The bitter truth about Patak Trading

[gmst]

Quote from Maverick74:

Does this make any sense though? TST wants to make money right? You want to make money right? OK great. So we have a market now. We have a bid, which is you and what you are willing to pay. We have an offer, which is TST and what they are offering. A sale takes place when you and TST agree on a price and a service. As a trader, you have to decide if you want make the trade. It's that simple. They put all the rules out there in plain sight. They couldn't be more transparent. They even let YOU make your own rules. I just for the life of me cannot make sense of your argument. That's like me saying Interactive Brokers is a scam, all they care about is my commissions. They don't care about my long term success. I swear to you, I'm really trying to understand your beef and I'm not getting anywhere with this.

The offer in this case is like 10 big figures away from market. So, the transaction should not happen, however the bid-side (Traders) are getting fooled in thinking the offer is too good. This is my beef in short.

I really need to sleep now. I will post some numbers tomorrow, hopefully then you will see the near-impossibility of achievement of the 'absolute transparent conditions' that Patak has devised. See you tomorrow.

EDIT: Correction: the offer is not 10 big figures away, otherwise bid-side would see the problem immediately, offer is alright perse. The 'hidden' problem lies in the fine-print, in the 'terms of contract'. Terms of contract have been designed such that in the long run bid-side will almost always lose massively.

 

[gmst]

Quote from Maverick74:

Does this make any sense though? TST wants to make money right? You want to make money right? OK great. So we have a market now. We have a bid, which is you and what you are willing to pay. We have an offer, which is TST and what they are offering. A sale takes place when you and TST agree on a price and a service. As a trader, you have to decide if you want make the trade. It's that simple. They put all the rules out there in plain sight. They couldn't be more transparent. They even let YOU make your own rules. I just for the life of me cannot make sense of your argument. That's like me saying Interactive Brokers is a scam, all they care about is my commissions. They don't care about my long term success. I swear to you, I'm really trying to understand your beef and I'm not getting anywhere with this.

Also, Patak wants to make money, so they will make money from the split of 20-40% from the trader's PL. But they want to make money from commissions as well and they want to make money from combines as well by churning traders. All this I have already detailed.

 

[Wide Tailz]

Quote from gmst:

Wide Tailz, I don't need any help from any prop firm. Not sure why you think I need any help from any prop firm!?!?

Based on my attitude,

.... you shouldn't need any help, of course, what with your superior analytical skills and higher education.

But that's not how it reads between the lines. See, I can play along and expect the worst about you, just as you can about Maverick or Patak trading. I can fire up my spidey senses and detect an air of entitlement in you that alludes to the risk in having any involvement with you.....

It's not all about you. There are more people in the world than just you. If you expect anyone to help you for more than one iota of time, it would be to your advantage to give back, to build up your team mates, to encourage and to work for everyone's benefit.

This thread reads as one guy's sour grapes who was obviously interested in joining a prop firm (why else would he have spent 8 hours in due diligence) and found that the terms weren't to his liking.

Ok, thanks for the info. It's not your conclusion that is coming across in a malicious way, it's the spirit of accusation beyond just the facts.

If you don't need anyone, by all means get it done on your own. Use that MBA and get your own firm going...... and feel the weight of overhead every month.

Do you really think you could pay your bills based on the shared profits of the 5% of guys you trained that actually ended up making money (and didn't quit)?

You are a perfect example of why a firm would need to charge commissions and set high standards. So many in this game will ask for help, get it, then turn away and never give back, if they even stick around after they make it.

Why train someone who could just bail?

Based on your "me first" attitude, I would consider you such a risk....

 

[Maverick74]

Quote from gmst:

Also, Patak wants to make money, so they will make money from the split of 20-40% from the trader's PL. But they want to make money from commissions as well and they want to make money from combines as well by churning traders. All this I have already detailed.

Yes TST wants to make money. So does IB. So does Baron! Why doesn't Baron give away his advertising for free? I still am lost here. It seems that you think the consumer is not smart enough to make a decision. But why do you care? I don't care if some idiot opens a FX account with 50 to 1 leverage and blows out in two days. I mean people are going to make stupid decisions. Why the anger coming from you? Many people have been funded. In fact, TST has funded more traders in the last two years then most prop firms in Chicago.

