Looking for Pro firm

[darkhorse]

Quote from Maverick74:

Dark Horse, I'll admit I'm too tired to read through your entire post. Let me try to put this a different way. First of all, lay off the accusations. I never said it was con, that was another poster. I never even said what they were proposing was unethical. I simply said it was not, in my opinion, a good deal for the trader. Jesus, had no idea I was going to be read my rights.

Second, my beef with these types of deals is not what is "in" the contract. It's what is "not" in the contract. Yes, of course the trader understands the first loss provision. What the trader does not understand is how or if they are going to be backed. Most these types of firms do NOT spell that out in the contract. It's very ambiguous. The "investors" they talk about are very secretive and they never tell you who they are. And as a cop out they always say things like, well, it depends on whether the investor likes your performance. A lot of times traders get strung along forever and the backing never comes. Now, I know what you are going to say. Hey, that's the risk they take. Maybe. But it's still a bad deal in my opinion.

Is there some guy out there where this deal will work because the prop model is not the right fit for them and they can't find backing anywhere else? Sure. I can buy that. But make no mistake about it, they are the exception, not the rule. And in the future, if you are going to attack me, make sure you attack me for something I said, not someone else. That will make this dialogue go a lot smoother. Good night.

Okay, I apologize for indirectly attributing the "con" remark to you. I skimmed through the earlier posts fairly quickly, and thought I referenced the con man stuff in general terms. I retract any reference to you, and state for the record it was directed at whoever was throwing the phrase around.

Also, I don't believe my reply to you was ad hominem. To the degree that my reply had an edge, that's just banter. No attempt to attack you directly, as opposed to your arguments (although I stand by my indignance at the idea of a trader who can't or won't read a funding contract).

Re, exception rather than the rule... sure, of course. A consistently winning trader is, by definition, an exception to the rule that a majority of traders lose. A consistently winning trader who can also handle the pressure of scaling his program into millions or tens of millions, with the pressure of OPM on top... well yeah, that is no doubt a different breed of cat. But that's what these allocators are looking for -- confident winners who want to win even bigger.

And yep, it's a different deal than prop, much more focused and entrepreneurial... not something to try straight out of school or with savings from the middle management job.... but again, different strokes for different folks, horses for courses and so on. Our assumption was always that a program like this would not be right for the vast majority of ETers, but as for that small percentage, you never know.

 

[JamesBond007]

Maverick,

I feel for you. You have two guys from Mercenary Trader tag teaming on you. lol.

you two from MT - MikeMcD and Darkhorse - give us examples of traders who successfully went from a $100k risk deposit trader to at least an 8 figure AUM manager under your deal. you might then gain iota of credibility. until then there's no way a trader with decent track record is going to fall for your 20% profit split.

Once again, to get back to the topic of OP's - he's looking for someone to back him 100%. You dont offer 80%. Not even 60%. Not even 40%. You offer 20%, with all risks on the trader - not a single penny of risk from you or the investor.

Enough said.

Baron - I know you make $ off of ads but these guys are too much.

 

[hilojack]

Well I'll add my .02 here for what it's worth as I have gone both routes.

Prop is great for day traders who have some cash to put up, and who don't want the added pressure of OPM or the day to day BS hassles of running a fund. Most methodologies are accepted, but the majority are day only strats or hedged overnight (no, stop loss orders don't count). Most are equities only, tho some are now moving toward options (again hedged strats, finite risk). With no pedigree or connections, this is probably your best bet. Guys like Mav and Bright have been in this space for a while and have reputations as straight shooters (tho I'm not certain Mav is still in the prop biz). But those deals aren't always the best either. Like what most attempt to do here, there are trade offs (get it?). Commission vs. reputation, trading style, risk mgmt style etc. To each their own I say.

I went that route for many years, as a single guy who liked to eff around and party. But what I found out years later was the lack of an audited track record made it difficult to get in the door despite stellar returns. People asked why I hadn't gone to cap allocators who could monitor what I was doing. They thought I wasn't a serious trader (which early on I wasn't) despite getting married and settling down. Getting married is an individual prop traders nightmare, trust me!

So I then went cap allocator space. Took a step sideways to make a giant leap forward. The deal I took was a first loss deal (same as prop btw) and profit split was shitty. But here's what happened, it only took 6 months to get a proper allocation and my profit split and deal got much better. The cap allocator needed a program like mine to fit a portfolio of strats and they were willing to pay up to get it. Done deal, now running my CTA and haven't looked back.

