I believe that this is the case as well. They require you to submit an invoice to them, which is what I do for one of my sub-contract businesses. Only in this case, they will likely not be sending you any sort of 1099 for tax purposes, so you would likely need to sort that out on your own.
Although the legal relationship between them and the trader is not disclosed on their website, they do allow you to make a request for it. The contract agreement will be signed after successful completion of the challenge and is legally bindingā¦likely just protecting them and allowing them to terminate your account as they see fit and all of that nonsense. And actually, I may have read somewhere that the trading is done on a demo account with the trades getting pushed through to real market, but Iām not entirely sure on that. If that is the case, that would definitely be a loophole that they could be exploiting, but I am not sure that that is the case because their website specifically states that US traders are limited to broker offerings due to restrictions. So, really not sure.
I have also created a free trial. I can say that things look good so far. Regardless of how they are doing things, there is nothing that I have seen so far that would put me off. Bank transfers are possible, 0-risk account up to 300K that can be scaled beyond that with good performance, trading requirements seem reasonable, trading conditions seem good with lots of offerings etcā¦
I personally do not see why, unless the majority are against such discussion. This thread gets a lot of traffic/exposure and FTMO and similar programs could be quite helpful to US traders that are looking for solutions.
It all seems applicable to this thread since we are still trading via an offshore broker. Current brokers that cater to US traders may feel inclined to improve their service offerings if they see huge interest shifting away from them. In all actuality, trading this way is looking more superior to me by the day, and I am very seriously considering it. Letās break down some of the pros/cons:
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Cons:
Upfront fee (fully-refundable)
Must pass the trading challenge to become funded
Must follow their trading rules for maximum draw-down
Must trade 10 days out of each calendar month
Must wait every 30 days to withdraw profits
Must submit an invoice before withdrawing profits
Must not trade 2 minutes before/after big news events, per their restricted schedule (posted in client area and sent out via email, I believe)
May be restricted to using only MT4 (unsure about this one)
Max (3) 100K accounts per trader, per strategy
US traders limited to (1) broker (I believe) - LMAX, with max leverage of 100x
Crypto option not available
70% profit take
Maybe moreā¦? (still researching)
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Pros:
Free capitalā¦up to 300K and scalable (additional 25% every 4 months)
0-risk tradingā¦you lose their money, not yours
Relatively quick and easy requirements for acceptance
Excellent trading conditions with raw spreads and low commissions
Regulated broker (LMAX)
100x leverage without the nonsense restrictions that US brokers employ
Wire transfers available with processing times of 1-2 business days
Reputable company operating on an international level since 2017
Lots of reviews online
Different account size options available, with different risk parameters (for both, challenge and funded accounts)
Unlimited free trials available for challenge simulation
No profit target requirements, once funded
No restrictions on trading style or the use of EAās
my reason is because FTMO is a prop firm and no an offshore broker and you canāt make deposits with them. either way i have no problem with us discussion it here like who am i to complain
btw the Upfront fee is fully-refundable if you pass the challenge, i seen a youtube video of one trader failing 4 100k challenges so he lost over 2k . at least with a broker you can bail out and withdraw what you have left if you didnāt blow the account
Well, if we are getting technical about it, this thread is about going offshore to escape the CFTC, so whether trading with an offshore broker by proxy or going direct, seems irrelevant to me. Just my opinion.
Most traders fail the challenge. For me, it seems very easy. Anyone doubting themselves can check the exact requirements for the challenge and trade via the free trial to see if they would pass before forking over any money.
So, I might question any excuse for failing 4, consecutive challenges. The failure rate serves as a testament to how most, new traders begin trading prematurely and are unprepared. But, again, just my opinion.
The problem with these companies is that the model makes no sense for successful traders that are trading with higher leverage offshore.
They typically require traders to open an account with themā¦ the larger the deposit the higher the managed account size. They also have restrictions for daily loss limits, and some also have weekly & monthly loss limits. When you lower your risk to stay within their loss limits you quickly realize that the margin requirements never hit their money and all the loses would only touch the amount you have on deposit. There is never any risk to their capital.
Some donāt let you trade overnight, weekends, certain hours, near reports. Some also require forced education that cost more money.
