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  • #10,381
  • Edited 3:54am Aug 21, 2022 3:44am | Edited 3:54am
Why such prop firms can exist from a math point ? Because one cannot do compounding. Otherwise 1 trader out of 100 even with a 90/90/90 rule would make a killing.
  • #10,382
  • Aug 21, 2022 3:49am Aug 21, 2022 3:49am
Quoting pipmaster77
{quote} Interactive Brokers requires 10 million in assets to trade forex. None of the mentioned brokers offer any protection of funds on FOREX, the CFTC actually prohibits it. The regulation on forex is all disguised to move people back to futures. Not to mention, as CableJ has pointed out, the conditions are deplorable. I am only talking spot market here and have no interest in anything else.....futures, options, stocks, etc
I assume you can't trade CFD forex in Interactive because you're americans ? Because they do have forex and CFD forex. Spreads are the same but leverage is much higher in CFDs.
  • #10,383
  • Aug 21, 2022 4:20am Aug 21, 2022 4:20am
Quoting pipmaster77
From FTMO thread: Starting from Saturday, 20 August 2022, MT4 and MT5 platforms will calculate free margin based on the account balance instead of the account equity. Going forward, our maximum order size for Forex pairs will be set to 50 lots (only applicable to MT4 and MT5). If you would like to open a bigger position, you will have to simply submit another market order. Opinions/concerns? Obviously, the calculation of free margin will prevent one from maxing out on a winning position. Looks pretty obvious, IMO, they are trying to limit the huge...
I thought FTMO copy trades good traders, would they not be using profit earned from copying the better traders to fund the large payouts?
  • #10,384
  • Aug 21, 2022 4:35am Aug 21, 2022 4:35am
There is a point we should consider when spraying prop firms about using challenge fees to pay. At some point, if a user is profitable often enough, they will have to hedge to minimize risk.

The number of people they have to hedge will be small but there will still be some of those traders. Thus, it is not a "ponzi" or a "pyramid scheme" as there is a risk mitigation system there.

The fearful should be more concerned about whether or not their strategy will work on real market conditions when they do get switched from b to a than they should be fearful of a prop firm going bust.
  • #10,385
  • Aug 21, 2022 4:49am Aug 21, 2022 4:49am
From a math point based on overall failure statistics of any trader (90/90/90 rule etc.) a prop firm does not need to A book any of their traders. They only need to offer no compounding, meaning same fixed risk on every day. Then the prop firm can just collect challenge fees and finance their business. So to gather a good reputation they only need to have a proper setup (website, customer service, some automation, etc.) and some pockets to cover first loss from payouts (exceeding fees at begin).
  • #10,386
  • Aug 21, 2022 4:53am Aug 21, 2022 4:53am
you are right they don't "Need" to. But you can lower your risk to the max DD figure by hedging. So you can say "ok enough losses on this guy". It makes no sense not to do that at some point .
  • #10,387
  • Aug 21, 2022 4:58am Aug 21, 2022 4:58am
Of course if they can figure out which trader to A book then it can makes sense to reduce the risk. On overall traders failure statistics which are published on internet I have calculated the minimum challenge fee for a 100k account must be something between $150 and $200. With no A booking and not offering any compounding here. So the breakeven point is much lower than what MFF is offering at $450 for 100k challenge. So there must be plenty of room to obtain profits from doing this business.
  • #10,388
  • Aug 21, 2022 5:03am Aug 21, 2022 5:03am
Quoting TrAndy1
Of course if they can figure out which trader to A book then it can makes sense to reduce the risk. On overall traders failure statistics which are published on internet I have calculated the minimum challenge fee for a 100k account must be something between $150 and $200. With no A booking and not offering any compounding here. So the breakeven point is much lower than what MFF is offering at $450 for 100k challenge. So there must be plenty of room to obtain profits from doing this business.

Sort of, but you have to think about those withdrawals that are 150k+ that takes huge amounts of traders Fees. Plus the phase 1 bonus for MFF specifically. Its why the 15% fundednext did was dodgy because the math becomes off when you have that.
  • #10,389
  • Edited 6:02am Aug 21, 2022 5:46am | Edited 6:02am
Compounding on an account can force a prop firm to A book some of their highly profitable traders. Compounding is the most single critical factor here (beside the challenge fee of course) because when a good trader is in the gains and can increase his position 10xtimes the initial size, it really can be dangerous for a prop firm. In the second place if a prop firm allows unlimited accounts (TPT) having unlimited risk capital, that can cause a lot of problems when good traders make a killling (against prop firm), too. So that is why I see the risk for FTMO much larger doing the business than MFF, because FTMO offers the best compounding option with their based on balance rule for gains. So one large swing position over several days and then scaled can cause headaches for FTMO which are then forced to A book it. Their recent rule change makes sense for them because they have seen how a few traders could make a 500k or 1000k payout based on their max. daily loss rule. So MFF is better/more safe because they have much reduced risk with a non available compounding feature, which makes it more diffcult to gather such payouts which were possible on FTMO.
  • #10,390
  • Aug 21, 2022 6:13am Aug 21, 2022 6:13am
Knowing that a trader is profitable and not just lucky a couple of times may be difficult, no ?

