I am almost done completing a preliminary investigation of this so called "prop shop" for futures traders. Although I'm not certain, I think this is the outfit aztrader9 is currently in trial with. (aztrader9, please correct me if I'm wrong.)
My conclusion is the Patak program is a terrible deal for the trader and should be avoided. Stand by for more details in the next day or two.
you do realize they are not in the business of teaching, but rather of introducing you to capital... therefore, please detail the findings and the criteria used to evaluate whenever you have a chance.. I would be curious to know more.
Patak is a member of the CME and has a wholly owned sister company, TopstepTrader.com. TopstepTrader is basically a vendor that sells prospective prop traders the right to earn a position trading Patak's capital. The businesses are structured as separate entities to not run afoul of the NFA regulations for member firms.
The only way a trader can become a prop trader for Patak is to pay $80 for a four week trial, in which one is evaluated on his success trading in Sim mode on the T4 trading platform (which has several limitations compared to other well known retail providers). If one is selected to join Patak, the fee is refunded; otherwise it is non-refundable. A trader can sign up for the trial, known as "Combine" as often as he wishes in the event he fails to get accepted as a Patak prop trader.
During Combine, if one losses $1000 in any given day trading a max of 5 contracts with a hypothetical $50K account, he will not be selected to become a prop trader. Anyone who has traded futures knows this is unreasonably restrictive and unrealistic. In effect, this is a 2% drawdown--a hurdle that easily is broken by even the very best of traders. In other words, the odds are stacked against the Combine subscriber from the starting line.
Since the program was launched in June, the new recruit manager at Patak has stated that only 7 persons have been selected to join Patak as a prop trader among a very large number of Combine subscribers, the number of which wasn't disclosed, but I would not be surprised if it were in the mid-high hundreds.
In my opinion, this program is terrible for the would be prop trader for a variety of reasons.
First, the Combine scheme is a vendor service charging one $80 to earn the right to prove he can make money trading futures. Considering Patak has the most to gain from the arrangement, based on the fee split, this seems like a way to simply extract $80 from the applicant with nothing of value given in return. If that were the only issue, the deal wouldn't be bad, but the profit sharing split after marked up commissions make this a non-starter.
The new prop trader starts out with $50K of Patak's money with his hands tied behind his back, insuring his failure. All one has to do is examine the attached split an fee structure to see that it is near impossible to be profitable with the guidelines. THE DAILY LOSS LIMIT ON A $50K ACCOUNT IS $500 trading up to 5 contracts. When that happens, you are done for the day. No chance to recover. Should your account drop to $48K, you are demoted and have to go back to Combine to earn the right to become a prop trader again and pay an additional $80.
In addition, the prop trader is charged $2.40 r/t plus exchange fees. Ask yourself why Patak won't simply charge a token commission and pass along the same fees it pays as an exchange member rather than retail charges?
The bottom line here is this: Patak is only risking $2K less the profit on commissions on the prop trader. In return for that, they will take 40% of your profits. If your a profitable trader, you'd be better off borrowing money from your relatives, take out a home equity loan, or even use a credit card cash advance to fund your trading account and keep most of the profit for yourself. If a trader generates $5K of profit, Patak--after taking 40%--is now in a no loss, no risk position. They can either break even (by cutting off the trader at $48K) or continue to rape the profitable trader for 40%.
This is a marketing scheme to separate aspiring traders from their earned profits. If you can't afford to risk and lose $2K of your own money than you shouldn't be trading--you are under capitalized. And if you can, you don't need Patak to skim 40% of your hard earned money and pay them retail commissions to boot.
I do have to hand it to Patak for coming up with this brilliant business model. It makes loansharking look like legitimate.
Recommendation: Pass. Don't think twice.
Last edited by Tundi; December 20th, 2010 at 10:58 PM.
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CTS T4 has limitations? care to elaborate what you would call limitations. The platform provides all the funcitonality that NT7 does pretty much. It is pretty fast, and it has basic charting. If you care about coding your own indi's that would be an issue, but if you are trading price action, SR, pivots, etc. It does the job just fine.