The game with these firms is that most traders will lose the challenge because most traders lose money, so the cost of challenge is free money for them. Then for those that pass, they have forced expensive onetime educational costs and/or ongoing monthly platform fees generating more money for them.
Now when you do get an account, you may feel great that you have more money under management but youāre never touching the money for margin or losses, so itās phantom money, and then you have the split of revenue anywhere from 20-50%.
Since youāre forced to stay within their daily loss limits, trading the same account required for deposit offshore with higher leverage than they allow and keeping 100% of the profits would yield significantly higher returns.
That being said, I have not looked over FTMOs offering, but the above has been the typical with these types of prop firms.
Most of what is outlined here is generalized and does not apply to FTMO. But, there are some good points here for everyone to consider when doing research on these companies.
The most famous firm is topsteptrader, others like oneup, LMI, they all trade futures.
Take example of LMI( which has best terms among all), http://www.lmitrade.com/learn_how
For a $50000 account,its daily loss limit is 1000,maximum drawdown 2000.While for FTMO it is 2000 and 5000.But LMI profit target is 2800, while FTMO is 5000.
LMI is a lot of better in other terms: for a 50000 account,you pay $155 challenge fee, while FTMO charges ā¬345.
LMI funded account first $8000 profit go to trader, then the rest split 80/20, 80% go to trader.
Then FTMO it is 50/50 split.
In the past I saw a lot of traders who took challenges for topsteptrader,oneup,and LMI,very few passed.
My impression is for those who can make consistent money, only 1 out of 10 passed.
For those who passed and got funded accounts,4 out of 5 broke rule and lost their funded account in the next a few months.
The most difficult part is drawdown.
Also, if you get a funded account, you will sign a contract and become a pro trader, who will in the future pay professional data fee if you trade futures.
Regarding FTMO, based on my understanding, the profit targets are only for the challenge. After that, there are no profit targets unless you are trying to scale the account. Also, the profit take for FTMO is 70/30, with 70 going to trader.
Based on what I have seen, I can understand that many traders will have a difficult time with these kinds of challenges. FTMOās youtube channel has many videos that showcase peopleās performance for the challenge/verification phase, and you can see their trading metrics.
For example, you can see what people average for the win/loss%, RRR, number of trades, daily/maximum losses, instruments traded etcā¦ The results are all over the board, and itās easy to see that many traders barely succeed and will likely fail shortly after being funded unless they have the discipline to improve as needed.
Overall, I think that this option may not be suitable for everyone. Definitely.
Yes, FTMO is 70/30 split.
I mistake for BluFX, who split 50/50 with trader, but you donāt have to pass any challenge, just pay subscription fee for every month and you can trade a funded account.
For FTMO if you donāt reach 10% profit in 30 days, you have to pay another ā¬345.
Where did you see that? Only the challenge/verification phase has a profit target. Once funded, the only profit target you have is optional if you want to scale up the account. There are no official profit targets that are mandatory once funded. The only way you would pay more money is if you failed the challenge/verification and wanted to try again, but it is optional. Please correct me if I am wrong. Thanks.
Are you an independent contractor payed earned income taxed at ordinary rates?
Section 1256 offers a favorable 60% long/40% short tax rate, Section 988 is taxed at ordinary rates but you can defer taxes indefinitely by having your offshore account denoted in non USD where psychically held currency rules apply (taxed when realized) offering untaxed compounding advantages like an IRA. (THIS IS NOT TAX ADVISE CONSULT YOUR CPA!!!)
Yeah, itās an interesting point regarding taxes. Presumably, you would be working as some sort of independent contractor, since you would need to issue an invoice for withdrawal. Whether or not they would issue you some sort of tax form seems unlikely. But the account is actually a demo account, so Iām curious how that would be interpreted. There is a real account with real funds, but itās technically not accessible to you. Nonetheless, something for my accountant to figure out.
On the trial, I completed the challenge in 3 days. On the challenge and verification, you do not have to wait the full 30 and 60 days, once you complete challenge they move you on. However, there is the must trade 10 day rule, so, in essence, you can go from challenge to funded in as little as 20 days. The way I view it is thisā¦at my same rate of return trading my own 30K, I will earn 7 times that trading 300K. I wouldnāt feel comfortable having 300K of my own funds with offshore brokers even following my risk model of mitigating the risk over 5 brokers. So to me, itās a win/win.
