Becoming a backed trader

T

thetraderprofit

I'm throwing this out for everyone to knaw on.

I've had a measure of success as a prop trader. I'm willing to
teach my strategies to the right person(s), and to back them in implementing those strategies.

I'll put up $25,000- $50,000 per trader; they can have leverage of at least 10-1 overnight on hedged positions.
They cannot trader any hedge without my approval, and can only trade my strategies.
They will have access to bullets, and be charged a reasonable (1
cent/ share ) commission. They can only trade in my office (I'm not a broker/dealer), must move to my location, and take securities exams.

They will have no risk.


What's a fair split, considering I'll be earning a significant piece of the commission?
 
From my experience, I'd say 60/40 or 70/30 (the trader gets the higher percentage) is highly competitive. Other companies use a sliding scale payout based on your ticket average (with a max payout of 50-55%) and super low transaction costs ($6-7 all in, including ECN, SEC tax, etc.), but even then it's tough for the trader to make decent cash in this market. If your transaction costs are around $10 or above (all in), then I'd max out the payout percentage to 60 or 70% straight up with no ticket average.
 
My transaction costs are based on 1000 share blocks. If you charge 1 cent per share (which is a bit steep), then you're already looking at $10 per 1000. If you tack on ECN fees, SEC tax, etc. for Nasdaq stocks, then your transaction cost is around $12-14 per thousand shares. It's cheaper to trade through an online broker...
 
Originally posted by thetraderprofit
I'm throwing this out for everyone to knaw on.

I've had a measure of success as a prop trader. I'm willing to
teach my strategies to the right person(s), and to back them in implementing those strategies.

I'll put up $25,000- $50,000 per trader; they can have leverage of at least 10-1 overnight on hedged positions.
They cannot trader any hedge without my approval, and can only trade my strategies.
They will have access to bullets, and be charged a reasonable (1
cent/ share ) commission. They can only trade in my office (I'm not a broker/dealer), must move to my location, and take securities exams.

They will have no risk.


What's a fair split, considering I'll be earning a significant piece of the commission?
More...

50% is typical in the private trading groups I know.
 
60% with the 50k capital seems reasonable. Not many firm's backing traders these days. Does the trader need to sign a contract obligating him for a minimal amount of time?
 
Originally posted by thetraderprofit
I'm throwing this out for everyone to knaw on.

I've had a measure of success as a prop trader. I'm willing to
teach my strategies to the right person(s), and to back them in implementing those strategies.

I'll put up $25,000- $50,000 per trader; they can have leverage of at least 10-1 overnight on hedged positions.
They cannot trader any hedge without my approval, and can only trade my strategies.
They will have access to bullets, and be charged a reasonable (1
cent/ share ) commission. They can only trade in my office (I'm not a broker/dealer), must move to my location, and take securities exams.

They will have no risk.


What's a fair split, considering I'll be earning a significant piece of the commission?
More...

Why charge them anything at all? These are your traders, right? You are essentially 'hiring" them without pay, so just pay them a percentage of "net net" profits....wouldn't that make more sense?

Our traders who back others don't have to transfer any capital anyway, as I;m sure you won't, just "guarntee" the accounts, and give them a share of the profits....

And who wouldn't want to move to Vegas anyway?? Why would anyone live anywhere else??

:-)

Don
 
What licenses do you require?

I've heard that taking the Series 62 then the 55 was an easier and less time-consuming route than taking the Series 7.

Will you be able to sponsor incoming traders prior to them moving out west?

Thanks,

axe
 
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