Typical investors face: Typical traders face : Please note that your 10 seconds bar on ES chart could be too long/coarse for day trading. At times, you have to use a finer/shorter duration because the market could be moving very rapidly.
Do you need to pay monthly fee for a live account in Prop firm. I am on express account with Topstep, I don't even want to move live.
ring..ring in the!r cash register. The sound of coins dropping in and their registers drawer opening and closing. Why do you think they make it hard to "pass"? The whole system encourages you to "fail". It is jingle jingle for them. IMO.
I gave several thousands to bucket shops. They never sent me anything back. Must be a good customer. Now … they must be earning with this volatility. At worst … they won’t send you the check.
Most seem to be down on these firms but they offer a great service. Better for day trading wanna bees like me. Much better to lose an entry fee and a $100 reset than losing real dough. It is also a much better for gaining experience than sim because you do have some skin in the game. Then you pass a gauntlet and then the 2nd one and get paid $4,800, that is pretty cool. Now they are setting me up on my "Traders Career Path" third stage, a live sim to make $9,000 before losing a trailing $4,500 and get paid $7,200 if I pass. Once you get past the live sim and are trading real dollars for them they pass though the 80% in partnership form so you retain the 60-40 capital gains tax break. Helios (Earn 2 Trade) is the only firm that I know of that does this. With the others you are a professional contractor. Anyway, these are difficult markets in that you can lose 1K in a few seconds very easily, so it is nice knowing if I lose I don't lose real dollars but if I win I do earn real dollars. What is not to like about that? It is not them that makes it "hard to pass"; it is the market. If you can trade you can pass.
They wouldn't be sprouting up like pole beans if there weren't any money in it for them. They make it whether a trader does or not. A trader can just trade micros with his own money is a better deal IMO. To learn. Let us know when you make it to the partnership deal. I would read that form very carefully. We have to ask: Why would they even do this? Why not trade their own money themselves? They are offering this "so-called" service for a reason. What would that reason be?
You are correct that they make a lot of money from people that have big dreams and keep pouring money into the slot machine hoping to make it big. However it is difficult to even pass the first stage "Gauntlet", and significantly even more difficult to pass the 5 Stage "Trader Career Path" Program. Once a trader does that then they have a qualified traders who are spread across the Globe trading different instruments so they have a pool of traders who have proven successful to manage their vast pile of money. I like the idea of 80% profits with zero risk. And with success the contract size could increase much faster with a Prop Firm and I would risking my own money. So overall I believe I would make more money going this route. To each his own. If you don't hear me back here bragging then you know I probably did not pass the 3rd Stage. PS: I don't like micros because it is a 1/10 size with 1/3 of the commission. Not an efficient way to trade.
Let's assume a $200 cost in total for a program with one such firm. It's not inconceivable to get a $5K return on that fairly quickly if you're a great trader. In fact, it can be much higher, too. In comparison, it would be very difficult to return $5K day trading 1 micro on a $200 account in a comparable amount of time. The answer is simple. They're exploiting the very high failure rate of aspiring traders. Their main income comes from selling subscriptions to failed traders. A successful trader is not their ideal customer. The ideal customer is the failed trader which comes back time after time giving them risk free fee money. Is it really that different from a futures broker? How many of the retail day traders with futures brokers do you think make money? I bet it's the few. The broker provides infrastructure and gets paid through fees. The only thing I can see is that these 'prop firms' have your credit card on file and it's very easy to do 'just one more program'. In that way, they may very well be facilitating gambling and they're really cashing in on the hopes and dreams of the many failed would be day traders which dreams of riches. As such, the entire business model is very cynical. For an able trader it can be a great opportunity to turn a very small sum of capital into a substantial sum, though. But that will be the few anyway. Not the many. That's just how it is in the trading business.