Also, $80 to prove that you can trade and the possibility of access to capital, is not bad a bad deal. If in fact aztrader09 is doing patak, he is learning quite a bit about himself when there is pressure and being evaluated while trading, which I am sure is well worth the 4 ticks on ES.
key thing here is that the max traded contracts if 5; it doesnt mean you have to trade 5 lines...just that you can go up to 5... if your money management tells you to trade less, then trade less.. $50K is a small account IMO, so 2%-3% loss for the day is what one should risk regardless... I dont know how you trade, but the way I see it is that if you are down $1K on a single trade, then you are doing something wrong.. whatever conditions caused you to enter the market are wrong and you are hoping... now, that might be different in you are trading 10-20 contracts.. a mere 1-2pt stop will kill you and take you out for the day, hence why one should not trade that many contracts with such small account. It is all based on your MM plan...
I dont know if they are passing the CME member exchange fees or not, one would assume they would if you are trading under their name. I have not see an agreement, so I cant comment too much, but keep in mind that MIRUS charges $2.10RT, and 30c RT is not much if that allows you to trade with OPM.
As it should be... no different than people going back to simulator when they are screwing up royally on their own account. Think about it... two losses with 5 contracts risking 4pts p/car.. he made $24 on those two trades in comms, but you lost me $2K?! I would certainly place you back in simm if that was my money too..
If you are a profitable trader, you dont need Patak.. but it also depends what you mean by "profitable".. I would rather say consistenly profitable instead of just "profitable"... if you have a decent account from which to earn a living, which to me means $100K-$250K minimun, then you dont need patek and can lease a seat and pay peanuts when trading...
I would never recommend to anyone, and I do mean anyone, to take a HELOC or Borrow from their Credit cards or from their family to trade the futures markets... that is one certain way to go broker.. one should trake with at risk capital, not with money one is afraid to lose.
I say Patek's MM rules are sound.. no professional trader risks 5-10% of their account per trade, gamblers do and certainly not the good ones... what most people forget about is that when your account reaches a decent size and you can carry 50+ lines, the reason for which one focuses in %'s and Ticks rather than $$$ is because the mind wont be able to handle losses in the 10's of thousands.. hence you focus on ticks or account %... so has been my own experience... and no, I dont draw 50+ today but one day I will.
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I'm not a big vendors fan, but like @sysot1t I don't think it's a bad deal.
The T4 platform is not great, far far away from NinjaTrader or other modern softwares, but the DOM is good enough, and there is all basic functionnalities in it. So Ninja (or its competitors) for charting, and T4 for entries is good combo, imho.
Their guidelines are maybe quite hard to follow, daily loss limit, 2% drawdown, only few instruments, etc, but it make sense.
Anyway, I could write exactly what @sysot1t has already wrote, and I also think it's not a too bad deal.
But maybe @aztrader09 will give us his opinion, sooner or later.
Usually in trading, those who know don't talk, and those who talk don't know. (Al Brooks)
success requires no deodorant! (Sun Tzu)
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I just saw that they have changed the live trading account from $10k to $50k, last week was $10k, and this is a good improvement, $10k is not really attractive, and to me don't make sense give you the trial with 50k and then live trading with 10k.
There was another story like this https://futures.io/vendors-commercial-products/6296-have-you-dealt-pulsarcap-the...have-no-money-trade.html, and I was really skeptical, that they will take your money charged for the trial, cos this was really hard to surpass, but now they close recruiting, so maybe was not a scam.
Another thing, i really would like to know who will give you his money to manage and pay you from 60% of the gain, so to me this sound really good.
The other good is that can be a good test for your trading ability and to verify if u have develop your trading method in a right way.
The T4 DOM is really good, better than many others.
Commission seems a little high.
Conclusion, maybe could be a good opportunity for those who have not enough money to properly start trading in the futures market, the main issue is in check if they are honest.
Take your Pips, go out and Live.
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Agreed, the conditions and success rate both seem completely reasonable to me. Bottom line is they want to make money and most people simply can't trade. Commissions seem ok as I understand them as long as they are not taking a cut. If they are taking a cut then that would be a red flag in my book, especially if they aren't disclosing it up front. The $80 fee also seems a little dubious. I am cautious of any company that utilizes HR as a revenue center. IMO, it makes sense to require a deposit to filter serious applicants, but the deposit should be refunded upon completion of the trial. My only other thought is whether this would be closer to trading sim, psychologically speaking, and some people might do better than if trading their own money or would actually become profitable where they failed before? Hmmm.