Is Getting Funded with Prop Firms Worth the Challenge Fee?

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[michaelj.pasley]

It’s worth the challenge fee. It’s like taking a $550 stop loss for a $10, 000 take profit. You basically get 10k for $550. Prop firms changed my life. I never would be where I’m at with only $1000 of risk to trade with. I’m funded with 200k, or 20k to trade with.

[PB-qbgx]

It's worth it because having the large capital to trade with is amazing. Everybody talks about the max drawdown without realizing they are still allowing you to trade with the power of the whole account. The profit you make is from the overall amount of the account, not the drawdown. It's really not that hard to get, but people will always make things that are good seem bad. I think it's just a human nature thing.

[hsuehhao]

Thank you Nick for pointing this out. Whenever presented with an offer, esp one that sounds too good to be true. I always put myself in the other parties shoes and analyze what they are getting out of me. So i have come to 3 conclusions .

1. The majority of new traders will pay the $550 and eventually give up or forget about it . No loss to the platform.

2. They are monitoring the way the average consumer trades and with what indicator and patterns and selling the data to the big boys .

3. They are data harvesting the demographics ( KYC ) of the average trader and selling the data to brokers, online retailers, etc for easier target advertising .

[BullsEye]

One prop firm I was interested has 100k account, can trade stocks. The trailing max drawdown is 2k and daily max loss is 1k. Weekly max loss is $1, 500. Basically a 1 to 2k account. Also, you need to pass a consistency rule. Is it worth it for $200 a month? $200 is their cheapest option. The profit goal for step 1 is $2, 500. Step 2 is 10k.

[leroylubisi]

Hey Nick.

This is an amazing observation that you are making here. In my humble opinion, I feel that most traders fail to realise one important aspect, that YOU ARE A RISK MANAGER BEFORE YOU ARE A TRADER. Now when you are looking to approach a funded challenge, you need to keep in mind your average strike rate and your average risk to reward and work out a risk management formula that is feasible to the said challenge.

More often than not, traders have to adjust their strategy and risk management approach to suit the viability of passing a challenge and then readjust the risk to maintain and keep the account in the longer term with enough buffer to survive a losing streak.

So essentially risk management is key with prop firms, more than anything. If you keep that in mind then you are more likely to succeed and stay in the game for the long term.

[glenxavier]

I think prop firms are like debt/leverage in investment sector. They can make or break you depending on your level of understanding of the game.

[boutiquebikes]

Surely it's all about risk management?? Yes, I get that stuff happens and you could end up going -10% if you have a big drawdown streak BUT if you're only risking max 1-2% per trade then if you've got a half decent strategy that should be avoidable.

IF I had 'my own' £100k trading account then I'd still only risk 1-2% per trade anyway - I think the error people make is not understanding risk management.

Bottom line is 5% / month on a £100k funded account is still £5k (less the prop firms 20% cut).

READ READ READ the rules before taking the plunge.

[ArunHDGaming]

You just have to admit you are risking 10% of your fee when risking 1% in a 10% drawdown based "PROP trading account". And you also have to admit you are only funded $10, 000 dollars risking 10% of what YOU OWN every time you take a 1% trade. For most people this is a good way to go about building 5 figures or hopefully 6 figures worth of capital with less than 1000 dollars invested. But you have to admit that you are not trading 6 figures, and again admit you are taking trades at high risk. This is a crucial part of understanding the game, prop firms are built like a casino with its infrasture designed for the majority to lose, and as a small fish your goal should be to milk as much as possible out and build your own capital for true freedom. Once you have your OWN MONEY in a trading account, then risking 1% really is what it is, protection based risk management. In a funded account you have huge exposure.

[clistens]

Yes, especially for programs like 5ers and FTP

[progers]

It would be a no for either of them from me simply because of the 30 day time limit. Something like CTI or FTP works really well for me because of the 1-step challenge and a lot of time to let trades play out if you’re a swing trader.

[paoloarias]

Drawdown/constraints wise it's true that you are basically trading a 10k acc rather than a 100k for $550 which is not actually good for the price you are paying. However, profit wise you can really say that you are trading with a 100k account since the position size you will be taking will be based on the 100k total capital. All in all, it will really depend on you if you want to take the challenge or not.

[samorka]

Obviously. But only if you're able to pass it first go. Not if you keep doing it over and over again

[dabadah]

Exactly Nick... what im on with MFF for example is $84 for a $10k account but I immediately noticed that its really only a $500 account because that's the daily drawdown limit.

But I still think its worth it because I've try a million times to grow a small $20 account into something worth withdrawing

[savednotsoft]

In my opinion,
The only prop challenge worth taking is the Lux Trading Firm. Scalable to $10 million account, NO trading period, sensible rules, decent targets bothways, decent price also.

[ruanbosman]

Another important thing to know with prop firms is that it’s all DEMO funds. So think about it if they give you demo accounts to trade from and have no actual exposed risk, then why would they give you these tight rules? Simply to limit you to make decent money otherwise their business model won’t be profitable for them

[thelastuchiha]

thanks for the information nick i didn't know about that

[msarria]

If you're a good trader, $500 to trade $10, 000 sounds like a good deal to me.

[matimbabaloyi]

Their model is extremely unrealistic even for pro traders

[danielbrink]

Instant funding growth programs are better in the fact that you got like 6 months to make 6 percent to get access to the first account, so the time restriction is not there, Most people blown up challenge accounts cause they overleverage cause you got only 3 trading weeks to pass

[jerine]

I don't know.. I have not try a prop firm yet.