing off sim results, over the last few days while on vacation, I have ran a sim test strategy on C2. Here is the result: 6 trading days, CL and ES, and we should add about 3K more to the end result because C2 charges $14 for a return trip as compared to $5 at TST. So I guess I could have passed TST's 150K Combine in 5 days. Yippiie!!!!
lol... well I guess the question begs to asked: why the hell didn't you simply do exactly that in a TST $50k combine? Is the $160 entry fee too rich for our Canadian exchange rate these days? Unless I'm mistaken, this is still the TST thread... unless it changed to C2 overnight?