Self funded vs prop firm… truth behind it | Forex Factory

Options

Go to
Permalinks
Print Thread

Featured US Prop Firms

Similar Threads

Anyone trading with a Prop firm 33 replies

Prop Firm Hub 51,744 replies

ERP Prop Firm Journey 4 replies

prop firm new model - my trading journey 871 replies

Attachments: Self funded vs prop firm… truth behind it
Exit Attachments

Self funded vs prop firm… truth behind it

  • #1
  • First Post: Edited Jan 19, 2024 7:54am Dec 14, 2023 10:05am | Edited Jan 19, 2024 7:54am
Discord group
https://discord.gg/8MXtVKzTEK

Comparison of FTMO 200,000 account and Private equity account Fee: 1080 For the exact same amount of work and reaching a profit target of 10% of the FTMO account. You will end up with these numbers at payout. FTMO: 16,000 Private: 17,280
This is where things get tricky, if you don't withdraw right away on FTMO you will be reset to 10,000. As risk parameter 5% On the private account you will withdraw and leave the account empty and start over from zero.
So let's consider second payout, we are all in it for the long run right? Reaching the 10% target again, will give you 16,000 again. And the private account will be at 34,560 (no withdraw) this is where you could withdraw half of it and start over but the choice is yours.
90% don't reach second payout. Considering the scaling plan on FTMO, you have to reach profit target of 10% for "4 months"(I don't remember the exact numbers) If you do the exact same thing on your private account.. we are talking astronomical growth of equity.
The private account gives you the scaling plan without the rules, and all capital is your own. They are playing with numbers to make us feel safe, small fee for huge gain, when in reality it's the opposite.
There are so many factors that ruin your trading. One being that if your are not in profit from the initial capital, you basically have zero! While on the private account you have 100%
A 400,000 ftmo account sitting at 390,000 is worth zero .. and you are BreakEven(at zero) after you gain 10,000usd. While on a private account 39,000 is yours
"Anger clouds the mind. Turned inward, it is an unconquerable enemy."
  • #2
  • Dec 15, 2023 2:43am Dec 15, 2023 2:43am
All fair enough.

However, you omit one very important difference between prop and self-funded, and that is the psychological issue of it being your own capital, or not.

This is HUGE, and that is what prop firms are selling, the ability to trade free of the fear of losing one's own money (bar the challenge fee of course).

It is pointless comparing identical equity curves from prop and self-funded accounts, because they will NEVER be the same, based purely on the psychological difficultly of trading one's own capital.
  • #3
  • Dec 15, 2023 7:58am Dec 15, 2023 7:58am
If you truely want to maximize your trading, you should look into copy trading.
Some brokerages have in house copy trading, meaning others traders using the brokerage can connect their accounts and copy your trades passivly.
You get a 20-30% Performance fee on all profits, the Brokerage will take care of it and deduct the profits from your copy traders and send it to you every week or month.

Lets say you just trade 1.000$ of your own money, but you have build up 200x copy traders with a average deposit of 800$, this means in total you have about 160.000$ under Management.
If you now do 10% gain, you made your copy traders a collectiv profit of 16.000$, from which 30% will be Transfered to you, so about 4.800$ performance fee, while you your self made just 100$ (10%) in your 1.000$ Account

This is the purest form of maximisation in trading, upside maximisation with no downside risk besides your own capital.
The biggest one i every saw had 16.000 copy traders and arround 70. Million $ under management while he him self was just trading a 14.000$ Account.
With a 30% peromance fee, he was making 210.000$ for every 1% gain on his Account
1k to 100k Copy Trading All Time Return: 367.9%
  • #4
  • Dec 15, 2023 8:54am Dec 15, 2023 8:54am
Quoting ChilledT
you omit one very important difference between prop and self-funded, and that is the psychological issue of it being your own capital, or not.
Yes, he omitted that (huge!) factor, of course.

But that’s not even the main thing he omitted.

The big, glaringly obvious point that everyone always misses, in all these (widespread) discussions is that comparing trading a “funded” account with trading your own, self-funded money is inherently not valid, since the funding companies are (obviously) targeting people WITHOUT enough funds to trade their own money, so they’re two different groups of people anyway, with very little if any overlap.

It’s not as if many people realistically say to themselves “Now, I wonder: do I want to trade my own money or get a funding company to fund me?”
  • #5
  • Dec 15, 2023 10:49am Dec 15, 2023 10:49am
It always depends on the prop firm (hopefully a solid one) and their overall conditions.
Then there's nothing wrong to trade with them.

