Capital Available for Traders
- Thread starter mickson
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I agree with the argument and math, but it doesn't work at Patak either:
So Patak gives you 150K at the most, with an 80% profitshare as max. and you make 20% return. So you made 30K and you can keep 80% of it, or 24K. How does that work for the same trader?
You are right, the bottom line is, the trader has to be able to make a living at the end of the day. So we have here 3 variables, returns, profit share and account size. As a formula:
Account size X return% X profit share% = making a living
I remember him, because he lives in the same city as I do, and I was investigating him. My call is that he was a MLM salesman.... It is safe to assume had he been legit, we would have heard about him...
So Patak gives you 150K at the most, with an 80% profitshare as max. and you make 20% return. So you made 30K and you can keep 80% of it, or 24K. How does that work for the same trader?
You are right, the bottom line is, the trader has to be able to make a living at the end of the day. So we have here 3 variables, returns, profit share and account size. As a formula:
Account size X return% X profit share% = making a living
I remember him, because he lives in the same city as I do, and I was investigating him. My call is that he was a MLM salesman.... It is safe to assume had he been legit, we would have heard about him...
Yes, the industry standard is 2%/20% however those are for proven guys i.e. most hedge funds are formed by guys with previous industry experience at known institutions with verifiable backgrounds, these guys are backing unknowns who perhaps came from a totally unrelated industries thus the initial seed amount and profit sharing has to be lower has to be lower i.e. this is much more speculative. Funding someone eg $20 million who previously traded a $50k or $100k account is sheer madness...
Again, Patak and this are completely different models. There is no deciding between either or. Patak is for the swinger, the aggressive trader. Hell, he can afford to have 80% drawdowns. The RAPA model is about low volatility and very managed drawdowns. Futures traders can make a lot of money really fast. RAPA is more about slow and steady. Not to mention at Patak you can size up much faster. Within months a competent trader could be making 10 times what he was making when he started. At RAPA it could take years to build your equity and technically, it should. There just are two many differences between the models to compare them side by side. Honestly, they are in different worlds. One is not better then the other. If you are AustinP slinging crude oil around, you don't want to go anywhere near RAPA. But at Patak, he could be making 500k a year really fast. He could also lose half of that in a bad month or two. Patak is for traders by traders. RAPA is for investors by investors.
With Patak, you know "exactly" the circumstances in which you will be funded. At RAPA you may never get funded. Raising capital is a crap shoot. I know guys with terrible track records that have gotten capital and I know guys who have traded for years with solid returns that just can't seem to find any money. With Patak, you can work a day job or run another business on the side. with RAPA you better be 100% committed to running money. What investor is going to allocate money to you when he finds out you are working an IT job on the side.
There are plenty of advantages RAPA has over Patak. It's much more flexible. You can hold positions. You can trade stock, options and futures. You make your own rules, etc. Like I said, no one is sitting on the fence here saying you could go to either one. One is a trading gig, the other is getting into the money management business.
This is the part I like most about it. The mixture of trading products.
If you have a viable strategy that works well, and can execute said strategy quite passively (few hours a week at most.) Then the extra juice managing money on the side is nice.
I don't see this as a program someone uses to get backed (like TST as you keep mentioning.) I also don't see this as a program someone wants to use if their strategy has scaling issues (if the optimal risk and position sizing is maxed out with an account of a few hundred thousand, you want that to be your money or have a very high interest in the returns from it.)
But.. if you have a few good investing strategies, and don't need to account for hours of screen time, then the extra kick on the side is great.
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That said, I do agree with you on the not-so clear methods of funding. I'd like to see a more specific funding criteria than being atop a leader board.
Simply put, if people gotta be first to get funding, then they might get more risky doing so... and the last thing I'd want is a very stable and consistent strategy/trader being bumped out of funding by some gambler who's had a decent past few months.
Just a thought.
Thanks for the insight, Mav. So, am i correct that these guys are actually building a "hedge fund" with non centralized, remote traders whom they vet via their model and social media site?
There seems to be regulatory issues with this concept, with not the least of which is the off shore origin of the "manager".
Not to mention a huge influx of this type of thing-- just on elite we have mercenary, RAPA, and Patak-- fishing for talent--- imho, Patak is the only one with solid odds of surviving--- just look at the marketing of the others-- one says--"large scale capital allocators" LOL, other one is "hedge fund, hedge fund" Most here are too sophisticated to fall for these tactics.. surf
Thanks for your comments. In a future website upgrade, we would like to have a table for investors like we have for traders. Here the investors will be able to be more specific and visible in terms of what is on offer. Also we will track the performance of the capital allocated.
One thing RAPA doesn't do is reward gamblers. You will notice the best % performance certainly doesn't move you to the top of our leaderboard. We recently had a trader who had a 400% return with a 68% max drawdown and he had a score of only 74 and couldn't understand why we weren't rewarding him for his herculean trading profits.
RAPAs scoring algorithm is interested in risk adjusted trading performance and consistency of performance throughout. For example if you have a daily VaR of 1% for 300 days and then on 5 days you suddenly spike to a VaR of 5% RAPA doesnt like this.
Trading is like course management in golf, trying to hit the green in 2 on a par 5 when it is surrounded with water is a dangerous strategy, you will lose more than you win.
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