Anybody owns a prop firm?

[birzos]

Would you be interested in showing your firms total pnl to the world in a very unique and beautiful way?

Why?

Traders value transparency and seeing people's results.

As @lawrence-lugar summed up, the ones who will show you are synthetically creating returns so you have no idea the true figure, be it an individual trader or a prop firm. Decided to look in to the analytics https://www.elitetrader.com/et/threads/topsteptrader.305660/page-5#post-4398091 investigating the best methods to mentor new traders to run micro funds. In the end it was pointless as the prop firms skew to service income not trading profits.

A natural retail return is 1-2% per month on hourly timeframes, you can generate 3-5% but after that it becomes aggressive and very inconsistent, so you need to drop down timeframes to increase the trade volume at the same percentage.

https://www.elitetrader.com/et/thre...t-the-retail-level.311722/page-2#post-4494222

The base figures don't change, only how you push and pull the dynamics to either naturally (slow and least effort) or synthetically (fast and most effort) create returns. It's a normal distribution (top 0.1% make almost all the returns) within a normal distribution (top 1% who make any returns at all).

A $50bn AUM fund tried to pull me in to consult on their architecture, but when I deep dived in to their figures found they only produced a 1% fee return, all perfectly obscured of course, and told them to get lost because they are so inefficient the only thing that would help them is more QE. Everyone these days creates synthetic returns, we create natural returns which is why the figures would make less than no sense to you because it's built on an evolutionary structure.

It's why the world has moved to technical HFT, fast and furious, and fundamental long term, slow and steady. The simple answer to your question, no, because the devil is in the detail and no one will have a clue, especially at retail, how to interpret the results, there is a very good reason why they have accredited investor rules for balanced portfolios. These social trade follower sites should have been shut down a long time ago, that will change as QE dries up and the synthetic returns evaporate.

 

[traider]

Since the 50b fund is so inefficient, wouldn't it be easy to help them improve? They can also give you quite a decent paycheck for a period of time. Can you elaborate more on what they were doing wrongly?

 

[tradethetrade]

Traders don't value it... but like to see what others are making... doesn't mean that others would like it for them to see...

But if I am looking for a prop firm to start a trading career, I'd definitely like to know if they make money.

 

[Pekelo]

Would you be interested in showing your firms total pnl to the world in a very unique and beautiful way?

From the Comment section of tradingschools.org of the review of T3 prop firm:

"But if you go to:

http://www.sec.gov/edgar/searchedgar/companysearch.html

and search for T3 Trading and then look at their focus report where revenues and expenses and net income / loss is reported, I am not very impressed. Maybe I am missing something. One year I show a loss of $137,902 and then another year I see a gain of $4,243,855, but from what I have read they have over 300 traders so per trader that is not very much money."

That is about 13K for the the average trader in a good year and $400 loss in a bad year...

 

[tradethetrade]

Are you still trading or now an entrepreneur

@algofy and @traider

I tried to do both, but now I only invest long term while I run my business. I have some bots that I turn off and on occasionally when I want to test new setups.

 

[tradethetrade]

and search for T3 Trading and then look at their focus report where revenues and expenses and net income / loss is reported, I am not very impressed. Maybe I am missing something. One year I show a loss of $137,902 and then another year I see a gain of $4,243,855, but from what I have read they have over 300 traders so per trader that is not very much money."

That is about 13K for the the average trader in a good year and $400 loss in a bad year...

Very insightful answer. These reports are tough to read because they could have invested heavily into growth and the following year reaped the rewards. Could be real losses among other factors.

I am curious to know how much of their profits are due to training. 10 years ago, training was free pretty much anywhere and there were prop firms at every corner making money.

 

[TickSeeker]

Sure. Here are my first 6 months.

https://www.trademetria.com/blog/my-first-few-months-as-a-prop-trader-including-results/

How about yours?

So you did 1600+ trades and made ~$1.4k which gives you an expectancy of $0.86 / trade. In this situation it's no brainer why you paid roughly 81% commissions (6k / (6k+1.4k)).

This is nothing else than overtrading in it's clearest form. Your mentor has teached you to be a very good cash cow for the company

 

[tradethetrade]

So you did 1600+ trades and made ~$1.4k which gives you an expectancy of $0.86 / trade. In this situation it's no brainer why you paid roughly 81% commissions (6k / (6k+1.4k)).

This is nothing else than overtrading in it's clearest form. Your mentor has teached you to be a very good cash cow for the company

Lol, yes I was and always been a cashcow for brokers. However, I managed to increase my volume by 10x while my commission dropped by 90% over the years.

Capital preservation is your first goal during your first months. I was way ahead and already making some money.

 

[TickSeeker]

Anyway congrats you are green !

 

[birzos]

Since the 50b fund is so inefficient, wouldn't it be easy to help them improve? They can also give you quite a decent paycheck for a period of time. Can you elaborate more on what they were doing wrongly?

No, simply because that inefficiency is built in to their business model. It means the consultant has to offset 10s to 100s of employees lack of ouput. It is something you can do adhoc over a period of time, but not overnight, your output will always exceed your compensation, the senior management rely on it.

So you wait but until they implode and skew the input/output balance to at least neutral, very few achieve this in life.

NOTE: It's always better to use Reply as it pops up in peoples inbox.