The main reason why doing business with these get-funded programs is a bad idea...

Discussion in 'Prop Firms' started by Laissez Faire, Jul 20, 2021.

  1. that they're not really interested in funding and cultivating successful traders.

    I'm convinced that having to deal with funding a trader is more of a nuisance to them than something they actually want. The proof is in the pudding.

    When these programs were initially launched years back the parameters for completing an evaluation were rather unrealistic and it was very clear that they made money simply by selling subscription fees. Fast forward today I'd say the rules for many of these programs are realistic as long as you don't use too much leverage.

    Still, by design, there are so many rules and restrictions which makes it very clear that they don't really want a trader to succeed long term or in their live accounts. Especially as some of these companies have one set of rules for the evaluation phase and another for the live account as you get funded.

    One example is the new EOD drawdown rule which Earn2Trade is promoting these days which it turns out only applies for the evaluation phase and NOT the live account. How does this help someone who wants to trade a live account? You managed to pass the evaluation, but now there's a new set of more difficult rules as soon as you're 'funded'.

    Then you have OneUp which also have much more restrictions as soon as you're trading a 'live' account.

    Also, as soon as you withdraw profits - you're back to square one in terms of buying power and drawdown. You're always risking your own 'profits'. Never the firms. As far as I know you will never at any point be backed by the firm. It's always your own profits which are at risk.

    Add to that all the smoke an mirrors in their advertisements. For one - you're certainly not trading a 150K account. You're trading a 5K account at best - as that's the drawdown limit and buying power you have.

    At the end of the day - do these companies pay you profits?

    Yes, I think so. And it would be unwise to not do so. However, I'm convinced that they don't really want to do that and far more prefer to collect risk-free subscription fees which ideally you give them on a monthly basis as you try again and again and again. I've read reports of guys that have spent thousands on these fees trying to get funded.

    Can these firms serve a purpose?

    Probably. For an intermediate trader it could be beneficial as it could be considered a more serious simulator training practicing risk management and with the possible upside of gaining a live account and pulling some money out of it to fund his own account. At worst - your risk or loss is capped at $200-300 per month. How many traders lost far more than that with their live accounts they opened prematurely?

    It could also be something to consider if a trader is in a situation where he doesn't want to play with his own risk capital and still want to stay in the game somehow and practice his skill a bit more serious than in a mere simulator.

    Make no mistake though. I have zero reason to believe the actually want to fund a successful trader long term.

    If anyone thinks or knows otherwise. Please let me know.
    tomas262, Jaydom, schizo and 15 others like this.
  2. As I found myself in a life situation where I didn't want to risk my own capital, but at the same time wanted to stay in the game and practice, I decided to actually try my luck with OneUp / MES Capital a few weeks ago.

    Long story short, I passed the evaluation within the 15 days required generating 10K worth of simulator $$$. I got funded and earned $7K of 'live' profits and my account was liquidated on the grounds that I held a position overnight.

    This is true, but it's also true that this company practices a 2 strikes and you're out policy with regards to breaking rules. As such, I took a calculated risk on holding an unrealized loss (but still well within daily loss limits) through the electronic close and overnight. Prior to that I sent them an email asking for permission, but admittedly received the answer too late. I figured I would survive with a warning.

    16 hours after I broke this rule as my account and position was profitable and my account had hit $7K of profits my account was liquidated. They did this on their own discretion; not an auto-liquidate upon rule break.

    It seems like OneUp/MES have their funded traders initially on a simulator even after funded, so maybe it was not in their best interest to have someone making 'money' after all as it would mean they had to pay out of their own pockets if someone wanted to withdraw.

    I made money 14/15 days on the try-out and 5/5 as a funded trader. If they really wanted to back someone it does not make sense to liquidate an account at equity highs where someone is actually making money.
  3. Fonz


    I agree with you all.
    As a business owner, would you "fund" a trader that you know nothing about? Seriously, who will give real money to anyone who pass a 15 days test? Not me for sure.

    A way more serious test would be to check at least 6 to 12 months of intra day trading record (audited and validated), during a bull and also a strong corrective market.
    Only with a trader risking his own money, even with micro contracts.

    If one pass the company's test based on very recent historical trades records, then one should be hired to paper trade for 3 to 6 months and then, if this period is also successful, then progressively, the company should help the trader to increase his positions and better control the risks, with real company money.

