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. traderjo

    traderjo

    You can't dismiss this as a complaint by failed test takers... the entire thing revolves around are these true prop firms/ hamster wheel nature and real motive of business!
     
    #61     Jul 23, 2021
    Laissez Faire likes this.
  2. Overnight

    Overnight

    *bangs head against wall*

    Then why not simply limit the traders to 1 contract?!? Forget the scaling-up idea!

    Dudes, if you give me the ability to hold overnight one contract, with the drawdown limit being the initial maintenance requirement from the CME for the ENTIRETY of the trade +/-, then I can show you how all of your clients can make money!

    In fact, you should establish a course in swing-only-style.

    For example...If you near a drawdown that is exceeding the NAV of open position+performance bond, nearing the expiration, then you close the account and make them reset. BUT if they are not near that limit but are in drawdown, they are NOT ALLOWED to close the position.

    You only allow them to close the position manually if they are in PROFIT.

    It is what I am forcing myself to do, and it is working! See my bloody journal, gods-damnit! Real monies!

    (There are plenty of details to this I have left out, but you get the gist!)

    GAAAAH!
     
    #62     Jul 23, 2021
    Laissez Faire likes this.
  3. Probably. For an intermediate trader it could be beneficial as it could be considered a more serious simulator training practicing risk management and with the possible upside of gaining a live account and pulling some money out of it to fund his own account. At worst - your risk or loss is capped at $200-300 per month. How many traders lost far more than that with their live accounts they opened prematurely?


    Yes this is the only legit purpose they serve in my opinion. The trader has some money at risk so these are better than just straight simulation for purposes of trying to develop your edge and develop a consistent winning strategy, planning your trading day and developing consistent good habits while putting a capped amount of money at risk.

    However what is still very unrealistic is the trailing drawdowns that 99% of these firms use

    a “fixed” max drawdown daily loss limit below the zero line is actually what would mimic a real live trading account—-not a trailing drawdown

    so the same programs they offer “if” they had a fixed max daily loss drawdown and not trailing would be a better practice for the trader for trading with a live account as that is how it is with a live account

    of course the “capped” amount you can lose if you blow up the account is not realistic as that is not how it is with a live trading account and a capped amount they can lose can give some traders the ability to trade with no stop loss or unrealistic stop losses as they don’t fear losing all their money as they can only lose the fee they paid

    but with a fixed max drawdown at least it would make it the most realistic for training purposes
    As long as a trader would implement the same risk mgt as they would if all of their money in the acct was potentially at risk



     
    #63     Jul 24, 2021
    Laissez Faire likes this.
  4. #64     Jul 24, 2021
  5. bookish

    bookish

    you are on target these friends just want to know who you are and if you are successful at trading once they know you're successful at trading to come out to your house drug you interrogate you take all your knowledge take everything off your computer and poison you with neurotoxins to give you amnesia and make you stupid. every one of them is that way if you'are any kind of a badass and want someone to bring to justice, one of these places would be a good start.
     
    #65     Jul 25, 2021
  6. I have a bit of a unique insight as to how these places operate. I am on both ends at the moment, being funded by a couple of FX 'firms', and also contributing to the material for a couple of other ones. I can assure you this is about handing fees from the entries to the very small percentage of winners. There is no money, other than the entries.

    To start out, these companies will have a certain amount of a buffer backing them, but in the end they know that less than 3 percent are going to keep an account for any serious amount of time. The most common thing for the 'successful trader' is to get 'funding', and them blow up almost right away.

    The worst are the companies that put a time limit on your combine, and expect ridiculous returns. The common set up at the moment is 8-10% in 30 days, followed by 5% in the next 60 (or less). This trains the monkey to get aggressive once he/she is funded. This is especially true if they have failed several times, gotta get that money back for all those losses!

    There is a way to make money, but with all things, it takes time. First of all, if there is a time limit to the hamster wheel - that's an immediate no. Secondly, one stage is what you want. Also, you should be able to withdraw smaller amounts. (Some make you earn 10% before being able to do so.)

