# What kind of P&L or % returns are Prop shops looking for to take you on?



## jiggy (2 July 2009)

If you want to be taken on as a trader working for a prop shop what are the parameters used to determine which person is worth considering based on their trading P&L or percentage return they made with a specfic amount they initally started out with.

It would be very intersting to hear from the experienced guys here who have worked for props what kind of benchmark is used.

Thanks in advance


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## alwaysLearning (2 July 2009)

I'm extremely interested in this as well.

My goal is to trade a small account profitably for a year or two and then go to a prop firm and hopefully have them give me some of their money to trade with and then we split profits etc etc. (so that I can more rapidly increase my trading profits/trading capital and speed the compounding process up).

I don't know if this type of thing realistically happens often though?

I hope that someone with prop firm experience or knowledge can shed some light on these aspirations.


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## Trembling Hand (3 July 2009)

Percentage return is not what they look for. They want a consistently profitable trader that trades the same instrument that they are set up to trade, mostly futs.

They want someone who can control their risk (read losses) and has the ability/method to scale up big. They also want traders that are reasonable high frequency.

And mostly intraday. No point going to a prob shop with share trading results with hold times of 1 month per trade. Or CFDs.

Though you are best to just ask them. Of course they will not give you a straight answer but I would bet if you went to them as a newbie with an average day of say 20 ticks per contract on something like the SPI or STW they would be interested.


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## Mr J (3 July 2009)

If one can make 20 ticks a day on the SPI, money shouldn't be a problem. That's already a 6-figure income on possibly low 5-figures of capital.


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## Trembling Hand (3 July 2009)

Mr J said:


> If one can make 20 ticks a day on the SPI, money shouldn't be a problem. That's already a 6-figure income on possibly low 5-figures of capital.


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## Mr J (3 July 2009)

Trembling Hand said:


>




Just making a point, as many people interested in prop seem to be interested because they lack capital.


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## Trembling Hand (3 July 2009)

Mr J said:


> Just making a point, as many people interested in prop seem to be interested because they lack capital.




Thats not the only reason. Why is it that VERY profitable traders stay prop?

If you can take 20 tics avg per day unless you have the capital to trade 4 - 5 I still think you will struggle.

Take into account tax, trading cost, living expenses and normal drawdowns and you see its extremely hard to grow your capital punting on 2 contracts.


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## alwaysLearning (3 July 2009)

Trembling Hand said:


> Percentage return is not what they look for. They want a consistently profitable trader that trades the same instrument that they are set up to trade, mostly futs.
> 
> They want someone who can control their risk (read losses) and has the ability/method to scale up big. They also want traders that are reasonable high frequency.
> 
> ...




I am very encouraged by this TH. I hope that they would accept me if I can do all of what you say above given that I trade 'OTC spot forex' and not forex futures via the CME.

I'm still not profitable but I am getting there and I'll never give up. This is my dream.


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## Mr J (3 July 2009)

Trembling Hand said:


> Thats not the only reason. Why is it that VERY profitable traders stay prop?
> 
> If you can take 20 tics avg per day unless you have the capital to trade 4 - 5 I still think you will struggle.
> 
> Take into account tax, trading cost, living expenses and normal drawdowns and you see its extremely hard to grow your capital punting on 2 contracts.




Obviously the reason to go prop is to make more, and yes my statement was oversimplified. If you have to live off of that capital, then yes, it may be difficult to grow it. If you don't have to live off of it, or if you're making 20 ticks a day and have reasonable expenses, then it shouldn't be difficult to grow it.

Come on TH. 20 ticks a day at 5 contracts is over 600k per year, and that is not even compounded. 10 ticks a day on one contract is 60k, not compounded. Obviously how much growth that would allow depends on the individual's financial responsibilities, but even that should allow most people to grow a little. Bump that up to 20 ticks or add multiple contracts, and few should 'struggle'.


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## mazzatelli1000 (3 July 2009)

As TH has alluded props/funds are interested in the path dependency of the % returns - i.e. how you achieved it.

Descriptive measures of performance they use (not comprehensive)
1) profit factor
2) peak to trough DD
3) Average $W/$L
4) APD ratio
5) Sharpe Ratio


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## jiggy (4 July 2009)

Using CFD's would be used by props too i would assume. Good leverage there.

I wonder if the percentage return they look for on average........30, 50 100 200% etc


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