False Advertisement with Try out firms like Top Step, One Up and Earn 2 Trade

Discussion in 'Prop Firms' started by Dreadsen, Oct 14, 2020.

  1. Dreadsen


    1a.Try.Out.Firm.Advertisement.Of.Account.Size.Explained.png I've noticed that there are different marketing strategies with these "try out" firms. And some of them are falsely advertising these "Account Sizes". When actually they are giving you access to Intraday Margins for a select number of contracts. Why do they do this? Why are they advertising $25,000 accounts or $100,000 accounts when it's more like $1200 ?

    I noticed that when SMB had their futures Try out program they only advertised your fixed draw down and the number of contracts you could trade. LeeLoo also doesn't advertise these large account sizes.

    Why would a try out firm need to resort to these types of tactic to lure people into their Try out program?
    traderjo and DrCornwallis like this.
  2. Especially when there are brokers out there that offer $400 margins on ES with, of course, no profit split.
    volente_00 likes this.
  3. ES is not $1,100 margin, not for retail. It is more like 10 times that these days.

    Firms can set intra day margin at any level they want to.

    So they could say they set margin at $8333 per contract for customers ($25000 for 3 lots)

    Which is still lower than current Interactive Brokers requirements but much higher than companies such as AMP.
    Last edited: Oct 15, 2020
  4. Yeah....would be 'prop traders' are paying for not very much.....

    .....of course, the other way of looking at it would be if someone only had a $2K account, would they really be taking day trades off the 1 minute charts, risking around $350 on each trade idea? Probably not........that is essentially what traders are doing with these prop firms, high risk high return trading......almost certain to go pear shaped sooner rather than later, but until that inevitable point comes, also potential to make out like a bandit.......(at least for the tiny minority who can both trade, and have luck on their side long enough to make the prop firms cough up, which of course they really really don't want to do......20% profit split? yeah right...they be taking the other side of funded trader trades in 90% of cases imo.
  5. $1,100 from CME page is intra-commodity margin for a calendar spread. CME margin for outrights is $12,000 as of now. These numbers are for holding overnight.

    Regardless of that, I agree with you, intraday margin is to be set by the broker and can be much lower. E.g. $3,300 intraday initial for ES at TradeStation, a self-clearing FCM.

    With the "try out" firms, their margin is shared anyway over all sub-accounts, so effectively much lower. If one person is short a contract, next person long a contract, next person flat, the net margin for the firm is zero.

    The above assumes orders are acutally sent to the exchange, which may not be the case. I've seen bucket shop language on earn2trade.com, leelootrading.com, topsteptrader.com. That's hard evidence their funded traders bucketeers are losers.
    traderjo and DrCornwallis like this.
  6. It may be misleading, but you’re essentially paying $125 per month to gain a margin of $1500.

    So, assuming you know how to trade and don’t have capital it may not be a bad deal, although that trailing drawdown is a concern.

    As most would be traders don’t make it - these companies mostly make their money on fees and reset fees.

    I have however received newsletters from TST where they brag about how much they’re actually paying out to their traders.
  7. Trying out via funding firms that offer fixed max drawdowns makes sense
    If you pass your drawdown is always the same amount below the zero line.
    Also if you are making profits during the session your max daily loss is the profits you have made that session plus the max drawdown below zero line. In other words the fixed max drawdown is just like a regular account that you funded with your own money.

    On the other hand funding firms that only offer a trailing max drawdown are ridiculous and you are trading at a distinct disadvantage. The trailing drawdown is calculated intra-session with most firms so as an example if you have a $2500 trailing drawdown and you are up $2500 in profits on the day and during the session you go back to breakeven - you have failed as you violated a $2,500 trailing drawdown even though you are breakeven on the day. On top of that most firms that use a trailing drawdown also calculate it from your high watermark of the day even if it was unrealized profit---- so as an example lets say you have $2500 trailing max drawdown and you have a trade in NQ that is going your way and you are up $5,000 for the day and believe the trade is going to continue in your favor and you dont close the trade out and instead of continuing in your favor the NQ reverses sharply and now you close out with only a $3,000 profit - guess what--you only have $500 in cushion left because they calculate from the high watermark ($5,000 unrealized) not the $3,000 actual
    legionx and traderjo like this.
  8. I ran the numbers on the Gauntlet Mini "$150,000" fictional account. With an open-trade trailing drawdown of $4,500 and a profit goal of $9,000, I assumed excellent trading of Sharpe 3. The most one can trade is between 10 and 15 MES to not hit the trailing stop. It takes 5 to 6 months on average to reach the profit goal. Again, assuming really great trading with Sharpe 3.

    That's an absurdly poor wager, considering the firm charges $2,100 during that time to get its meager funding of $4,500 in drawdown allowance.

    People who pass such rules are doing it predominantly on luck, not skill, which is why much more than 70% of "funded traders" fail in short order, which is why the firms are keeping them on "live"-sim to take the other side.
    DrCornwallis and traderjo like this.
  9. Pekelo


    Marketing... 25K sounds way better than a 4K account.

    Since the introduction of micro E-mini futures these firms should have gone the way of the dodo...
    traderjo likes this.
  10. Even before micros, you could day trade Russell emini with $250 margin per lot with AMP.

    AMP also do a special offer where you can trade ES lots with just $300 margin. But they charge and extra $1 per side in commissions if you want to go that low. Regular margin on ES is $400.
    #10     Oct 18, 2020
    Chuck Krug likes this.