The other side is if you're a trader and know how to make money in the market, you can just turn 100 or 1000 bucks into 30K in a short period of time and go from there.
The next step would be trading futures/options/(volatile stocks) to make even so much more money in the coming months/years.
  • #6
  • Dec 15, 2023 11:50am Dec 15, 2023 11:50am
Quoting The-Flipper
It always depends on the prop firm (hopefully a solid one) and their overall conditions.
//-----

....... very true....... prop firm success and survival rates are widely published..... those results are as would be expected....... not good......

for me, they are the perfect solution.....h
to trade and code, keep both simple... no call to impress....h
  • #7
  • Dec 15, 2023 12:12pm Dec 15, 2023 12:12pm
Quoting Thomas.
The biggest one i every saw had 16.000 copy traders and arround 70. Million $ under management while he him self was just trading a 14.000$ Account. With a 30% peromance fee, he was making 210.000$ for every 1% gain on his Account
Do you have a link to that signal provider?
  • #8
  • Dec 15, 2023 12:25pm Dec 15, 2023 12:25pm
Quoting The-Flipper
The other side is if you're a trader and know how to make money in the market, you can just turn 100 or 1000 bucks into 30K in a short period of time and go from there
100 into 1000 into 30000 „in a short period of time“.

That’s called gambling. You know how unrealistic such results are without taking HUGE risks, don’t you?

You don’t need to open a trading account for it. Go to a casino somewhere, you CAN also turn 1k into 30k. Maybe even faster. OR, you will just lose it…
  • #9
  • Dec 15, 2023 6:36pm Dec 15, 2023 6:36pm
Quoting lddd
{quote} 100 into 1000 into 30000 „in a short period of time“. That’s called gambling. You know how unrealistic such results are without taking HUGE risks, don’t you? You don’t need to open a trading account for it. Go to a casino somewhere, you CAN also turn 1k into 30k. Maybe even faster. OR, you will just lose it…
I don't wanna go into the discussion of "unrealistic" or the "gambling" part.
For a trader with edge it's definitely doable in a couple of months.
  • #10
  • Dec 15, 2023 6:47pm Dec 15, 2023 6:47pm
Quoting The-Flipper
{quote} I don't wanna go into the discussion of "unrealistic" or the "gambling" part. For a trader with edge it's definitely doable in a couple of months.
I don't call it edge I just call it a skill. I learned the hard way when I was speaking to a girl and was talking about trading, so naturally in the conversation I said this "I just mastered my edge, you have to see!" She didn't know trading, she was just listening to me.

I wont complete, I will leave the rest to your imaginations.
  • #11
  • Dec 15, 2023 7:33pm Dec 15, 2023 7:33pm
Quoting mastersplint
Comparison of FTMO 200,000 account and Private equity account Fee: 1080 For the exact same amount of work and reaching a profit target of 10% of the FTMO account. You will end up with these numbers at payout. FTMO: 16,000 Private: 17,280 This is where things get tricky, if you don't withdraw right away on FTMO you will be reset to 10,000. As risk parameter 5% On the private account you will withdraw and leave the account empty and start over from zero. So let's consider second payout, we are all in it for the long run right? Reaching the 10% target...
People are writing that you missed this and that. Let me add another one.
You are assuming that a trader buys just one prop account. No, many many accounts bought and lost in order to have one passed and then hopefully trade that and take in profits for the long term and that is a tall order. I'd say the average fee being around $500 for 100K (not counting discounts), the average cost of a funded account is 10X that or 5K. There are plenty examples of folks here passing challenges and losing them in no time and buying more and more.
  • #12
  • Dec 16, 2023 6:41am Dec 16, 2023 6:41am
Quoting The-Flipper
{quote} I don't wanna go into the discussion of "unrealistic" or the "gambling" part. For a trader with edge it's definitely doable in a couple of months.
Okay, show me ONE. And then show me how the trader does it every year for the last 10 years. Everyone can be lucky. If you make such strong theses you should be able to substantiate them, everything else is populist nonsense. Thank you.
  • #13
  • Edited Dec 17, 2023 4:15am Dec 16, 2023 5:03pm | Edited Dec 17, 2023 4:15am
Quoting lddd
{quote} Okay, show me ONE. And then show me how the trader does it every year for the last 10 years. Everyone can be lucky. If you make such strong theses you should be able to substantiate them, everything else is populist nonsense. Thank you.
the problem is, you really see many of this winner. but only because many 100k people do it this gambling way and by simple math many 100 have to win extrem big from this. you never know who it is before, so it was of course pure luck until done with many thousand trades to proof your edge is a real edge (then it starts called trading, before difficult to call someone a trader before he has many thousand trades of same patterns to know at least with 90% significance you have a edge).