No where on TST's site do they say trading is easy. No where on their site do they say they can make you into a star trader. They simply say if you want to give it a shot, go for it. I am not getting how they are deceiving people. BTW, you do know that there are other firms doing this right? Like Pulsar? And Index Elite? Are they scamming people too?

I mean here is where I would have a problem. Say they came out and said, pay for the combine, we'll look at your numbers and if we like what we see, we'll back you. Well can you imagine the outrage when guys would do that and make a lot of money and then not get backed?

TST is telling you exactly to the dollar what you have to do and they explicitly tell you what you cannot do. They even create a profile page for you that details all your performance metrics right for you to see so you know how you are doing.

I mean if your whole argument is, trading is hard, then maybe I never understood the purpose of this thread. But you are not saying that I don't think, you are saying this company, TST, is committing fraud. Which is a serious accusation.

 

[Lucias]

I don't post here but I'm making this one exception.

First, let me say that I've asked Maverick many times for his advice on prop firms and respect his opinion but don't always agree. Maverick, I've been trying to PM but your inbox is full.

First, I don't think blowing out your account will matter to any prop firm because props only care about traders making a million dollars or that have automated strategies they can scale. They just don't care what you do with your 5k or 10k account. It doesn't matter if you double it in a few months without any DD. They don't care. Trust me.

Second, let me say that GMST in regards to your TST analysis: you are absolutely right. Let me also say upfront, I am considering and may try the TST program: it is probably better then 50/50 if they come up with a reasonable custom combine.

However, there are several "red flag" warnings about TST though that you mentioned.

1. The profit objectives combine with risk limits combined with so many silly rules. I know that a top 1% to 3% trader will have a hard time hitting those objectives, slightly better then 50/50 on a first pass round. Some of the rules that GMST shows in his PDF are killer.. no adding to positions until they are up $500? I can tell you that if you can't add to positions there is no way you are going to build your account up fast. The fact that these profit objectives are NET and not GROSS also just ups the difficulty. There are so many rules that really whether they fund you or not is entirely up to their discretion. I don't blame them on that part but if you don't know them/trust them then your paying a whole lot for a whole little.

2. One of the non genuine points on the whole thing is that they claim to give you a 50k or 100k account but they don't. They give you the risk limit could be as little as $500 or 3k with the bigger program. 3k before you are sent back to simulator. How many traders can't come up with 3k? If they believe in their trading why would they send a trader back to simulator? Real firms won't allow traders to go to simulator. They make too much money. They scale them back when they do poorly. Yes, maybe they have to go to simulator rarely but not just for losing $500. Why in the world would you want to send a trader to sim when he's down a bit.. then he'll recover in sim. I'd be afraid to it if I were funding a trader that I believed in. This is a red flag to me because it makes no sense. Hit risk limit: scale back to 1 contract. Hit risk limit 3x then back to sim makes sense. Not hit risk limit back to sim.

3. The entire outfit seems more geared to churn and make money from turn over. Who wants to share trading profits with scouts who are constantly looking for new recruits?

4. One of the things that give them credibility was they were a CME member firm but my RETAIL broker gives me better rates. I ask them about this and they said it was because they were small.

They could alleviate most of these concerns by highlighting traders who have CLEARED/MADE more then say 30k, 70k, 120k, 500k. And also traders who were with them for 6 months, 12 months, 12+ months. I would almost bet there are less then 12 traders who have cleared 30k. If they have more then I'd be impressed. TST if you are reading this.. you should really highlight the type of sucesss your traders have. Remember also that Richard Regan got in trouble for showing tiers that nobody obtained. I think that's an excellent thing myself.

I am going to say this program ISN'T good for traders who don't have the proper capital to trade. I would not recommend it for them because its tooexpensive. Think about this.. you start with 3k or 4k or whatever you can scrape together and you make just $50 per day. That's 10k in a year. So what if you can't do $500 per day. That's 10k. The opportunity cost is just enormous.. I'm happy when I make $5, I'm happy when I make $50, and happy when I make $500. I'm not so happy when I see great opportunities and let the other pit boys get those contracts.

Now think about it, would you rather spend several months trying to pass a combine or have 10k in your pocket? Maybe you can't do 5k in a month... maybe you only can do 10k in a year. Take the 10k you make and your 3k and now you got 13k. It adds up. Trust me. Maybe you can only hit the 3k-4k 1 month of the year.. then that's evne more. Or maybe you try the combine for several months... now you aren't making money in the market and maybe you lose a couple and down a few hundred and worse you are trying to achieve these very optimistic objectives.

