Our views on prop firms

One of the most requested topics on this channel is for me to give my opinion on getting funded proprietary trading firms and FTMO. So in this topic I’m finally going to give you my view and also towards the end of this article I will explain why I’m doing the challenge myself. About to be honest the main reason I have a voice on this topic for so long is because I’ve had quite a negative view on these modern pop companies like I didn’t have firsthand experience of them so I didn’t think it was very fair when I might be wrong. That changed recently and I now feel I’m in a much better position to give my opinion this is still just my opinion maybe I’m not right maybe you disagree with me. That’s ok and if I am out right wrong about something then you or the company someone else can just let me know by adding to the comments below.

You know I think there’s a reason why so many of the prop firms all over the place are advertising left right and centre and that’s because the business model itself seems to be a very profitable one. I’m not saying what I’m about to explain is exactly what they were doing, only they’ll know that but I don’t think it seems fairly likely. So a bunch of traders are paying these fees to do a challenge and most of the traders don’t pass that challenge. Most of the traders don’t pass that challenge so the prop companies are receiving these fees without any obligation to give anything in return other than the opportunity itself, now of the people that do actually pass the challenge this percentage most wins up losing the account before making a single return. For math and the majority of those that to make a return or only make a very small one anyway before they eventually lose the account. So only a very small percentage of good traders will make a big enough return to cost that company significance, so as long as the fees they receive each month for the people doing the challenge exceeds the amount and they have to pay out. Business will continue to be profitable.

prop firms
Popular Prop Firms

Conditions usually state that traders are using a demo account and that may or may not be linked to a live trading account, so it’s not as if they have to put money into a real trading account. The more people who pay the fee whether they’re actually ready not the more revenue the company has funded or make a decent return on the funds the count the less they have to pay. So that means they’re incentivised to help traders to lose and you see this first of all in the application process itself the challenge to me at least doesn’t prove that someone can trade. With a little luck you can pass this any anytime. To prove that someone could trade, maybe they change it to be something like achieving consistent returns for six months with a maximum of X percent draw down. So instead the challenge is done in a way that knows people are not traders that are just gambling with their account. If you’re a good trader try a challenge as you actually might pass. However if you’re going to gamble or not then I’m sorry but those challenges wouldn’t give you any confidence as a trader. It’s really not a good way of finding profitable traders! So this seems to me that the challenges don’t actually matter to these companies. Once you do actually have the funded account there are all kinds of rules and restrictions about what you can and can’t do. This makes it fairly restrictive and increases the chance of you actually ending up losing the account by breaking a rule by accident. In a nutshell stick to instant funded accounts instead, get capital without any challenge and start trading.

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