For the sake of "intense accounting analysis", what do you think TST receives when a funded trader takes a distribution, whether at the 60%, 70% or 80% level, as a source of revenue?
Not sure I understand the question. At the 60% level, their gross revenue is 40% of say 1k or 400. Out of that, if you are asking what do they net? I think zero. I think profit split plus commission markup is still less then total operating expenses. The combine fees need to make up for it. The formula for the combine fees is complicated as they pay out $35 to the exchange for the data. So on a 10 day 30k combine that grosses $150, their net alone on this is only 115. This means if a trader earns a rollover, TST actually loses money on the combine fee the 2nd time around. Or let me put this a different way. If a trader does the combine that cost $150, and gets 4 free rollovers, TST will actually lose $25 net on the total 5 combines.
Now as I said before in my response to Pekelo, I believe the rollover ratio is 40%. So we can do some basic math here. For every 10 combines, 6 pay, 4 roll. The 4 roll generate a loss of 4 * 35 or 140. The 6 that pay generate a net of 6 * 115 or 690. That leaves a net of $550 for every 10 combines. I think their payroll is 30k a month. Not counting office space, utility cost, legal cost, marketing cost, etc that gives us these numbers:
30,000/550= 54.5
54.5 * 10 = 545 combines. That's how many combines they need a month just to breakeven. No way in hell!!!!!!
Now, let's bring that down some and say of those 12 live traders, 6 of them pull out 1k a month in withdrawals. That is fair, half probably are not making anything and the other half are probably trying to build their cushion but will take out 1k. That is 6k coming out in which TST will get 2400. Let's say they make 2k in over rides on the commish. That's 4400 in revenue. So that lowers the operating expense down say 25k.
25,000/550= 45.5 * 10 = 455 combines to breakeven!!!!
This does not include office expense, utilities, marketing, legal, etc.
I'm telling you, I've gone over these numbers every which way. I honestly thought about starting a similar model on my own several years ago when they came out with this. The numbers just don't work. No matter how I tweak or manipulate them.
My guess is they are doing 100 combines a month tops. I've asked a few people from ET how many are in the live chat room since at the beginning, that was actually a requirement for the combine. I've heard ranges from 10 to 50 depending on the day and how the market was.
I think this could theoretically work if one person, and one person alone ran the whole business with little to no over head. In other words, ran it out of his basement. If you keep your overhead close to zero, there "might" be a way to make this work.
For the love of God it's certainly not making millions like Pekelo and Volente suggest. That is a farce. I'm being dead serious, if this made even 500k a year net I would drop everything and offer a competing service. I could run this with my eyes closed. But I doubt this model is even profitable....yet. Now maybe the plan down the line is to grow this into the next optionetics. That was a very different model but this thing has to morph into something else then what it is now.
Before anyone attacks me or my numbers, please provide DATA that supports your argument in terms of operating expenses, total combines, gross revenues and costs. Don't just scream like a child "they are making millions, it's not fair!" LOL.
