Quote from gmst:
Michael,
Thanks for giving a point by point response. The conversation on this thread has led to a much more detailed analysis of the program at Patak than available on the website. I have raised my reservations and you have put forward your points. I think its up to individual traders now to decide if they want to go ahead with Patak or not.
The main conclusions are:
1) You are not going to change your commission structure, even if its going to cost 9000 USD or more per year to a successful trader trading 150k account at Patak.
2) I still think Combine objectives are way too tough, especially because performance has to be met on every 10 day/20 day basis.
3) I still think on a 50k account asking a trader to put in a trailing stop after 500$ in profit is nonsensical. This limit should be increased to at least 1500$-2000$ for it to make sense. Remember, in trading we want winners to be 'generally' larger than losers. EDIT: Another way you can define the trailing limit is by defining it in number of points rather than dollars. So, for example ES: a trader must put in a trailing stop after trade is 8-10 points in his favor.
My final suggestion to you is that - once a trader goes live, make him adhere to performance objective over say every 50 or 100 trading days instead of every 10 or 20 trading days. This would increase the odds of retention of a trader in live trading by a HUGE margin and you might have a serious business of finding, funding and retaining good traders. 10 day/20 day is just a churning model. Simply because over time, vol changes, market character changes, there are good months, there are slow months. So, "LIVE" traders should be evaluated over a longer period rather than on a 10 day or a 20 day basis for the model to make sense.
Ultimately its your company, so you will take the final call. But I think if you make above changes, this program will start making a little bit of sense from traders point of view. Otherwise, it is an extremely lop-sided program as it currently exists.
gmst to answer this to the best of my ability:
1) You are not going to change your commission structure, even if its going to cost 9000 USD or more per year to a successful trader trading 150k account at Patak.
Yes we will definiely work to get the best for that trader but until you prove that you are the big profitable trader we can not go to our clearing firm and restructure commissions with no evidence.
2) I still think Combine objectives are way too tough, especially because performance has to be met on every 10 day/20 day basis.
Combine objectives are fair yet challenging like the markets. We need to find traders that are producing. Our smallest account is 30k account size $500 limit. You would need to have a trading average of $250 and meet the scouting criteria to get financially backed. This is an average. So over the 10 day Combine you need to show you can produce at least $250 on an average and meet at least 2 of the 3 performance requirements (avg win greater than avg loss, total win % greater than 45, and avg win duration greater than avg loss duration). The performance requirements are basics mechanics of trading.
We all got in this business to put up this type of money or greater. We don't trade for the sake of trading we trade to make money. The Combine allows the creme to come to the top therefore showing who can trade today's market and giving us a chance to get that person on a funded account.
3) I still think on a 50k account asking a trader to put in a trailing stop after 500$ in profit is nonsensical. This limit should be increased to at least 1500$-2000$ for it to make sense. Remember, in trading we want winners to be 'generally' larger than losers. EDIT: Another way you can define the trailing limit is by defining it in number of points rather than dollars. So, for example ES: a trader must put in a trailing stop after trade is 8-10 points in his favor.
gmst- trade how you like. Just meet the scouting criteria and profit of the Combine.
My final suggestion to you is that - once a trader goes live, make him adhere to performance objective over say every 50 or 100 trading days instead of every 10 or 20 trading days. This would increase the odds of retention of a trader in live trading by a HUGE margin and you might have a serious business of finding, funding and retaining good traders. 10 day/20 day is just a churning model. Simply because over time, vol changes, market character changes, there are good months, there are slow months. So, "LIVE" traders should be evaluated over a longer period rather than on a 10 day or a 20 day basis for the model to make sense.
gmst- When a trading goes live they do not have a 10 day or 20 day objective. They have no profit target. They talk to their head coach each week and the head coach discusses if they are performing and meeting the basic metrics. If you are producing you have nothing to worry about, if you are breaking even you have nothing to worry about, if you are losing in the account and not meeting the performance requirements then yes that is something for a prop firm to be concerned about.
mp