I'm 99% sure that there are many retail traders who are already better then many of the so called "pros". You don't have to be a top .5% trader to make money in markets.

Having said that, there are 2 reasons to use the program.

1. If you already are successful and want more leverage. This is why I am considering it. I'll be honest, I will swing a lot more aggressive with their money then I would my own and that usually works for a skilled trader. i understand the odds of passing are probably just a bit better then 50/50 even for a top 1%-5% trader.

2.If you have a system that can do these returns but don't really trust it. Its a good candidate. The reality is you will be hard pressed to even curve fit a system to meet these requirements.

Okay so that's it for TST. If you aren't a US citizen you may want to look at Europrop. They looked interesting but they don't accept US citizens. Again my advice: if you don't have enough to trade then save own 3k and trade it yourself.. then try TST when you want to scale up.
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Now onto Bright trading. First, I will say upfront that Bright has a good reputation as an honest and reliable businessman. I have met kept up with Bright for several years. I have met Don in person, attended their webinar last webinar, and spoken to him on the phone.

I am going to be 100% honest. The more they speak about trading then the worse they sound. The problem with Bright is that they come out and talk about how they'll give you a million dollars of their capital to USE not ABUSE. They talk about how they give you strategies that actually work versus those "retail strategies". It sounds really good.
He'll tell you that his brother made crazy millions trading futures (but they still need your 50k). Oh but then next breath he will say they don't allow to trade futures because there isn't any edge in futures. By edge, he must mean no commish/edge for him.

In his sales pitches, he'll drop to absolute novices that sure he has traders making 250k on the 25k starting (he said this in person, later denied it, then later claimed something to the same effect). But when it comes time to task..

Well that's wonderful Don. How do you do it? What type of research staff do you have on hand that allows your traders to make so much? How does one use a million in leverage with only 25k.

This is where you won't find any answers. At his webinar, his brother basically said day trading was dead and that they didn't have any edges. Then he talked about really average/low quality/poor edges that aren't going to be scaleable.. like the 3 day cycle. They say in one breath that hedge funds can't do more then a few percent but that's basically the space their traders are operating in now. But, you can do a lot better because.. what? because you can do your own research?

That webinar was absolute garbage. The worst of the worst garbage I've ever heard in my life. And, I heard a whole lot. As a discretionary trader, I don't have a lot of rules but the type of things I heard them Brights doing didn't inspire confidence. I thought maybe I'm a dumb greenhorn. I went to my professional quant friend and his impression of Bright's trading based was way worse then my own.

Now, let me backup and say that Bright trading offers a very unique service. Maybe the only business offering that service. My opinion is that if you have real capital, let's say 100k, and YOU have a reason for the leverage and KNOW how to use it (and are comfortable executing all orders through a single source -- some wont be) then go for it. It might be the only option in town.

I would absolutely NOT recommend those who don't meet the above going the Bright trading route. You'll pay more in data fees and there just isn't any credibility imo (based on phone calls, webinar, etc) that they have the resources or incentive or even ability to take a greenhorn/retail style trader and get him up to doing 10x returns with million bucks leverage.

If you have only a small amount of capital then you are much better off trading futures. OEC gives free data, amazing platform, you can trade T/A or whatever you like to do.. fundamental. You get tons of leverage. You can make $100 per month and still be profitable. No desk fees. And, yes you can trade methods that really work too.. really work as good as any other method that is!

That's my 20 and 1/2 dozen cents. As honest as it gets.. and yes that webinar was really that bad.

 

[Lucias]

I would be willing to lay the following odds

#1 Less then 12 traders have cleared 30k at Patak (total, since inception)
#2 Less then 6 traders have cleared more then 50k at Patak. These are probably 1-2 year traders.
#3 Less then 4 traders have cleared more then 100k.
#4 No traders have cleared over 500k.

Whether they truly fund traders or not is subjective, I would say one should have at least 3x to 7x the risk limit to fund a trader. That would be laying 18k on a trader with a 3k risk limit which they don't really do. They put you back to sim at their discretion. This makes the call option worth a lot less.

