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Funded Trader platforms

  #61 (permalink)
mariafp
Annecy, France
 
Posts: 51 since Jan 2024
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The UK spreadbetting companies generally have the business model of offsetting their own NET liabilities (only) in a real underlying market.

They are in that sense a bucketshop, because all that gets passed on to a real market is the overflow from the "bucket" after the long/short positions of different customers have cancelled each other out.

Again, they are NOT, I understand, relaying every "trade" to a real market, only their own net liabilities.

It is relevant in this context, regarding the discussion above, because they are all (by law) regulated by the FCA. I think it is fair to say that the British FCA is one of the world's strictest and most cautious regulators, with a justified reputation for inspecting things at a level of detail and with a fine-tooth comb, and not only their hair.

My point is that "not passing every trade on to an actual market" is not necessarily, in itself, an indication of something "terribly wrong" or something "that needs to be stopped". It is perhaps a legitimate, ethical and reasonable business model, as long as it is properly regulated? I understand that funding companies are not properly regulated, of course. But it may be the case that regulation would help the business as a whole, as well as protecting future customers?

-----------------------------------


Valjean View Post
Not only can you not copy other traders, but you can't have the same strategy in >2 of your own funded accounts.

Maybe I am too skeptic but that would make me concerned that it is perhaps not really a "funded" account at all, but that they are themselves the counterparty and needing to limit their liability in the case of someone who might get very lucky with a too-big position-size?????

I believe that MyForexFunds (forex "funding company" currently in litigation with the CFTC and the Canadian regulators) got into trouble mostly or at least partly for telling prospective customers on their website that it was a partnership when they are funded, and for using the words "We win when you win," when they were in fact the counterparty.

What I am trying to suggest in my clumsy foreign way is that it may be ok for them to be the counterparty if they say openly that they are the counterparty (like a CFD broker), but it reaches a while new level of dishonesty if they say "We win when you win" when in actuality they are the counterparty? No disrespect intended to anyone, but from looking in some other trading forums it does appear to me that the world is full of people naive enough not quite to understand the difference. Many people apparently imagine that their CFD "broker" is actually a broker!

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  #62 (permalink)
 jlabtrades 
San Diego, CA
 
Experience: Intermediate
Platform: NinjaTrader / Tradovate
Broker: Tradovate
Trading: Futures / 0dte
Frequency: Many times daily
Duration: Minutes
Posts: 85 since May 2023
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mariafp View Post
I believe that MyForexFunds (forex "funding company" currently in litigation with the CFTC and the Canadian regulators) got into trouble mostly or at least partly for telling prospective customers on their website that it was a partnership when they are funded, and for using the words "We win when you win," when they were in fact the counterparty.

You can check the thread where we broke down the legal complaint ( ), they got in trouble for adjusting the spread, adjusting fills, and manipulating account balances.

1) they acted as counterparty to the trades
2) the trades qualified as retail trades
3) they failed to register as an exchange dealer for these trades
4) they failed to publish these transactions to an exchange
5) they omitted material facts from customers about these "valid" retail transactions and deceived customers of true profits (used their own commissions to reduce account equity, delaying execution of orders, worse prices than appeared to the customer at the time an order (slippage), using specialized software to artificially increase the spread)


I think a lot of the speculation around these companies is trying to understand how they make money. They can make money being counterparty, having bad rules and take in more in fees and resets than they payout, or using the data from all the traders in some fashion (sell it, trade off it). I think its tougher to make money being the counterparty, than most think and the majority of these are playing the fee and reset game.