At some point firm may be hedging against a trader who they think is successful and he ends up being a loser, starting to lose and firm loses twice (the past withdraws and now the losing hedge)
  • #10,391
  • Edited 7:47am Aug 21, 2022 7:34am | Edited 7:47am
Quoting Capablanca
Knowing that a trader is profitable and not just lucky a couple of times may be difficult, no ? At some point firm may be hedging against a trader who they think is successful and he ends up being a loser, starting to lose and firm loses twice (the past withdraws and now the losing hedge)
Let me try to give you an answer. If a FX prop firm or FX broker is forced to do some A-booking they need to differ between profitable and loosing traders as my most important premise. Since they cannot differ among traders who have a solid trading plan with enough knowledge and experience, they must look after other certain parameters here. Searching on websites what are the most errors traders are doing, I have found the following mistakes, loosing trader are doing. Here are some:

1) Not sufficient trading capital (on a prop firm it would mean anything below 100k or 200k is for them a kind of warning sign, thus the trader might be loosing)
2) Over-leveraging (going all in utilizing a certain percentage of max. possible leverage at the prop firm (or broker) (or in other terms risking ca.5% per trade on props)
3) Having (or showing) no kind of (solid) isk Management in form of having Stoplosses (and/or Takeprofits too) (or having ridiculous low Reward-Risk-Ratios)
  • #10,392
  • Aug 21, 2022 7:52am Aug 21, 2022 7:52am
Quoting TrAndy1
Compounding on an account can force a prop firm to A book some of their highly profitable traders. Compounding is the most single critical factor here (beside the challenge fee of course) because when a good trader is in the gains and can increase his position 10xtimes the initial size, it really can be dangerous for a prop firm. In the second place if a prop firm allows unlimited accounts (TPT) having unlimited risk capital, that can cause a lot of problems when good traders make a killling (against prop firm), too. So that is why I see the risk...

It was the case until FTMO just changed their margin calculations. Now they are all the same pretty much.
  • #10,393
  • Aug 21, 2022 8:07am Aug 21, 2022 8:07am
Not really because on FTMO you can still do Indices trading and having swing trades on them. Even a 30:1 leverage cap here and their new cap that only on initial balance the max. margin can be allocated, it is not a real limit on scaled swing trades. Because 30:1 leverage on initial balance still is 300:1 true leverage based on risk.
  • #10,394
  • Aug 21, 2022 8:13am Aug 21, 2022 8:13am
Quoting TrAndy1
Not really because on FTMO you can still do Indices trading and having swing trades on them. Even a 30:1 leverage cap here and their new cap that only on initial balance the max. margin can be allocated, it is not a real limit on scaled swing trades. Because 30:1 leverage on initial balance still is 300:1 true leverage based on risk.

Map that math out for me. 30:1 leverage on balance is still 300:1 true leverage? ... What does that even mean?
  • #10,395
  • Aug 21, 2022 9:30am Aug 21, 2022 9:30am
Quoting Takisd
{quote} Map that math out for me. 30:1 leverage on balance is still 300:1 true leverage? ... What does that even mean?
100k account with 1:30 leverage and 10k DD fully utilized is equivalent to trading your own 10k account with a leverage of 1:300 (called "true") on its full margin and with the same monetary risk
Money is made by sitting, not trading
  • #10,396
  • Aug 21, 2022 9:33am Aug 21, 2022 9:33am
Quoting Capablanca
{quote} I assume you can't trade CFD forex in Interactive because you're americans ? Because they do have forex and CFD forex. Spreads are the same but leverage is much higher in CFDs.
Yes, because we are Americans trading with an American broker. The irony.
  • #10,397
  • Aug 21, 2022 9:43am Aug 21, 2022 9:43am
Folks , have been searching for a week now about fundednext .
all reviews I read about this company look artificial to me dono why ..!
many reviews on the net look like been written by one user one reply.
wonder if anyone here been paid by them or know a friend ? I am really considering joining them.
  • #10,398
  • Aug 21, 2022 11:53am Aug 21, 2022 11:53am
Quoting Capablanca
{quote} I assume you can't trade CFD forex in Interactive because you're americans ? Because they do have forex and CFD forex. Spreads are the same but leverage is much higher in CFDs.
CFD's are banned in the US.... the CME has to protect their existing volume from competition, they also can't give up those lucrative rollover fees that roll in every 2-3 months on long term trades that don't exist with CFDs.

Actually leverage is much higher for day trading indices & currencies futures (150-250:1).. As a day trader, If I had to trade domestically I would ignore the Forex brokers and go straight to futures. As PIP mentioned, that was likely part of the motivation back in 2009 when regulation hit here... to force FX volume back to the CME.
  • #10,399
  • Aug 21, 2022 12:18pm Aug 21, 2022 12:18pm
XAUUSD Forex Sentiment
Current Metrics
XAUUSD
Short 35 % 2275.43 lots 9537 positions
Long 65 % 4270.80 lots 26945 positions
  • #10,400
  • Aug 22, 2022 6:21am Aug 22, 2022 6:21am
https://www.traderscentral.com
hey anyone using this ? is prop firm or casino ?
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