Due to unexpected circumstances, I find myself taking initial steps to forming my own prop firm a couple of years before I had anticipated. Accordingly, I have begun exploring the different structures, language and policies of the main ones, which I intend to summarize here.
For now, I will merely be a sole proprietorship, a business entity that is owned and run by one individual, with there being no legal distinction between the owner and the business.
I'm starting off with one employee, a trader residing in India.
I will also be working on the language used to define my business, the potential non-disclosure agreements for protecting my intellectual property as much as possible, and the instructional materials for teaching the firm's recruits.
Let me just say, in advance, that my threshold for all the negativity in this site was reached a couple of months ago, so such individuals, including the ones I have on ignore, can talk among themselves.
I just read a comment from Jordan_Andy where he expressed his opinion that ET has "mainly 2 groups of subscribers... The ones permanently angry no matter what you do because of whatever reasons and the 'Sponsors' who are obviously here, only to market their business."
I don't know about the second half of that statement, but I halfway agree with the first. I am primarily a positive person, so I will no longer engage with the angry folks (the ones who don't seem to have a life, and consequently end up trying to waste all MY time trolling my threads). I see no value in it. I feel I succeeded with my system, despite everyone who said I wouldn't, and am now ready to move on to the next level, regardless of all the negative and critical comments that are sure to come. So, let them come, and I will just add those members who become too annoying (to me) to my ignore list.
I can help with this, there are two types of approach, profit generating and fee generating.
Profit Generating
An entity I know via via did it this way, the reference point is Richard Dennis Turtles, 23 were trained and understand 2 failed, making it around a 9% failure rate and 91% success rate, the prop entity trained a few traders on their architecture however none of them were able to make it a success basically being neutral, even though the architecture was a net neutral platform with positive return skew, meaning it was really hard to make losses, if they had succeeded it would have been incredibly profitable for everyone. The reason, with Dennis all were trained onsite, whereas remote it will invert the basis which shows the power of their architecture basically running remote at 50% success/failure, however the reason for the prop was to actually train traders in the methodology to later run funds, the fact it did not produce results was actually irrelevant as it was not the primary focus.
Fee Generating
This is the likes of prop firm such as Top Step Trader, someone posted all the number analysis some years back for them either here or on Quora, interestingly their failure rate is the exact inversion of the Dennis Turtles in the 90% range, if you find those numbers you will see the money in the $100,000s to $millions is made in the fees due to the failure rate, the profit amounts are smaller, this is how prop firms work, it does not mean they are a bad thing as everyone believes they are the exception, however even in that sub 10% success rate how many actually make enough profits to be a career and leave their day job, 1% and less.
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The IP is a serious problem, what you will have is people from certain countries 'appropriating' that IP, repackaging it, and selling it as their own trading method, I know a story of someone who wrote 1,000s of articles and decided to remove a proportion of them as their were 'work in progress', someone actually asked them for copies because they forgot to download them, and they often found their content copied and reworded without citation to the source, this is how people create their own little cottage industries of information that is not transferable to the next person, because the devil is in the detail.
You will see the same, however it was told to me there is one simple thing, without you supporting that knowledge base anyone with the IP and anyone using it will fail rapidly, you want to make it difficult for them but in the end this is the cost of business. The consultants who released the prop were going to set up onsite training for future hedge fund managers, they had the location scouted with self enclosed single room kind of chalets, out of the way from cities being peaceful and calm, then things like lockdowns came along with endless amounts of costs, they simply said skip it, and created fintech to do the same thing instead, which it does.