I like how TopStep on their new platform TopStepX has the tilt that shows you the % short and long of traders in the market. If they give this and more detailed information to in-house traders, then this can be their edge on the market, like human-based market indicator. I could see this being information that all of these large firms have, and with a smart enough data scientist, put together an algo to identify good traders and then copy the trades or do like topstep and just display the information as an indicator

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  #63 (permalink)
 
Tymbeline's Avatar
 Tymbeline 
Leeds UK
Market Wizard
 
Experience: Intermediate
Platform: Tradovate
Broker: Tradovate
Trading: MES, MNQ
Frequency: Several times daily
Duration: Minutes
Posts: 649 since Apr 2015
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mariafp View Post
The UK spreadbetting companies generally have the business model of offsetting their own NET liabilities (only) in a real underlying market.

They do, yes. (You're very well informed for someone with - to use your own words! - a clumsy foreign way?)

I don't think it's a requirement imposed on them by the FCA that they do that, but certainly many do it, and are even willing (at least to some extent) to discuss how and where and when they do so. Similarly, it isn't a requirement for FCA-regulated CFD forex brokers (nor, I think, for the very few US CFTC-regulated spot forex brokers like Oanda and forex.com) to offset any liabilities: they're allowed to be counterparties, subject to other conditions imposed on them such as having adequate funds, segregation of client funds, and so on.


mariafp View Post
My point is that "not passing every trade on to an actual market" is not necessarily, in itself, an indication of something "terribly wrong" or something "that needs to be stopped".

No - not necessarily, but clearly there are many people who prefer to use an actual broker rather than a counterparty, perhaps primarily because of the perception that that way, you avoid the conflict of interest and that whole "We win when you win" problem you mentioned.

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  #64 (permalink)
donbashk
Dallas
 
Posts: 2 since Oct 2018
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I think you are wrong about the Topstep Funded Trader program and it does not really work the way you describe it. I do not see any individual trading a combine account for a whole year before passing them and being funded. If anyone does that then trading is not for you. Topstep provides real life experience via Topstep TV on YouTube and also having coaches to guide a serious trader to be successful. It is also possible to pass the combine account in two days and be funded. Payout is simple and straightforward with no hidden rules. Once you meet the criteria you can surely withdraw money from the account and pay yourself without any difficulties. I have done it before a couple of times and it works. I have tried many other prop firms but I find Topstep to be one of the most transparent firms helping serious minded traders.

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  #65 (permalink)
 
justtrader's Avatar
 justtrader 
San Francisco, CA
 
Experience: Intermediate
Platform: Ninja Trader, TOS
Trading: es, rty, cl, gc, nq, ym
Posts: 184 since May 2011
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donbashk View Post
I think you are wrong about the Topstep Funded Trader program and it does not really work the way you describe it. I do not see any individual trading a combine account for a whole year before passing them and being funded. If anyone does that then trading is not for you. Topstep provides real life experience via Topstep TV on YouTube and also having coaches to guide a serious trader to be successful. It is also possible to pass the combine account in two days and be funded. Payout is simple and straightforward with no hidden rules. Once you meet the criteria you can surely withdraw money from the account and pay yourself without any difficulties. I have done it before a couple of times and it works. I have tried many other prop firms but I find Topstep to be one of the most transparent firms helping serious minded traders.

Are you suggesting that APEX funding is no a transparent firm?

jt

TWYS NWYT (Price Advertises Opportunity; Time Regulates it; Volume Measures its Success/Failure ---- Dalton)
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  #66 (permalink)
 jlabtrades 
San Diego, CA
 
Experience: Intermediate
Platform: NinjaTrader / Tradovate
Broker: Tradovate
Trading: Futures / 0dte
Frequency: Many times daily
Duration: Minutes
Posts: 85 since May 2023
Thanks Given: 33
Thanks Received: 54


donbashk View Post
I think you are wrong about the Topstep Funded Trader program and it does not really work the way you describe it. I do not see any individual trading a combine account for a whole year before passing them and being funded. If anyone does that then trading is not for you. Topstep provides real life experience via Topstep TV on YouTube and also having coaches to guide a serious trader to be successful. It is also possible to pass the combine account in two days and be funded. Payout is simple and straightforward with no hidden rules. Once you meet the criteria you can surely withdraw money from the account and pay yourself without any difficulties. I have done it before a couple of times and it works. I have tried many other prop firms but I find Topstep to be one of the most transparent firms helping serious minded traders.


