Meeting with local prop firm. Good questions to ask?

[comagnum]

A very successful old timer trader featured in Market Wizards that has seen it all in his 40 years of trading recommends anybody thinking about quitting their day job to trade full time should have at least $200K (after taxes), and probably another $100k parked outside of the trading account that they have made from trading and even than should have a stop as far as a draw down and a time stop out to return to a full time job if the trading does not work out. Like others have pointed out - there is a major edge is in having sufficient trading capital. Having rising capital made from trading year over year is a lot better than having just hopes and dreams of hitting the big time with other peoples leveraged money. Your trading capital profits is a good metric for if/when you may want to make the leap to ditch the day job and trade full time.

 

[ScalperJoe]

I've been told to look into trading futures as they would be more suited for what I'm trying to do. Topsteptrader might be something I would look into just to see what I can or cannot due before I take any jump into things.

Still looking around at other things trying to figure out what I'll do.

I suggest reading the FAQ's on the Topsteptrader site and generate a clear understanding of ALL of their rules. Also, you can find lots of information regarding Topsteptrader on the threads posted here on ET.

 

[propwarrior]

Ok. I think that's enough for me to go on.

There are two main philosophies of what people call a 'prop firm'. They can be distinguished by how much you and the firm are aligned from a profit making standpoint.

One group always requests first loss capital. Usually payment for desk fees / software and maybe some training. Then they give you a comissoon schedule and offer you a high payout of 80-99%. In reality they are fairly indifferent to your success - and they are certainly not betting on it.

The other model is to pay a salary, rarely require first loss capital, and pay all your trading expenses until you've got something working. They also pass on to you all the rebates they get. It used to be that they would offer a 50% payout but that's not really sustainable anymore and 20-25% is the current norm. They are very invested in your success and have bet heavily on it.

In one of these models everyone stays poor and in the other model you might get a 90%+ chance of the trader succeeding and everyone making good money.

Just think about it. There's no way to maintain a competitive infrastructure when the trader is getting 90% of the profit. They aren't even trying. The whole model is to churn through people en masse and collect commission and desk fees off them. Even then, it really doesn't work out for anyone.

Ask them revenue per person and revenue per trader. Ideally ask a few people separately. Good numbers would be $1-2M. If the numbers they say are 1-2x your day job salary then 1) they are lying and the number is actually lower 2) even if that were the average it wouldn't be worth the time/risk.

People way underestimate the reward required to sink very precious time into producing a volatile income stream. For adequate retirement happiness and to compensate for the risk you are taking you should have 80% confidence you would be bringing in 300k+/yr after 18 months.

I know several traders who have had million dollar years, never lost money, didn't overspend and currently are having trouble making ends meet. It's a path with lots of uncertainty.

listen to what he says, he knows his stuff.

 

[propwarrior]

I suggest reading the FAQ's on the Topsteptrader site and generate a clear understanding of ALL of their rules. Also, you can find lots of information regarding Topsteptrader on the threads posted here on ET.

Topstep it not a prop firm by any stretch of the imagination.

 

[elliots11]

Topstep it not a prop firm by any stretch of the imagination.

It is a different business model than a prop firm. How would you categorize Topstep then?

 

[propwarrior]

It is a different business model than a prop firm. How would you categorize Topstep then?

Personally I don't find it helpful to find a category for Topstep. It is what it is. I don't think its a bad company, it provides some value. Prop firm though it is not.

 

[ScalperJoe]

Personally I don't find it helpful to find a category for Topstep. It is what it is. I don't think its a bad company, it provides some value. Prop firm though it is not.

I think the word "prop firm" is loosely described on these boards. Besides, itradeRisk never called it a prop firm, only stating that (it) "might be something I would look into."

I agree with you that TopStep provides some value, even though it's not a true "prop firm" such as, for example, First New York Securities. http://www.firstny.com/who_we_are.html

 

[propwarrior]

I think the word "prop firm" is loosely described on these boards. Besides, itradeRisk never called it a prop firm, only stating that (it) "might be something I would look into."

I agree with you that TopStep provides some value, even though it's not a true "prop firm" such as, for example, First New York Securities. http://www.firstny.com/who_we_are.html

yeah. truth be told 'prop' has been used by many people to earn a buck out of the punter. i once visited a 'prop' firm which was a blatantly relieving punters of their fees. Filling a room full of desks with multimonitors with playing squawk doesn't mean it's a prop firm. be careful out there planty of charlatans who will take your money.

 

[Andrea Wylan]

you're very wise and what you're saying is completely true. Thank you for your contributions to this forum, for me personally and i bet for others your advice and opinions are a huge help.

Thanks Esko. I appreciate that.

 

[Andrea Wylan]

Numbers lie. There are three kinds of lies, lies, damn lies and STATISTICS.

So true.