    The only way I have seen work is to have several accounts, generating small mounts every month. Furthermore, you aren't a problem for the company. If you earn too much, that's going to be a problem. It's much easier to pull $300/month from 6 accounts than it is to pull $1800 monthly from one of these firms.

    Also, always take a look at their addresses on websites. You run a search of that address, and viola! - you will find those are almost always office sharing buildings, many that offer 'virtual offices.'

    Again, you can make money, but its a slow and steady process. You won't be retiring anytime soon.
     
    #66     Jul 25, 2021
    Laissez Faire likes this.
  7. LOL. Exactly.

    Initially, I knew that my profits would be paid from the subscription fees from failed traders and didn't think too much of it as long as I would get paid.

    But then I realized the implications of this, i.e., my profit is a net loss for the firm. Obviously, they don't want me to win if by doing so I make them lose.

    Yes. I never refuted that it's impossible to make money with these firms or stated that they don't pay out.

    But I think it's worthwhile keeping in mind that they have a business model where it's NOT in their interest to pay you out.

    And why do business with a company where your interests are not mutually aligned?
     
    #67     Jul 25, 2021
  8. If these companies were really in it for the long haul (meaning they want to provide revolving credit funding and earn the majority of their money from their percentage cut of your generated profits) then the live funded accounts would offer clearly defined benchmarks (upfront in writing) for increasing your live funding exponentially over time based on you doing better and better with your trading metrics

    virtually none of these companies do that. The only one I am aware of is FTMO which offers 25% funding increases every 3 months (both 25% increase in daily loss limit and 25% increase in max loss limit) for meeting certain criteria every 3 months. They also allow you to pass the challenge multiple times and combine all live funded accounts into 1 larger funded account and use the total combined max daily loss limit of all the combined accounts

    they also only used “fixed” max drawdowns which are calculated only below the zero line - they do not use trailing drawdowns of any type

    they also refund your challenge fee if you get a live account and give you your challenge fee back when you make your 1st withdrawal from the live account

    they do not penalize you for withdrawing all of your profits - meaning you below the zero line funding max daily loss limit and max total loss limit are still full intact even if you withdraw all profits so you can always trade their risk capital

    also with a fixed max daily drawdown - your daily loss limit actually increases within the same session with the amount of your profits

    example - you have a $5,000 daily loss limit, you build up $3,500 of profits in a session - now you have $8,500 daily loss limit for the remainder of that same session

    as opposed to the other companies that use a trailing drawdown that in the same scenario would move your line from $5,000 under zero to just $1500 under zero since you closed $3500 in profits - essentially penalizing you for the profits in the session by taking away the “real” cushion that you should have

    or even worse - the “unrealized profits” calculation that if you were up $3500 but didn’t close the profits out they still move the mark on the trailing drawdown
     
    #68     Jul 25, 2021
    Laissez Faire likes this.
  9. Almost all of the FX ones double the account size with a 10 percent gain.
     
    #69     Jul 25, 2021
  10. Another important feature is
    No trailing drawdown

    must have a fixed max drawdown below the zero line and no penalty or change in funding or loss limits if you withdraw all profits


    the non-fx companies such as Topstep futures accts and E2T futures accts are simply a joke for the trader in my opinion with their trailing drawdown, scaling plan and how they treat your remaining funding if you withdraw all profits


    Actually I mistyped it is a potential increase every 4 months not every 3 months

    https://ftmo.com/en/scaling-plan/

    in my opinion a good trader should have no problem increasing a $200,000 account by 10% in 4 months if they are trading a volatile underlying such as US100 (Nasdaq on FX)

    that would be you are making $20,000 in profits over 4 months ($5,000 a month)


    In fact I would say if you are a good trader and have that type of funding you should be able to make $1,000/day ($5,000 a week) in profits (let alone $5,000 over 20 trading days in a month) When you are working with a revolving $10,000 daily loss limit below the zero line and a max loss limit of $20,000 below zero line

    considering the fact that with a fixed max drawdown your cushion increases intra-session as you close profits and also your total loss limit also increases as both are always calculated below zero line and are not trailing
     
    Last edited: Jul 25, 2021
    #70     Jul 25, 2021
    clockwork71 likes this.