I think you are wrong about the Topstep Funded Trader program and it does not really work the way you describe it.
Were you replying to my topstep comments? If so, I'm not sure what you are referring to

I would call TopStep TV more of a marketing tool then a real life experience . There are at least a dozen other people on different platforms showing their live trades that are both more successful traders and better at educating viewers. Its nice they provide their coaches though, its a first I've seen from a prop firm.

And also to be fair to other firms, I have never had payout issues once I met each ones individual rules

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  #67 (permalink)
 
wldman's Avatar
 wldman 
Chicago Illinois USA
Legendary Market Wizard
 
Experience: Advanced
Broker: IB, ToS
Trading: /ES, US Equities/Options
Frequency: Several times daily
Duration: Hours
Posts: 3,533 since Aug 2011
Thanks Given: 2,066
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jlabtrades View Post
You can check the thread where we broke down the legal complaint ( ), they got in trouble for adjusting the spread, adjusting fills, and manipulating account balances.

1) they acted as counterparty to the trades
2) the trades qualified as retail trades
3) they failed to register as an exchange dealer for these trades
4) they failed to publish these transactions to an exchange
5) they omitted material facts from customers about these "valid" retail transactions and deceived customers of true profits (used their own commissions to reduce account equity, delaying execution of orders, worse prices than appeared to the customer at the time an order (slippage), using specialized software to artificially increase the spread)


I think a lot of the speculation around these companies is trying to understand how they make money. They can make money being counterparty, having bad rules and take in more in fees and resets than they payout, or using the data from all the traders in some fashion (sell it, trade off it). I think its tougher to make money being the counterparty, than most think and the majority of these are playing the fee and reset game.

I like how TopStep on their new platform TopStepX has the tilt that shows you the % short and long of traders in the market. If they give this and more detailed information to in-house traders, then this can be their edge on the market, like human-based market indicator. I could see this being information that all of these large firms have, and with a smart enough data scientist, put together an algo to identify good traders and then copy the trades or do like topstep and just display the information as an indicator

I am certain that it is all about the data now...all kinds of evidence to support that.

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  #68 (permalink)
 jlabtrades 
San Diego, CA
 
Experience: Intermediate
Platform: NinjaTrader / Tradovate
Broker: Tradovate
Trading: Futures / 0dte
Frequency: Many times daily
Duration: Minutes
Posts: 85 since May 2023
Thanks Given: 33
Thanks Received: 54


wldman View Post
I am certain that it is all about the data now...all kinds of evidence to support that.

I mean if google and facebook make all their money from selling user data, makes sense prop firms do the same with entries and exits

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  #69 (permalink)
 
wldman's Avatar
 wldman 
Chicago Illinois USA
Legendary Market Wizard
 
Experience: Advanced
Broker: IB, ToS
Trading: /ES, US Equities/Options
Frequency: Several times daily
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Thanks Received: 9,556

Most people would be amazed...but I guarantee that is happening.

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  #70 (permalink)
 
josh's Avatar
 josh 
Georgia, US
Legendary Market Wizard
 
Experience: None
Platform: SC
Broker: Denali+Rithmic
Trading: ES, NQ, YM
Posts: 6,246 since Jan 2011
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wldman View Post
I am certain that it is all about the data now...all kinds of evidence to support that.

It's well known and even advertised that it's all about the order flow data. Top Step even says something like "your trades inform our trades." The entire business model depends on that.

When performance/XFA/paid accounts are aggregate anything other than delta neutral, they must go with that flow (using hopefully a reasonably sophisticated algorithm) in order to properly pay out winners.

It's a brilliant business model. Customers pay the firm, the firm sees the flow, and the best customer performers are rewarded for it. They get real time flow and they know the performance record of every trader with those orders. Simply brilliant, more power to them.

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