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THE CME states that the maximum a prop firm can take from a trader when they fund the is 20 % so i am not sure how they can charge 80% the CME has strict rules to protect traders from predatory prop firms. google it.
now prop firms can get more out of desk fees interest tech fees etc. but th eprofit share is a max 20 % to the prop firm from what i remember when i maanaged and worked at a stock/futures prop firm back in whoa.. well 2004! OUCH!!
A profit split of 90/10 to the trader is what Leeloo offers if you manage to let your account staying alive for at least one year.
"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
Not enough orderflow to matter. When companies by order flow, they are looking for huge datasets, not a few sim traders who orders NEVER hit the market. It would be useless to execute on.
I've had this conversation with a few traders!
Hahah
All of those accounts are overleveraged, anyone who attempts to put on full size once they've scaled up is an idiot without basic math skills.
To their credit, the more well-known companies do have a good record of paying out ppl, and from the mouth of some ppl who have used them for a few months on the funded side, they claim that the funding side will customize rules for each trader, including daily drawdown, but it will require obviously keeping REAL money earnings in the account to cover losses.
Big HINT all initial wins aren't from real trading, they don't the whole leader-follower algo until well AFTER a trader proves themselves to be profitable. Who knows when that true time table is. All initial money made is off the backs of traders who have failed evaluations and who have paid for resets.
Because these accounts are overleveraged, because the initial drawdown would kill anyone trying to scale to full size, it only makes sense for ppl taking these to ONLY use the smaller accounts, scale up and request custom drawdown...
The funding really is small and one huge question would always be-- what if they get a skilled or really lucky trader on a good run who runs up say 250k in a month on play money in the funded account that isn't running the leader-follower algo, does the company have enough money to payout? Perhaps not some of the smaller ones like say Leeloo, but will Topstep and Oneup-- I don't know any of the other ones... How willing are they to send that wire???
Would it be a great loss leader so they could advertise-- Our biggest trader cashed out 250k in evaluation and reset fees from the pockets of all of you guys who can't trade or manage risk yet who keep retaking these things!
I think it is all a brilliant business model, not unfair, a bit unethical because they knowingly set poor critical thinkers up for failure.
Smarter traders without money or who want a small influx of cash will benefit most. All others are just donating to these companies...
Long-run value of these companies? There's nothing wrong with paying 20%, many 'real' firms that require deposit have this same setup. The corollary is that the best of the best firms don't require deposit and zero fees, yet the vast majority of traders could never get a 'job' at such places. They want fresh out of uni quants, not guys who learned orderflow from youtube.
If a person if happy with looking at all of this as a deposit firm where you pay 100-400, get $1000-$5000 in funding, then you use a mix of play money and real money to build up an account, then trade based on that balance with the opportunity to scale with better than retail margin, then maybe it will make sense to stay funded for a year or so? It will all depend on how much size you need, how much money you need to keep in your acct and so on. Similar decision a person would make with the 100s of equity firms that give size and demand a deposit. The issue with Futures is that with day trade margin, you don't need to chase leverage like equities traders do...
We do get people sometimes who think that someone is monitoring their trades to trade against them using the "valuable" information this monitoring gives them. It generally seems like an explanation of why the person can't trade well, without an acknowledgement that it's their trading skills behind their losses, not some bad guys who have some special information about their trades. This is sort of the same idea, attributing great value to knowing where small retail traders are trading.
The reason these traders struggle is not that someone is using their trading against them. It's that they haven't learned how to trade well yet.
This is also a likely reason why traders complain that "the rules" are why they have trouble passing the combine/gauntlet things. The rules may be good or bad, and if a particular set of rules does not fit someone, they should not try to trade by them. But the majority of people who do not do well in these firms also do not do well on their own either, for the same reasons: they don't trade well. Not something that is easy to realize, but a necessary one or there is no improvement.
Right. The fact is, no one cares.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
I have been funded a couple of times with TopStep, and I want to tell one thing that is often overlooked.
Once you get funded, the trades really go into the market. I checked it because I also have another personal account.
For me this is all that matter.
If you make money or not depends on you, the firm is not playing against you.... so if you can comply with their rules it's definetly cheaper than using your own money.
I know many of you will think that this reply has nothing to do with the thread but for me it's the crucial point.
If the trades actuallly go into the market then (once you are funded) you are really trading, but many companies do not pass the trades to the market.... I don't want to mention the companies that do not, but I did a thourough search and many of them don't.