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Interesting discussion here where many of the comments echoes the same view I've expressed earlier.
Basically, that many or most of these firms are bucket shops and are in the business of collecting fees, not funding traders.
Sure, it may be cheaper than blowing up your own account, but with your credit card set up I imagine it's only too easy to hit that reset button and all of a sudden you spent a bit more than your initial $150 anyway.
I'd love to hear an update on the guy who's trading 20 copy accounts.
I mostly agree. Except for the statement of counterparty risk. CME is not. FCM is initially,, for a millisecond. And the game only works for the prop shop when the tradet trades own capital in the end and pays the prop shop 10 to 25 percent for the pleasure. That is the goal.
So it is a great way for a developing trader to learn some accountability and discipline. and it also is a really super dumb way for a successful trader to throw away money to trade through a prop shop.
That makes sense. Hard to see why a successful trader with funds available would want to use one anyway, and lose a share of their profits. They are targeting people without enough funds available who think (often wrongly and too optimistically) that they have the skills required to pass?
The way to get really, really rich (unless you have a super duper edge and even then) in this business is to trade OPM.
The problem with these firms is that as soon as you're in profit, you're never given extra funds. You're only risking your own profits/balance.
No matter how you twist and turn it, the only "risk capital" you're ever offered is the initial trailing drawdown which is typically around $3-5K which they misleadingly calls a $150K (LOL) account.
I'm a trader with an existing broker, grinding out returns in stocks and futures. Trade The Pool is intriguing as a way to increase my overall size.
I agree with the shortcomings that others have mentioned. I know that a "$160,000" trading account that I can get for $475 is really only a $3900 account, since that's what the max loss is. I think that Trade the Pool's business model is probably that <10% of people get funded, and they can use fees from people who fail to fund those traders who pass. And like another poster said, that business model works even if who pass the evaluation blow up their accounts. Anyone who is profitable is icing on the cake for them.
Nonetheless, if I run a backtest and believe I can pass more than a third of my evaluations, wouldn't this help increase my overall trading volume in a way that won't keep me up at night worrying about large losses? Am I being naive?
How many here have actually passed a Trade the Pool evaluation?
No, it certainly does not. And "23.38% passed" does not mean that 23.38% of attempts were successful. Many people try multiple accounts on multiple occasions.
I agree. At the moment, I think they are probablement third on my list for "possible ones" to try. My own impression only, all information second hand, not trying to influence anyone else! (I would try them only with Ninja, I understand from several people that Finamark is a real horror.)