So here is the takeaway: first loss deals exist to separate the bs artists from real deal traders. My guy would tell me countless stories about big bank traders, who couldn't handle risk when their own cash was on the line (you think the London whale woulda swung like that if his ass was on the line?). My own experience was the same, had a buddy who was an ex Goldman floor trader who could not hold 300 share positions once he went prop- true story. And unlike Mav's experience, I did not have to use their broker so they never made commish off me-- our interests were aligned.

So the point of my entire diatribe (sorry its early) is that it is really a personal choice. But here some things to consider: prop shops are as good as it is gonna get from day 1. Sure u can make good money as your BP goes up, but you won't be launching a fund straight from one of these shops. You are still in a first-loss arrangement and they only care from a biz perspective whether u can last long enough to generate enough commish. If your profitable that's a bonus. Nothing wrong with that btw. But make sure to keep meticulous records, do not take any significant time off (maintain a consistent track record) and use 3rd party software and/or audits to verify your results. Should you get the urge for true OPM, it will be much easier to get in a true prop shop or on a cap allocators radar.

If you decide to skip the prop step and go strait to cap allocator, do your homework! Know that your 1st year deal will likely suck, be prepared to put up cap, but ask to "just speak" to the allocators. When I took my deal, I had no idea who was behind the scenes but was pleasantly surprised when it was revealed. Had I just dismissed the whole thing as a scam I would have made the worst trade of mylife! How to tell what's a scam and what's not: use of broker. If the cap allocator is not making commish and you are allowed to use anyone you want, then it's probably the real deal. Sure thre may be some bs costs associated (particularly if you're not profitable) but you are essentially paying to get on the radar.

I respect Mav a ton, but remember that his background is in prop. I have no idea who mercenary is, so it could be bs, or it may not be. Like what we do every day, opportunity is wrought with risk and reward. So each should act according to their own individual needs and not based upon a minor chat room squabble.

Oh and to the OP: no one reputable is going to back you 100% based on back tested results. If what you have is as good as you claim you should have no prob coming with cash for either prop of a first loss deal. Prove your serious and vested in your own success and the cash will come.

Edit: I see the OP is already trading some OPM, so the route he should go is cap allocator, not prop. Prop will likely require 100% exclusivity, so you won't be adding to your existing base. So you should either take a first loss deal as it won't be as bad cuz you have other OPM, or apply to headhunters. Good luck.

 

[optionbull]

Quote from Maverick74:

Well, I take some issue with this. I'm not accusing this guy of anything unbecoming, but this is a very standard deal in the industry for first dollar risk. There are several firms out there that run this model. The problem I have with it is they do a lousy job (perhaps intentional) of making sure the trader understands they have first dollar risk. I use to have guys come to me on here to read over their agreements and explain to them that they have all the risk. They would keep saying, no, that is not what the firm said. It took hours upon hours of me going over the contract with them for them to get it.

Here is what makes me VERY suspicious of these deals. I'm not going to name the firm, but one of them approached me a few years back with a deal like this. I smelled a rat and called them out and said, how about this. I'll put up 100% of the capital. I'll give you 100k, all my money. However, I don't want ANY leverage. ZERO!!!!! Just let me trade MY capital for you so you can get your "so-called" look to see if you want to back me. They f*cking balked at that. I said why not? I'm putting up all the money. I'm taking all the risk. I don't want your leverage. Just let me trade my account with my own notional funding and let the chips fall where they may. Then they come back and say, make it a million. I politely told them to go f*ck themselves. These guys are so shady. I call their bluff and they run.

Anyway, I don't trust these deals in general and if a trader wants leverage they can get it going prop. Put up 100k and give it to Bright. Don will give you several million on that. Build a track record. Then let a 3d party marketer raise you money.

I was thinking EXACT same, why not just monitor account... if htey like what they see, fund the guy.

 

[operator]

Quote from hilojack:

So I then went cap allocator space. Took a step sideways to make a giant leap forward. The deal I took was a first loss deal (same as prop btw) and profit split was shitty. But here's what happened, it only took 6 months to get a proper allocation and my profit split and deal got much better. The cap allocator needed a program like mine to fit a portfolio of strats and they were willing to pay up to get it. Done deal, now running my CTA and haven't looked back.

