Prop Firm Trading (FTMO, Funded Trader, My Forex Fund etc.)

Trading Discussion Prop Firms
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Proprietary trading companies hire or train professional and experienced traders and then invest money in trading assets through these professionals. Depending on the company’s offers, you can get funded from between $500 to millions of dollars and apply your expertise and professional trading tools to trade profitably and earn commissions or profit splits.

How Many Forex Traders Get Prop Firm Funded Accounts?

It’s hard to be entirely sure of how many traders are failing prop firm challenges across the industry, but we have a pretty good idea! We estimate that around 5% of forex traders are actually obtaining funded accounts. Out of that 5%, only 1% of traders that started the challenge will be trading on the funded capital for the long term.

This is fairly eye-opening to most traders, as prop firms are often thought of as a way to bypass the years of learning to trade properly and just get started on a huge amount of assets under management.

By contrast, around 85% of traders fail within the forex markets, regardless of a trading challenge or not.

Thus proving that it’s actually harder to obtain a funded trading account than it is just to be profitable on your own capital. However, this is actually by design, as many prop firms don’t have the trader’s best interest at heart…

Risk Management During Trading Challenges

Risk management is one area that causes the majority of forex traders to stumble. It’s not easy. In fact, managing risk is the one component that can completely change the success a trader has in this fast-paced industry. Although risk management will always be important for traders, it’s even more important when you’re trading for a funded account. You need to ensure that you abide by the drawdown, exposure, and maximum loss rules that the firm has in place.

When surveying the industry, many prop firms don’t offer any kind of support, at all, when it comes to risk management. In fact, some firms are even offering 1:200 leverage to newbie traders, ensuring that they will fail within hours.

One of the main drivers of our 20% successful funding rate in the Elite Club is our risk management support. Beyond the training, our funded traders have a risk management desk that oversees all the trades taken and advises on ways to mitigate the risk exposure. Alongside the risk desk, advanced analytics are constantly provided on the virtual trading floor to ensure that traders have the tools necessary to actually manage risk proactively, rather than reactively.

Is It Possible To Pass Prop Firm Challenges?

In summary, it’s possible to pass prop firm challenges and start trading on funded accounts, but this depends on the conditions you’re given, as a trader. Historically, retail prop firm challenges have been designed to set traders up to fail. They’re given harsh targets, limited time, no support, and huge leverage – a perfect storm! It’s not surprising that 95% of traders fail their challenges!

I developed my trading strategy with over 13 Years of Live trading experiences. I already passed a lot of funding challenges and it’s ongoing.

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If a trader doesn’t understand risk management, to the point where it is irrelevant whether they have 30:1 or 300:1 leverage available to them, because they are risking no more than x% per trade, then they have no business trying to do a prop evaluation. No doubt many still do, no doubt most fail, and the odd one that does pass won’t last very long.

I agree that many prop firms conditions are set up to ensure that the trader fails, the US futures prop firms are especially nasty, with most of them running ‘intra trade’ drawdown, where unbooked profits are counted as losses and other sharkish antics, such as being disqualified for holding a position into a news event, when they could easily implement a system that closes their traders positions atm 5 mins prior to a major news release, or at least offer the trader an option to close before a certain time.

I wouldn’t touch any of the US futures prop firms with a bargepole…not even Topstep.

FTMO however, are very reasonable. And if you opt for a swing account, 30:1 instead of 100:1 leverage, there are almost no rules to be concerned about. The 10% target in one month is of course quite high, but achievable by most competent traders providing they amp their risk and get a decent run at the time of the evaluation. Then it’s 5% over 2 months. After that, no targets. Just don’t drawdown by more than 10% of the starting account balance and don’t lose more than 5% in any single day.

If you are a decent trader, I would say that you should be able to pass your FTMO account within 3 attempts max. After that, all you have to do is not blow it up. Of course, then that it s the point where you realise you don’t have a 100K account at all, but u simply paid 600 to get access to 10K of losable funds, and in order to (almost) guarantee that you don’t blow the account, the trader may find himself not risking $1K per trade as they did in the evaluation, but risking $100, as they would with their own $10K account. And when you come across people who are on their 15th attempt at the 100K evaluation, you realise that many traders just aint doing the maths.

There is a reason why there has been an explosion of these online prop firms, and it isn’t the profitable business of sourcing that 1% of actual long term profitable retail traders.

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Step 1. Ensure your own readiness

Before you sign up for a funded account challenge you must be sure that you are ready as a person and as a trader for this endeavor, which is both challenging and demanding. A good sign that you are ready would be having in your track record at least a few months of consistently making profitable trades. It is also important that this should be achieved through a proper, live account, funded with your own money and not through a demo account using fake funds or trading in a simulated environment and conditions.

This is because trading in demo mode, with no real funds at stake and at risk, is a completely different situation and the stress and pressure are much less than when trading on a live account. Demo accounts are ok for starting off and for practicing and learning, but no venue to sharpen your trading skills in real conditions. Obviously, when trading through a live account, you run the risk of suffering painful losses every time you take a bad trading decision, but this is exactly the risk-averse and loss-averse mentality that you will need to be able to rise up to the challenge of succeeding in a funded account challenge.

Moreover, prior to signing up for such a challenge, make sure you have devised, developed, and tested your own trading strategy or even set of trading strategies. Such strategies may be mechanical and dictated by indicators or they may be based on your own trading skills and reading of market directions, whatever works best for you and you feel more comfortable with.

In short, go into a funded account challenge with the confidence that you are consistently able to generate profit and armed with trading strategies you are familiar with under your belt.

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Step 2. Purposely adapt your trading strategy

If you already have a strategy and keep track of your trading performance, make sure you gather that data and compare the outcome with the specific goals set out in the challenge. Typically, funded account challenges require you to achieve a set profit target over a set period of time, with maximum losses set either on a daily, monthly or overall challenge period interval. If your current trading track record reveals that to meet the challenge targets you must either increase or decrease your risk, or look into ways to be able to generate higher profit marks.

Once you recognize what changes must be made to your trading strategy to attain and obtained the desired results, you should go on and make the necessary adjustments, while it would be a good idea to put those adjustments to the test and see if the outcomes yielded are those anticipated.

Another approach would be to trade using your usual strategies and methods and then gradually adjust your risk as you reach closer to the profit target set out by the challenge or the ensuing verification phase. Reaching success is very much an analytical game that requires constant monitoring and a firm determination to quickly make changes and adjustments as soon as such is deemed necessary, in other words, to figure out how to adapt and adjust to remain with and adhere to the specific challenge parameters and rules.

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Thanks for this info!