The main reason why doing business with these get-funded programs is a bad idea...

Discussion in 'Prop Firms' started by Laissez Faire, Jul 20, 2021.

  1. I don't understand your thinking here. Let's say you're trading the $150,000 account with OneUp. You can trade up to 15 contracts. In a funded account, they require a $5,000 cushion (which is your money). If you trade 10 contracts, the exchange margin requirement is $1,000 per contract on the NQ or $10,000 to trade 10 lots. If you trade those 10 lots successfully with a $5,000 cushion, isn't that a benefit? Yes, if you withdraw all your funds, you're left with nothing to trade. But the idea is to build on that $5,000 cushion. Obviously, they're putting up the margin or you couldn't trade.

    Now the question as to whether it's a "live" account or a "sim" account for the funded traded is certainly important to them as they would have to dig into their pockets to pay the "sim" trader if he/she makes a profit. I would speculate that they watch their funded traders very closely. If someone is making a steady profit with consistent trading performance, I would think they'd have that person on a live account asap and collect the 20% split on the trades.

    So to my mind, the advantage of working with one of these companies is to have them put up the margin, you maintain the $5,000 cushion or whatever cushion you're comfortable with, trade profitably, make money, withdraw, everyone is happy.

    You mentioned that they change the rules for funded traders. Can you elaborate on that? How are the rules changed?

    Thanks in advance for your response.
     
    #131     Sep 9, 2021
  2. Why trade with them and have to leave your $5,000 profits in the account when competitors offer the ability to withdraw all $5,000 in profits and still have full funding



     
    #132     Sep 9, 2021
  3. Overnight

    Overnight

    The initial exchange margin on NQ is currently $18,700 per contract. So for 10 contracts it would be $187,000 outlay.
     
    #133     Sep 9, 2021
  4. I didn't know there was a company that would allow a $150,000 account to go below the initial value. What company is that? Thanks.
     
    #134     Sep 9, 2021
  5. I would assume that the company is allowed day trading margins for all sessions. That would mean that the trader would have to exit a trade before session close and reopen the trade in the new session. It's my understanding that none of the companies allow overnight trades. I may be wrong on that.
     
    #135     Sep 9, 2021
  6. Overnight

    Overnight

    I was simply correcting a misstatement by you.

    "... the exchange margin requirement is $1,000 per contract on the NQ or $10,000... "

    The exchange minimum on NQ is currently $17,000 with $18,700 for initial per contract.

    The prop firms that clear through FCMs who allow for day-trading discounts don't have to put up the money for these excessive positions, so the FCMs must. The money has gotta' come from somewhere.
     
    #136     Sep 9, 2021
  7. Ok. I stand corrected.
     
    #137     Sep 9, 2021
  8. I trade through Ninjatrader Brokerage. They offer $500 day trading margins on NQ/ES.

    Actually, you can't trade 15 contracts immediately as a funded trader. There's a scaling plan.

    To trade 15 contracts, you need $12K in profits after getting funded. So, including the evaluation, you need to generate $21K of profits in order to be able to trade 15 contracts.

    Here's the scaling plan (one of the differences from the evaluation account):

    upload_2021-9-10_8-7-20.png

    Well, the obvious problem here is that your interests are not mutually aligned. It's not a win-win situation. It's a win-lose situation. You make money - they lose. I figure that's why they liquidated my account even as I was making $$$ and my account was progressing well.

    Generally, all firms have harder rules on the live account versus the evaluation account. And it's perfectly understandable why. They don't want you to succeed as a funded trader.

    The main difference is that there's a scaling plan, restriction on trading during news releases, no overnight holds and also the silly rule about having to generate x % of volume during a given week. They can literally boot you if you're profitable, but transact too low volume.

    https://oneuptrader.helpscoutdocs.com/category/304-funded-traders-rules-and-guidelines

    I have not changed my view on this subject. I think these companies can have a purpose as it could be considered a more serious training vehicle compared to regular simulator trading or even live trading (most start trading live too early).

    But it's not a serious alternative for a proficient trader who wants to get funding as there really is no funding and there's just too many hoops to jump through.

    FWIW, I'm trading my own live account again now. The only reason I did an evaluation in the first place was because someone actually told me he had pulled some money out of them and since I was in a life situation that was not ideal for trading my personal account.
     
    #138     Sep 10, 2021
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    #139     Sep 10, 2021
  10. I outlined other differences, too.

    Explain to me why you'd want to continue trading with such a firm after your first 8K (13K really as you need to build a cushion of 5K first) of profits from which you get 100%?

    Why continue trading when they're taking a 20 % cut and you can get 100% in your own private account?

    You're not getting any more margin. At least not on index futures.
     
    #140     Sep 10, 2021