Mav's Combine Proposition

Quote from SteveNYC:

What if the trader passes all of the 6 month requirements in the first month?

Can the trader go live in the second month?

Also, how often does the trader get paid?

Once a month payouts is like being salaried at a really really crappy low paying job.

A trader should be paid every 2 weeks at worst but preferably at anytime.
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No, the purpose is to work on different skill sets each month since there is no p&l objective. So there is no possible way to pass in one month.

The trader would get paid every month, 50% along with the backer. No deferred equity. However, if there is a debit, the trader must make back 50% of the previous losses and then the account re-sets to a 50/50 split. I also removed the idea of refunding the 1500 combine fee. I also put in a 3 strikes your out rule. Once you get sent back to the combine a 3rd time, the contract is over.

And for further clarification, I'm not doing this. I'm getting tons of e-mails about this including Don Bright. LOL. I AM NOT DOING THIS. It was a simple mental exercise to see if there was any viable way this could work and be fair. It turns out, there isn't.
 
Let's look at why the SMB model is successful. They are an equity prop firm but I think they are now getting into options and futures as well. With SMB, you give them 10k up front. That's an education cost. They teach you their methods and then put you on a simulator for some period of time. Once you are ready, you go live. You trade 100 shares of stock. SMB is not going to let you lose more then what you paid them. Mostly likely they will cut you off at 2k or so. They are also making money on commissions but this is very small. My point is, they are getting paid up front! They can't really lose no matter what since you are trading out of that 10k. This is a good model for the owner. They get a cheap call option on the upside if someone turns out to be a great trader. They get some of the p&l and some of the commish. The bad traders get cut off and they walk away with maybe 1500 to 2k in revenue. No way to blow up smb really with this model.

Now the funny thing is, even SMB is struggling with this model and they are getting 10k cash up front. They had to move into options and other products to keep money coming in. It's really hard guys. The bottom line is, it's very hard to get any of these traders to make money and without that, none of these models can really sustain themselves long term.
 
Quote from Maverick74:

No, the purpose is to work on different skill sets each month since there is no p&l objective. So there is no possible way to pass in one month.

The trader would get paid every month, 50% along with the backer. No deferred equity. However, if there is a debit, the trader must make back 50% of the previous losses and then the account re-sets to a 50/50 split. I also removed the idea of refunding the 1500 combine fee. I also put in a 3 strikes your out rule. Once you get sent back to the combine a 3rd time, the contract is over.

And for further clarification, I'm not doing this. I'm getting tons of e-mails about this including Don Bright. LOL. I AM NOT DOING THIS. It was a simple mental exercise to see if there was any viable way this could work and be fair. It turns out, there isn't.
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One thing I realize about your prop model is that a trader won't be paid for six months without exception. So, it's not really a Combine. It's like a school. A trader goes to school for six months. Tuition is $1.5k.

So, maybe Mav's Combine should be renamed to Mav's Trading Academy (MTA)?
 
Quote from Maverick74:

http://www.smbcap.com/careers/smb-young-guns

I'm signing Lucias and gmst up!!!!!

The Jesse Livermore Scholarship for Active College Traders

Love it! Come on kids, get on this!
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To qualify for the scholarship, you need to meet the following requirements:


To qualify for this scholarship you must:

1. Be an Undergraduate/Graduate student still enrolled at a US University

2. Have a verifiable track record of active trading

3. Be passionate about trading - you are the kind that skips class to trade (not that we are encouraging you to do so)
 
One thing I don't understand and of course im making this assumption is that in order for them to be reasonably profitable you have to basically give them your tactical edge.

Isn't that going to hurt your edge?
I know back a while ago before programming was around if you have a profitable edge you could teach other traders your edge, take a cut of their profits and have them trade stocks you don't trade...
But now a days you have programming... So just hire a programmer (like me) to program you edge to trade every stock / future it works on. So the business of teaching traders what you do really is out of date. Programming is a much better way to leverage. Computer are fast, efficient and they don't bitch. Hiring traders to do what you're doing is just simply out of date!!! Kinda like hiring a travel agent.

Besides most profitable traders will agree w me... Explaining to someone what your trading strategy is will in most cases take less than a half an hour...

Now if you're talking you trying to teach them to come up with their own stuff... Forget it! You'd have better luck selling ice in Alaska
 
Quote from WhiteOut56:

One thing I don't understand and of course im making this assumption is that in order for them to be reasonably profitable you have to basically give them your tactical edge.

Isn't that going to hurt your edge?
I know back a while ago before programming was around if you have a profitable edge you could teach other traders your edge, take a cut of their profits and have them trade stocks you don't trade...
But now a days you have programming... So just hire a programmer (like me) to program you edge to trade every stock / future it works on. So the business of teaching traders what you do really is out of date. Programming is a much better way to leverage. Computer are fast, efficient and they don't bitch. Hiring traders to do what you're doing is just simply out of date!!! Kinda like hiring a travel agent.

Besides most profitable traders will agree w me... Explaining to someone what your trading strategy is will in most cases take less than a half an hour...

Now if you're talking you trying to teach them to come up with their own stuff... Forget it! You'd have better luck selling ice in Alaska
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You are perfectly correct that it is easier to program an edge. But that is not what this model is about. It is about training people to trade THEIR edges with skill and discipline.

Technically if I set up shop I could have some people trading various futures contracts in different ways (breakouts, mean reversion, etc), some trading spreads, options etc etc. all skills they develop under my guidance.

Sounds good, but a lot of work for sure.
 
Mav,
How can you be sure the SMB model is successful?

SMB got a lot of attention because of a few reasons

1. They were featured on wall street warrior
2. Dr. Steenbarger went and helped them for free and mention them in his book.
3. Bella published a book.

I already asked SMB for capital. Bella made a post about how he'd fund traders that were serious/etc. you just had to ask.. he made a blog post about this some time back. I showed Bella that I had 2 top ranked futures systems at C2 and Bella replied with a rather formal/dry reply... didn't seem least bit interested. I believe they partner with T3 now too.

My feeling is that SMB is struggling.. why else get into options

Anyway, I really try to like the patak model but just too many things off putting about it.. I will write Michael in another thread with my suggestions.

Also you act like all prop firms make you pay deposit or they aren't succesful. This simply isn't true. I had at least 2 prop firms that would fund me.. no outlay but it wasn't tenable for me because I'd need about 1 year of living expenses saved up. And they wouldn't let me trade without relocating/no remote/no way to ramp up gradually. I did an analysis of my situation and figured that my best interest was to protect my capital. That's rule #1. Keep my trading capital and not put myself in jeopardy to work for someone else.

I know of several props that don't require capital outlay. They let you trade own edges too. The definition of a real prop is just that.. you don't put any up money and they fund you.

FNY said in an interview with the owners: they look for traders to bring in own edges.. own creativity. But there are others too..

My perspective if.. Michael says he's looking for best futures traders, I told him I'm one of the very best. Why does he expect me to pay if he wants me to work for him? And frankly objectives are too high....
 
SMB is part of the T3 family. They appear to make most of their money from training. Hard to tell if their traders make money.
 
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