BINGO...This is what it is all about...Congrats!

 

[hilojack]

Quote from optionbull:

I was thinking EXACT same, why not just monitor account... if htey like what they see, fund the guy.

Because true monitoring requires associated costs. Its essentially an audit. If you are looking for OPM (like the OP) then it is likely going to be a house account to receive the leverage.

If you don't need the leverage (or the OPM) like in Mav's example of dealing with the scamsters, then the exercise is pointless to begin with.

Mav's example is one way to sniff out the frauds. If you are willing to pay for your own audits (may need to use their auditor) and trade your own money, there are plenty of places that will look at your results.

Just remember, you need them more than they need you because there are plenty of people willing to take sub par initial deals for a shot at the big time.

 

[optionbull]

Quote from hilojack:

Because true monitoring requires associated costs. Its essentially an audit. If you are looking for OPM (like the OP) then it is likely going to be a house account to receive the leverage.

If you don't need the leverage (or the OPM) like in Mav's example of dealing with the scamsters, then the exercise is pointless to begin with.

Mav's example is one way to sniff out the frauds. If you are willing to pay for your own audits (may need to use their auditor) and trade your own money, there are plenty of places that will look at your results.

Just remember, you need them more than they need you because there are plenty of people willing to take sub par initial deals for a shot at the big time.

Audit costs minimal ........

 

[hilojack]

Quote from operator:

BINGO...This is what it is all about...Congrats!

Thanks. Look, you gotta kiss a lot of frogs to find ur prince! Or in other parlance you gotta bang a lot of mediocre chicks to practice up for the hot ones, especially if you have a small johnson!

Not that I would know LOL

 

[hilojack]

Quote from optionbull:

Audit costs minimal ........

Yes it can be. But I always find you get what you pay for. Make no mistake, Cap Allocators are in this to make money off of you, same as prop guys.

They just come at you from a different angle.

 

[darkhorse]

Quote from JamesBond007:

Maverick,

I feel for you. You have two guys from Mercenary Trader tag teaming on you. lol.

Whatever dude. This isn't a below-the-belt barfight. It's a conversation. I noticed the thread and decided to respond. And nobody is starting a flame war. You're deliberately making a mountain out of a molehill.

Quote from JamesBond007:


you two from MT - MikeMcD and Darkhorse - give us examples of traders who successfully went from a $100k risk deposit trader to at least an 8 figure AUM manager under your deal. you might then gain iota of credibility. until then there's no way a trader with decent track record is going to fall for your 20% profit split.

Absolutely, no problem. Real examples are available - and not just 8 figure end result AUM, but 9 figure end result AUM (+$100MM).

You want names? Sure. Call and ask. Describe your trading program. Open the kimono a little and get the same in return.

Stone-cold legit references, with full documentation of success, will be provided by the allocator on request. But why should they be provided as troll-bait to someone who clearly has a chip on their shoulder?

It's just a conversation for god's sake. Nobody is being asked to wire funds to a Nigerian bank account. If you have the goods, you'll get what you need before having to take a single step whatsoever beyond simply checking things out.

Quote from JamesBond007:


Once again, to get back to the topic of OP's - he's looking for someone to back him 100%. You dont offer 80%. Not even 60%. Not even 40%. You offer 20%, with all risks on the trader - not a single penny of risk from you or the investor.

And I'm looking for a Victoria's Secret Model. So what.

The ins and outs of what is realistic and what isn't re, backing and breaking through to OPM, have already been discussed on this thread, with confirmation (as you just saw from another poster) as to what the results can be from taking a reasonable calculated risk.

Quote from JamesBond007:


Enough said.

Baron - I know you make $ off of ads but these guys are too much.

Enough said? You didn't say a damn thing.

It's a legit opportunity for legit traders. We aren't trolls, we aren't snake oil salesmen, we are real traders and capital managers here in the trenches like anyone else (anyone else on ET actually trading that is), and the shit we get from guys like you mainly comes from having the balls to actually get on these threads and explain ourselves while defending the value of what we're putting out there.

It's a real opportunity, the legitimacy of which is very easily determined -- inquiries welcomed -- by someone with a profile that makes the opportunity worth pursuing. End of story.