Prop Trading Business Model

Discussion in 'Prop Firms' started by RedSun, Nov 5, 2021.

  1. wmwmw


    No people can consistently make money from casinos. And if there is one, casinos will decline him .
    But funding companies will not decline a good trader.They can simply change from playing against him to following him.
    Yes, most traders who trade challenges lost money.
    But there are still a few good traders who can pass challenges and get funded.These are winners. According to FTMO, 8% traders who took challenges got funded.For Myforexfunds,the number will be higher, because it's maximum drawdown is 12% vs FTMO 10%;profit target is 8% vs FTMO 10%.
    Besides, it allow unlimited free retakes if you do not reach profit target but have positive balance at the end of challenge and do not break their rules.
    It may be tough for a good trader to pass challenge in one trial ,but it is not tough at all to maintain a positive balance at the end of a challenge.So you will have unlimited chances for one fee as long as you can have positive balance at the end of each challenge. Their terms are much better than companies like topsteptrader and are now not tough for a good trader.

    Three important improvements at FTMO over peers of topsteptrader:
    1. Fees are much lower;
    2. Fixed drawdown vs trailing drawdown;
    3. Free retake if you maintain positive balance at the end of challenge and do not break rules.

    FTMO beat peers of topsteptrader by high margin, and now Myforexfunds beat FTMO in all respects.
    Last edited: Nov 7, 2021
    #21     Nov 7, 2021
  2. qlai


    You can get the same leverage on your own, but would you be bold enough to utilize it? IMHO, one of the benefits of prop is that it’s not your money on the line. It’s like buying an option - limited downside with unlimited upside.
    #22     Nov 7, 2021
  3. I'm already utilizing the same leverage they would offer on my own, yes, but I can't (and usually don't need to anyway) hold overnight.

    With this firm - you have to deposit your own first loss capital, so it doesn't seem to make sense to me unless:

    1. The lower commissions/fees make it worthwhile
    2. You want to hold overnight
    3. Future prospect of trading more money for the firm if you have a good performance, i.e., they let you pull out your initial deposit and let you continue trading a larger account for them.
    #23     Nov 7, 2021
  4. Ahh T3 very well aware of them. Then its fine they won't be able to give me better terms than I already have with my current prop
    #24     Nov 7, 2021
  5. Feel free to share details about your current firm if it's not a secret. You can keep their name off the boards if you want to.

    Just curious how it all works. Are you trading equities or futures?
    #25     Nov 7, 2021
  6. RedSun


    Most of the large cap stocks are fairly stable during the day. Most time one directional. So high leverage is fine. But overnight can be challenging, particularly for the folks who play earning games.

    Futures markets are totally different stories. Look at CL, NG etc. CL can have an intra-day $5 change and it is not one directional.

    I think if prop traders are required to inject own capital, like 20% of so, then that would be much easier to get funded. That would also reduce the agency impact.
    #26     Nov 7, 2021
  7. yeah sure. I trade with Alkaline Capital currently based out of Canada as I got decent terms and a great platform. Get 30x leverage with 85% split. they have a tiered commission structure but I get $0.003/share (since I trade close to million shares a month) and with ECN rebates it really comes down to approx 0.0015/share which is good enuf for me. I only do cash equities
    #27     Nov 7, 2021
    Laissez Faire likes this.
  8. jnbadger


    I went with this for awhile many years ago because I was desperate and just wanted to trade. Bad idea. I got a track record together, got my 57, and started making money. My firm takes 5%.
    #28     Nov 8, 2021
  9. traderjo


    Robert great explanation.. as an industry professional could you please clarify few more things on regulations
    1) Which model in USA is required to be regulated as broker dealer and is it dependent on model or product ( equity futures, OTC )
    2) Same question about Canada

    3) In the Test for fee model the entity taking the fee is generally separate than the entity which funds! both don;t seems to be regulated !
    #29     Nov 14, 2021
  10. deaddog


    At that rate the commish works out to $1500 per month.
    #30     Nov 14, 2021