I 'd like to be proven wrong on those above figures. Heck, I think it would be cool if they started the idea of making all the money from the combines but actually were able to find great traders. Patak, listen to me, you should share your figures.. show how you foster long term traders in your organization if you want to be taken serious. Let me add, those are the figures that are not too far off if they 'really fund traders'. The actual figures could be way worse.. like no trader having cleared at least 50k because they send them back to sim. The managers at TST told me that the "combines don't pay the light bills". If true then they should have figures a lot better then mine... they should publish them..

There is one other "funny" thing about the combine which is that they charge you more if you want more capital. Now, I can see that starting off. But you tell me that you have a trader meeting their objectives trading just a few contracts.. you tell me you aren't going to scale him up as fast as possible? Why in the world would you not?

--
Another thought related to Bright in a tanget way. The Defend Trading website will show how internalization doesn't help the customer because it only saves them so little per transaction but how it hurts traders like those at Bright. What it doesn't show though is that the internalize pay back the brokerage firm which may lower a lot of other costs and fees associated with the brokerage trading. Thats more money they can put into their services if they want too. I am all for 100% transparent markets.. I say get rid of dark pools, the whole lot, HFT, everything. But I just realized that the explanation isn't 100% accurate that they portray. Those back payments might be paying for the trading platform. Course, I could be wrong on this. Never studied it or payed it any mind.

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Finally GMST is absolutely right about how easy it is to fool people with reputation.. i.e Corzine... the Peregrine dude.

I found a website hightlighting Ponzi schemers. Almost every one of them was on NBC or some financial news program and that gave them credibility. Let me say there were a lot.. dozens and dozens and dozens.. maybe 100s even.

Look at Richard Regan, he was on the floor. I bet there are a lot of guys on the floor who can't trade.. just go there that to sell services.. like squak, mentoring, etc.

 

[volente_00]

Quote from Maverick74:

However now the landscape has changed and most of these firms want programmers or guys with solid track records.

If a prop firm was really out to back profitable traders, why would they not even be the least interested in a profitable track record and still require all potential traders to pay a deposit even though they have credentials trading real money ?

Also since you are local and know a lot of history, why did patak stop trading and start focusing on generating revenue from tst ?

 

[Maverick74]

Quote from volente_00:

If a prop firm was really out to back profitable traders, why would they not even be the least interested in a profitable track record and still require all potential traders to pay a deposit even though they have credentials trading real money ?

Also since you are local and know a lot of history, why did patak stop trading and start focusing on generating revenue from tst ?

I managed an office for 5 years and over that time I saw a lot of track records. I wouldn't wipe my ass with most of them. That's a very very long conversation that might be more appropriate for another thread. I have no issues with discussing it with you, it's just might be off topic here.

And as far as I know, Michael still trades on the floor of the CBOT in the Dow futures pit. His acronym is PTK. He's been down there for over 10 years. Coincidentally, I use to trade in that pit as well back in the day.

TST doesn't even have an office. They all work from the floor.

And let me further add, that a large majority of locals at one time or another looked for ways to back traders on the floor. It's how guys leverage their equity. It's been going on for over 100 years. Nothing new here except the technology has changed.

 

[volente_00]

Quote from Maverick74:

I managed an office for 5 years and over that time I saw a lot of track records. I wouldn't wipe my ass with most of them. That's a very very long conversation that might be more appropriate for another thread. I have no issues with discussing it with you, it's just might be off topic here.

And as far as I know, Michael still trades on the floor of the CBOT in the Dow futures pit. His acronym is PTK. He's been down there for over 10 years. Coincidentally, I use to trade in that pit as well back in the day.

TST doesn't even have an office. They all work from the floor.

And let me further add, that a large majority of locals at one time or another looked for ways to back traders on the floor. It's how guys leverage their equity. It's been going on for over 100 years. Nothing new here except the technology has changed.

So you would rather back a 2 week simulated track record over a proven profitable trader who came to you with a 10 year live profitable track record ?

 

[volente_00]

Quote from Laissez Faire:

This is all the math you need to know. Not much more to it, really.

And averaging 3 ES points per day is very much achievable. Why would they hire someone with less than stellar performance who is in drawdown?

Those are free to trade and lose their own money.

Why would someone who can consistently average 3 points per day choose to give 40% of their profits away and pay higher commissions as well ?


It only take $300 to $400 intraday per contract to trade the es with your own money an keep 100%