Prop firms and trading

Hello, everyone!

I need your help to understand what prop firms are and what are the advantages and disadvantages associated with this business model. I’m very interested in this topic, and I’ve already started studying it.

However, there is a lot of conflicting information on the internet. Perhaps someone can share their real-life experience, whether it’s positive or negative. I appreciate any information.

Also, if you already have a relevant topic or a useful link where I can learn more about Prop Firms, I would be grateful for the link.

Thank you for your knowledge sharing!

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Helloooo! :blush: Yeah. From what I’ve read so far, I’ve also seen very mixed reviews for prop firms. :confused: I personally don’t have experience working with prop firms but these threads might be of some help, hopefully. :blush:

Yeah definitely search through the forums. I feel like prop firms are the trendiest things these days. It’s all everyone talks about whether here or on reddit.

Basically, a larger trading account balance, provided by the prop firm, that they let you trade, and you keep some % of the profits, with the rest going to the prop firm.

But you need to pass the tests/challenges to show them you know what you’re doing and that can be profitable.

It’s actually a really cool model if you need money and you’re good at trading.

I’m actually interested in what risks exist for a trader. Are there any where registration is not required or there are no commissions at all? I’m just not quite clear on the company’s motivation, as it could incur more losses. Am I mistaken?

Thnks!

From what I’ve found, this seems to be a relatively new direction, roughly speaking, around the year 2022. It just looks so appealing )

I’m interested in how suitable this is for newcomers to trading. Additionally, everyone promises to support the trader

For new traders, I’d don’t think it’s an option. You’re new, you don’t know what you’re doing. And you have to usually pay an entrance free, or challenge fee, to get started with a prop firm. If they support you for free, great, give it a shot, but don’t pay any money into the training. There’s lots of free training on the Internet, and especially in the School here. Plus Youtube. Once you have your system and strategy down and you are profitable on demo, and maybe even a small live account, then maybe you’re ready for a prop account.

What did you hear about them, or what still confuses you about them?

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I think not suitable at all. Not designed for newcomers. No point at all to pay a prop firm for the evaluation until you know from free demo that you can reliably pass it and get funded by them?

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Some companies don’t require an initial fee, and they don’t charge anything every month. They’re willing to train you as long as you work with them. But cases like MyForexFunds worry me.

I understand that for a complete beginner, starting with a demo account is suitable. However, some prop firms claim that there are no risks involved when working with them.

Really? Which ones?

I found 2 options: FTMO and Axi Select. In the first option, they refund the deposit, and in the second one, you can start for free. Yes, I agree, it’s not entirely free, but the costs are not high. And the risks of such companies are high. I have a question about what’s the catch.

If you pass Step 3. That’s not guaranteed. That’s the catch. Most won’t get there. They used to have a trading period, but lots of other prop firms got rid of that rule and so FTMO had to keep up with the competitors.

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They have a minimum account equity requirement.

How do I join Axi Select ?

Joining Axi Select is fast and straightforward. To get up and running with their Edge score, clients must first place 20 closed trades, achieve an Edge score of at least 50, and deposit a minimum of $500 USD to access the six progressive stages: Seed, Incubation, Acceleration, Pro, Pro 500, and Pro M. Existing clients who already have an Edge score of 50 or more and hold a minimum of $500 USD in their Axi Select account (see more about the Edge score below), can immediately progress to the Seed stage and receive up to $5000 USD of funding from Axi. By meeting the requirements for every stage, clients can gradually build expert professional skills and trade $1 million USD of Axi funds in Pro M.

Each level of higher funding means you need to have more equity in your account. USD $500 is the lowest. And you need an Edge Score of 50. It’s explained here. Looks like this is kinda new.

So really, some of these other prop firms are cheaper. I was thinking you could just put $500 in your Axi account, let it sit, and get your funding, but then they have the Edge score thing, so you actually need to trade at least 20 times to get the score started. I don’t know if you get a 50 just from that, if all trades are winners, but that’s going to be hard for anybody to achieve, if you’re trying to keep that $500 in the account.

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It does! I think it’s worth trying if you have trading skills.

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Did FTMO or Axi say this?

Axi Select looks very scammy? They pretend to be FCA regulated but you actually have to deposit $500 to an offshore branch, not regulated by FCA at all! :roll_eyes:

Also in other forums people think Axi Select will be the next to be investigated, maybe prosecuted, after the My Forex Funds case.

Also they have let many people down before, apparently. :stuck_out_tongue:

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Let me set the record straight and educate you how prop firms work, in the markets there is a 92% probability of loss 92% of the time making profitability in the top 1%, the top 8% are breakeven, these numbers are validated by people who worked at brokers with access to P&L overviews.

Prop firms take a fee while you trade accounts via a test, paying a marginal $100s fee per month in return, normally you will spend close to $1,000s by the time you understand, only the top 1% make any profits and then they will come and go as it is unlikely they will be consistent over the course of months and definitely not years.

We’ve spoken to hedge funds that outsource their trading to basically prop traders and they struggle to keep their investors returns numbers stable because of these whipsaws, that’s with averaging AUM across prop traders, if you look it the other way around from an individual perspective it doesn’t work.

Here’s the thing with life, if you have something that works and is valuable it will be discounted to zero, no one will pay for it, why, simply because if they paid for something that works it would mean they couldn’t do it themselves and they would look stupid, so people take something that “might” work and try to curve fit it to work, this is the essence of prop trading.

Then why do prop firms exist, because 80-95% of their profits are generated from their fees, not from the trading profits, I’ve seen all the validated numbers and they reconcile to this fact, but as everyone needs to look for something that “might” work this is the route they take, now people can gain knowledge from the experience but usually less than more because they go in looking to succeed, instead of to not fail.

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