Risk limits, payout, draw at true prop firm (100% backing)

P

PBJunior

Hi all,

I have a couple questions regarding prop firms that back experienced remote traders with $1mm+ capital, take 100% of the risk, require no capital contribution, allow overnight positions in futures and options (ie not HFT-only or market-making only firms) and do not necessarily require the trader to be trading from the firm's office.

First off, after reviewing a lot of existing posts, it looks like besides the large, visible ones such as Schottenfeld, Millenium, FNY, Schonfeld in NY, they are relatively rare animals nowadays. A lot of posts on ET are dated pre-2008 and the business has changed dramatically.

Who are the equivalent to these firms in Chicago in particular? Gelber? Trillium? Ronin?
And elsewhere?

No need to share generic lists of prop shops, they usually mix arcades, market makers, HFT, ... This post is about the very specific firm type described.

Second, I understand the answers to the questions below vary wildly from firm to firm, trader to trader, deal to deal and over time. General and firm-specific feedback would still be appreciated.

1. How do they usually express their risk tolerance when they onboard a trader with an existing track record?
I guess a mix of:
  • limit of # contracts and notional $ exposure per position
  • max portfolio margin requirement $
  • max drawdown $ (game over for the trader if breached)
2. Is it realistic to get a multi-asset prop shop to agree to let the trader trade whatever he want (futures, options) as long as his drawdown is less than X dollars? Are they likely to freak out already when drawdown is X/2 and reduce risk limits?

3. In the same vein, time-wise, how long do they really let new traders breathe at the beginning if he stays far from the drawdown limit? 3 months? 6 months?

4. Trader payout seemed to be 30% to 50% for these types of firms. Is it still the case? How much of the trader's payout do they usually withhold for deferred payment? Upon what condition is deferred payment effectuated? When he leaves?

5. Are requests for draws usually considered only after demonstrated stable performance or can it be part of the initial ask?

Thanks,
PBJ
 
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20-25% payout if firm pays all expenses. High end maybe 50% payout if expenses are shared.

1. Usually a margin limit. Maybe a limit on a single trade size.
2. That varies a lot. They usually want you to stay within your initial stated competency.
3. Drawdown isn't so much the issue as lack of profitability. You should be profitable in 3-6 months
4. see above
5. Doesn't quite work that way. It's more in terms of a holdback. Can be 2 months to 1 year.
 
I don't know any firm that would let you trade remote as a new trader. They want you there in the office at least for the first year. And most of these firms are not interested in pure directional traders, so I hope your not a punter.
 
Maverick74 said:
I don't know any firm that would let you trade remote as a new trader. They want you there in the office at least for the first year. And most of these firms are not interested in pure directional traders, so I hope your not a punter.
More...

Oh yeah. I didn't see the remote trading ask. That's not going to happen.
 
Hold Bros might be open to it. They won't be able to give futures though.

Payouts typically are 50/50 with some sort of holdback provision to incentivize you to stay (i.e. 10% holdback paid out as an annual bonus, 5% holdback paid out as a biannual bonus)
 
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