Does a Prop Firm like this exist?

[GlobalMacro90]

Prop firm that:

Requires deposits from trader, but splits losses? Maybe up to a certain point? For a relatively smaller (but not too small since some of your money is one the line) split compared to first loss?

Also lets you hold positions overnight and doesnt charge interest (aka your trading firm capital not just using leverage?)

Something like (I am making up some numbers here):

Trader puts up $100,000
Firm Puts up $100,000

Trader then trades a $200,000 account, can use additional leverage for a fee (same as a regular IB leveraged account)

Most importantly, losses are split.

So if you have say a 20% drawdown, the $40,000 you lost is $20,000 their money and $20,000 yours?

All for a decent split. Something around 50/50 id think.

So basically deal which is between a full backed deal (all firm capital) and a first loss deal (where trader takes all risk and gets a high percentage, like T3, Maverick, etc).

Does something like this exist or am I totally off the mark?

 

[Robert Morse]

No. You would have to find a partner or private deal with an investor.

and if you find an investor to do this, a 50/50 split is too low. You should get paid as an investor and the trader.

 

[ajacobson]

New York, Chicago, San Francisco, London and a few other trading centers you may be able to find a backer who will tolerate a revenue split and provide leverage. A ton will depend on your verified trading history. Robert is spot on - many of the folks who traded the floors now simply have a backer, Dependent on the products you want to. In Chicago, there are a ton of people shopping volatility and SPX deals.

 

[Proptrader23]

Yes. I have a split-loss deal with my firm, the payout is much better than 50%.

 

[GlobalMacro90]

Yes. I have a split-loss deal with my firm, the payout is much better than 50%.

Proptrader23 I would love to hear more about it if you are willing to share

- Are your losses split evenly or is there another arraignment?
- Is there a point where you take all the future losses, such as if you are down x% the firm no longer splits loses with you.
- Do you know what you max DD could be before getting cut off / having the deal change?
- Can you hold overnight positions at no cost (meaning you dont have to pay interest on the position)?
- What kind of track record would be needed to get a deal like this (I know that a broad question)? How long would the track record need to be?

Thanks in advance.

 

[Proptrader23]

Risk capital and buying power are different. If you put up $100k and a firm puts up $100k in a split-loss deal your max loss is $200k.

 

[dozu888]

cart way in front of the horse man.

IF you are profitable.. 1 ES contract can create enough balance to get to 2 and 4 and 8 contracts in no time.

work on the trading.... money is NEVER a problem.

 

[dozu888]

and why do you want to touch prop, aka meat grinder, with a 10 foot pole anyway.

 

[Robert Morse]

GlobalMacro90,

I'm trying to understand the point of looking to double your BP but only keep 50% of the profits and losses. Basically you end up with the same, but have a partner. What would make more sense based on your desire to get more capital even if you have to risk yours too, is to find a partner willing to put up $900,000 + your $100,000 for a total of $1mm in the entity. That way you qualify for a PM account and get 6.67x or $6.67mm in BP. If then your deal is to split P/L equal up to $200K in losses and limit losses to no more than that $100K each, that would be an intersting deal for both parties. Of course in an event the other partner would have to eat the balance of the losses, but unless you can't control your risk, that should not be hard to limit.

bob

 

[GlobalMacro90]

GlobalMacro90,

I'm trying to understand the point of looking to double your BP but only keep 50% of the profits and losses. Basically you end up with the same, but have a partner. What would make more sense based on your desire to get more capital even if you have to risk yours too, is to find a partner willing to put up $900,000 + your $100,000 for a total of $1mm in the entity. That way you qualify for a PM account and get 6.67x or $6.67mm in BP. If then your deal is to split P/L equal up to $200K in losses and limit losses to no more than that $100K each, that would be an intersting deal for both parties. Of course in an event the other partner would have to eat the balance of the losses, but unless you can't control your risk, that should not be hard to limit.

bob

Hey bob thanks for this insightful post. Your example does make a lot more sense.

This is only available via a partnership/backer? (As opposed to a firm offering such a deal)