    Also an incentive/promise of a 80/20 profit split, is just a dream so unrealistic.
    So, for the trader perspective, 0 risk and a possibility to keep 80% of the profit is just a good deal for both parties?
    A better deal would be to offer real mentoring of risk management, emotion management (not control), peer review of trading activity on a weekly basis, and a progressive increase of exposure. A firm decent wage (no 1099..) and then a monthly incentive based on P/F per contract and a control of daily and weekly drawdown could be completed by a small share of the firm yearly profits.
    This firm should use different traders with different strategies and different duration of exposure, to balance risks.

    Only successful traders know the difficulty of scaling in and out, and how to increase safely (psychologically and technically) their exposure and their profits.

    And finally the last questions would be for this already successful trader: Do I really want to be a firm trader with a boss, even with the possibility to earn xxx times what I earn today? Am I ready to share my methodology?

    Good luck with your combines ;)
  4. smallfil


    Something similar to this would be the Turtles program which was started as a bet between Richard Dennis and William Eckhardt. Richard Dennis controlled the monies doled out because he owned a brokerage. That guaranteed, none of the traders would rip him off and also, traders had to follow rules. If they deviated from the rules, they were fired. This is more a mentorship where they actually, taught ordinary people how to be good traders.
    Prop firms on the other hand are in the business to make monies for themselves. Aspiring traders have to pay them monies then, if they can prove they are good traders, later on get funded (that is what they say anyway) and get a share of the profits. Hard to tell which of these firms are legit and if you are a trader and have a trading system, why would you divulge how to trade? What is to prevent the prop firm from stealing your trading system? Everything seems too one sided with the prop firm. Do they even teach traders how to trade? So, why bother with prop firms?
  5. danielc1


    So basically you are just whining about a rule you have broke, you know in advance that would give troubles with a funded account? Maybe next time stop breaking the rules? If the rules are too 'hard for your trading style, just use your own money. Then you have the freedom to lose it all.
  6. traderjo


    "It seems like OneUp/MES have their funded traders initially on a simulator even after funded, "
    This is the bit i never understood and to me sounds fishy.. what I mean is if after passing a test you are still trading on SIM and then if you make huge profits .. where is the money coming from????
    Laissez Faire likes this.
  7. Collagen


    Maybe You need to re-read what He actually wrote. He is realizing the business model promoted by these companies is not that good for traders after all.

    Regardless, I would encourage OP to re-think what He wrote few days ago about C2. As It's basically another example of milking the cows where cows are the traders and investors. The only good thing about C2 is the tech, pretty good, especially compared to what other competitors are offering. It's not the right place for reasonable investors/traders rather gamblers or profitable traders that like waste their time.. Cheers.
    Laissez Faire likes this.
  8. traderjo


    are you comparing C2 which is a copy trade service to Pay for test and hope to get funded firms?
    Laissez Faire likes this.
  9. Collagen


    I am simply saying that BOTH services doesn't make any sense for any (reasonable) traders. I mentioned C2 because OP made a lengthy thread few days ago as a viable choice and I thought to give him a warning, to re-think once again what He wrote.

    Actually C2 make sense If You are willing to put there some garbage that trade the bid/ask of some illiquid assets or a fancy highly risky pos. sizing. You may be able to earn a couple hundreds dollars for few months.
    Fonz and Laissez Faire like this.
  10. I wouldn't say I'm whining, but I don't see why I'd give these companies a free pass considering my impression of these companies as a whole and finally my own personal experience with one of them liquidating an account which was making money and acting rude and condescending to me afterwards.

    As already mentioned it's been said that this company have a 2-strikes-and-you're-out policy. As I had no prior rule breaks I figured I would take a calculated risk. Turns out that was a mistake. If I had known this I would of course not have done so.

    However, they waited 16 hours to liquidate my account. If they were serious about funding me as a trader they would not have liquidated my account, but given me a warning.

    The reason I enrolled in a program in the first place was mostly because I've been in a place where I didn't feel comfortable risking my own private capital - while at the same time wanting to stay in the game and practice my skills as trading is very much a skill based game.
    #10     Jul 20, 2021
    VPhantom likes this.