For example on the best promo code offer of TakeProfitTrader which has the best value among all futures prop firms, it still does not make sense to join. It is better to just trade on your own personal account. Why ? Here is the math: For a $50k challenge you need to pay around $100 without any other fees. YOu need to make 1.5 times the max. DD with consistency rule, where you need to factor in the difficulty something between 1.5 for EOD trailing and factor of 2 with live trailing DD models. So here we add 1.5 as factor. So $100*e(uler figure for compounding)^(1.5)*1.5=$100*4*1.5*=$600. Now you need to make same amount like drawdown on funded, which is e^1 as difficult factor because you could compound on your personal broker account continued. So $600*2.7*1.5 (here the lower consistency factor applied to show you that it even with lower factors it still does not make sense to join) = ca. $2400 as compound value on the paid fee based on what you need to achieve before you can get your desired payout, which is here in this case only $2000, so on personal broker account you would have $2400 as value versus you get only $2000 from prop firm. So you see it does not make sense to join over 99.9% of all prop firms. And then you need to exclude all the rest of prop firms who does not do payouts or have too much payout complaints like Goat Funded prop firm for example here. So actually there is only the instant no evaluation model Tradeify left which makes sense from a math point but with the discount code only and then Quant Tekel from the CFD prop firm side, also with the current 50% promo code only. So anyone considering joining prop firms should do the math before, I am encouraging. Then you see that it does not make sense in most cases. And that above calculation was before any individual country tax laws which could even make it harder to favor any prop firm offer. Of course if anyone has only the idea to do arbitrage hedging between personal broker account and the trading on prop firms then it makes nearly always sense to join any prop firm, as the calculation is different. But this is then cheating. I was only demonstrating the real trading, like you are doing it on a live broker personal account.
if anyone has only the idea to do arbitrage hedging between personal broker account and the trading on prop firms then it makes nearly always sense to join any prop firm, Could you pl elaborate ? to do that one has to first pass the challenge don't they or are you referring to a pair between Challenge and real account to neutralize the cost of challenge! there are some Eas people are selling to do that , but in real life does it work at all
What a coincidence, I just purchased a $150,000 evaluation with TakeProfitTrader today for $210. Not sure I follow your math, where is the $2,000 figure coming from? Take my stylized example which will drive home the intuition as to why prop is better. Assume you are a winning trader, and you win 100% of your trades, for the next 20 trades. If I took the $210 to instead trade my own account, I could initially trade two micros and I am compouding my account immediately. But problem is, I am compounding at such a slow rate because I am starting with two micros, then three micros, etc. Whereas if I used the $210 to buy an evaluation, sure the first 10 trades earn me nothing because those are used to pass the evaluation, but the last 10 trades I finally start compounding and I am trading 3 minis (equal to 30 micro) and so I am compounding very quickly. It is the classic case of the tortoise versus the hare. The prop firm route seems to be slower because you have to pass the evaluation, but once you get to funded, you are trading with such huge size the compounding accelerates. General principle applies even if you don't win 100% of your trades, but win say 65% of your trades.
I think these self-styled "prop firms" (they're actually "funding companies", really, not "prop firms" at all in the traditional sense of the words?) appeal to people who are in a hurry, too, though? They see them as an opportunity to trade a lot of capital without first having to accumulate it themselves. This is probably part of the reason the overall success-rates are so low? People who imagine that "undercapitalization" is the main issue preventing them from trading profitably (and that's maybe a lot of people) are surely a substantial part of the reason there are so many of these firms around?
That is why I failed my previous evaluations. I was in a rush to make money and did not patiently wait for my setups.
Did you not say that you have been a millionaire from trading prior and now you lost it all ? Or do you differ between your trading and investing account only ? I am surprised from your words.