Why are prop firms so popular?

Are there people here who have actual experience with prop firms? Why do you like it? No shills please.

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Prop firms are so popular because in theory they allow a profitable trader - who hasn’t significant capital - to immediately trade for a living with relatively little financial risk.

No, i dont have experience with them because i have sufficent capital to increase the size of my account when i want to do so. But a lot of traders are still in their early 20’s and dont have this kind of money saved up. For them it is simply a good deal. They can save money for their own trading account, without restrictions.

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yes

here’s one:-

my son-in-law recently got started with a funding company, too

he was in their target market because he had some trading skills and little capital, but it got him successfully started with a funded account, from which he was paid nearly $4,000 in February

he didn’t choose the one i recommended, but still did ok, so far, anyway :slight_smile:

wow that is very nice. how about recently? though i will be happy with 4,000 for the entire year!

well, i’ve gradually been changing my impression, to be honest - he’s done much better than i expected

he went with a funding company other than either of the two i suggested for him (the one he picked was my third choice, to be fair), he passed their evaluation at his first attempt (i was very surprised!), he made $3,800 in February (i was even more surprised) and hasn’t actually had a losing month yet (though February’s $3,800 is by far his best performance, so far, as March and April were about +$1,200 each, and he’s now only around +$400, i think, for May)

he’s cautious and conservative, and willing to sit and watch charts for many hours without entering a trade, which not everyone can manage to do

but he’d be the first to agree that he got off to a very lucky start

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for your son, if he has one month where he loses will he lose access to that funding account? how many losing months do they usually allow?

no

well, it depends how much he loses! you’re only allowed to lose 10%

so, they funded him with what they call a “$100,000 account,” but there isn’t really $100,000 - their risk was only $10,000 because he’s only allowed to lose 10% of it

but if he loses only a little bit, he could have as many losing months as he wants

his account is now nominally $125,000 (they add 25% of the original amount after 4 months, if you’ve made 10% total profit, or more, during the 4 months, with no more than 2 losing months out of the 4), so now he can lose $12,500 instead of $10,000 before they say Goodbye to him

the rules with all these funding companies vary

there are a few good ones, and very, very many bad, scammy, unpleasant ones! (just like with brokers!)

but generally it’s “how much money you lose” not “how many losing months” you have, i think

once you’re funded, there are no profit targets (apart from for increasing the amount of funding)

oh ok this makes sense. thats nice he hasnt lost even less than 10%! does he have another job how does he balance his time?

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yes, he works, but not full-time and often flexible hours

he tries to trade about 15 hours per week, the hours on Tuesday, Wednesday and Thursday when both the London and US markets are open at the same time

it’s the best he can do, and he’s lucky to be able to do it, of course - if his only free time for trading was Mondays and Fridays he’d be in trouble!

his maximum position size is 0.5% so he’d need a really bad run to lose 10% of the account, right now i think he normally risks about $550-$600 per trade, to try to win the same (R = 1.0, give or take commission)

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It would be great to hear from people who have first-hand experience with prop businesses as someone who has no prior expertise in prop trading

I read others comments on this topic and I guess I could not agree more with you. coz I don t have experience with them.

oh that is really small. thank you. this is probably safest.

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are you also interested in trying one?