What a legit futures prop firm might look like | Traders Hideout


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What a legit futures prop firm might look like

  #4 (permalink)

North Carolina
 
Trading Experience: Beginner
Platform: NinjaTrader, Tradestation
Favorite Futures: es
 
Posts: 644 since Nov 2011

If you want to make a disruptive model, a possibility would be to give a community of traders access to your co-location facilities and market data and let them develop the strategies for a profit sharing arrangement. I think, also, the profit objectives set should be targets and every trader evaluated individually. I mean if a trader hit 90% of the profit objective then that'd still be a good bet as long as all the other stats looked good. As for whether or not to shut a trader off or send back to sim, you would have a rolling series of statistics and a criteria based on that and the profits produced.

But you can turn what I developed into a sort of criteria for evaluating any prop firm... here's what it looks like

1. Does the firm offer up to 25k in at risk capital? You can score this on a scale. For example, 18k/25k = 72%. Reasonable. 2k/25 = 8% very questionable.
2. Does the firm offer/pass-thru its traders non retail advantages such as member commissions? This is valuable because it enables for deployment of strategies that might not be feasible on a retail platforms, i.e. like Tradestation or Ninja.
3. Does the firm offer co-location for automated strategies and data and tools to develop them?
4. Does the firm offer free access to quantitative developers, market research, etc?
5. Does the firm foster teamwork and trader development?
6. Does the firm track and provide in-depth statistics for their discretionary traders?
7. Are both the firm and trader's objective in alignment? This is demonstrated by a profit split near to 50/50 for most traders.
8. Does the firm have at least 3 traders producing significant returns of > 200k/year in post-split profits over the most recent 2 years? This is important because it demonstrates a viable business.

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