but many dont know this and call already gambler traders. but anyone defines things different too.
  • #14
  • Dec 17, 2023 7:07pm Dec 17, 2023 7:07pm
Quoting ChilledT
All fair enough. However, you omit one very important difference between prop and self-funded, and that is the psychological issue of it being your own capital, or not. This is HUGE, and that is what prop firms are selling, the ability to trade free of the fear of losing one's own money (bar the challenge fee of course). It is pointless comparing identical equity curves from prop and self-funded accounts, because they will NEVER be the same, based purely on the psychological difficultly of trading one's own capital.
That is why you need to learn to eliminate that aspect of it. Challenge fees cost a decent amount of money, and lots of people buy and fail challenges. If it was your own capital that you kept investing in at the end of the day youll end up on top.
"Anger clouds the mind. Turned inward, it is an unconquerable enemy."
  • #15
  • Dec 17, 2023 7:10pm Dec 17, 2023 7:10pm
End of the day, the math works in the favor of self funded. I believe self funded would be treated more carefully as well compared to a firm. I know traders who once they hace enough drawdown they dont treat it serious. If it was your own capital then you would, plus when you up your personal risk up to 10% a trade its crazy to see after 2 losses how quick you build it back. Especially with a 1:3 rr average. It doesnt take long to double an account. I personally have done 200 into 80k before within 6 month period.
"Anger clouds the mind. Turned inward, it is an unconquerable enemy."
  • #16
  • Dec 17, 2023 11:40pm Dec 17, 2023 11:40pm
Quoting mastersplint
End of the day, the math works in the favor of self funded..
Not so sure about that.

If you put $5,000 into an futures trading account (and you should be trading futures, not spot fx. Period), you lose it and you are out $5,000.

If you buy a $150,000 "evaluation" for $250 (this is not what they cost - they're less, but this will work for the math's sake).

You can purchase 20 tries : (250 X 20 = 5,000).

Now we know the funded account is not the "headline number" it's actually only equal to the drawdown allowed. Let's say, $3,000.

So 20 X 3000 = 60,000.

Therefore,

You can lose $5,000 in a real account, but you can spend that same $5,000 on 20 "challenges" and lose the equivalent of of $60,000.

I am assuming that not all 20 "challenges" were purchased at the same time for copy trading. In this case, each is purchased individually and the trader learns something from each failed attempt. Of course, the math is the same if all are purchased at once, but the whole point is a trader can learn from each failed attempt. Whereas with the self funded there's only one chase to learn and then you're out the entire amount.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #17
  • Dec 18, 2023 4:26am Dec 18, 2023 4:26am
Quoting HiddenGap
{quote} Not so sure about that. If you put $5,000 into an futures trading account (and you should be trading futures, not spot fx. Period), you lose it and you are out $5,000. If you buy a $150,000 "evaluation" for $250 (this is not what they cost - they're less, but this will work for the math's sake). You can purchase 20 tries : (250 X 20 = 5,000). Now we know the funded account is not the "headline number" it's actually only equal to the drawdown allowed. Let's say, $3,000. So 20 X 3000 = 60,000. Therefore, You can lose $5,000 in a real account,...
Hi HiddenGap

If you trade like that, your'e a fool.
Learning from failed challenges is a like learning to become an expert full time loser.

Professionals mainly study their winning trades and try and improve their trading execution. These guys don't spare much time with their losers.

A DEMO ACCOUNT COSTS NOTHING - LEARN TO TRADE DEMO ACCOUNTS EMOTIONALLY
Trading thin liquidity at the boundary of the charts
  • #18
  • Edited 6:21am Dec 18, 2023 6:10am | Edited 6:21am
I'm not able to follow OP's math.. Is he talking about 200k FTMO account vs 200k self funded account? If you have 200k, then why would you only trade FTMO and not private money? Seriously though 200k private money don't dump all of it into a forex/futures account i.e. split it between bonds/cds/stocks/index etfs/forex.

I have two points.

1. Nothing lasts forever - You can't guarantee prop firms will be around in 5 years, hopefully they will, but hope for the best prepare for the worst. So with that its not the worst idea to dump profits from prop firm into private account.

2. Odds are double stacked against you with prop firms - The odds are already stacked against you in trading, on top of that prop firms have rules that you have to follow that are designed to make you fail. I don't know a ton about prop firms but apparently a trader would fail with a 80% win rate and a 2:1RR because the prop firm has a trading consistency rule about 3:1RR?

Also taking OP at their word that 90% of traders don't make it to the 2nd payout, should put things in perspective on how easy it is to lose your account and any long term consistency with prop firms.
  • #19
  • Dec 18, 2023 7:23am Dec 18, 2023 7:23am
Quoting Anotan
I'm not able to follow OP's math.. Is he talking about 200k FTMO account vs 200k self funded account? If you have 200k, then why would you only trade FTMO and not private money? Seriously though 200k private money don't dump all of it into a forex/futures account i.e. split it between bonds/cds/stocks/index etfs/forex.
As usual, you're spot on. If a trader has 200K to fund a trading account, he should split it up into 8 25k "piles". Open an account with 1 25K pile and put the others in the bank. If he loses the 25K, then he can replace it with another one of the 25K "piles". Obviously, I am focusing trading and not investing.

Quoting Anotan
1. Nothing lasts forever - You can't guarantee prop firms will be around in 5 years, hopefully they will, but hope for the best prepare for the worst. So with that its not the worst idea to dump profits from prop firm into private account.
Again, leave it Anaton to nail it. The goal should always be to take the profits earned in the funded account and place them into a self funded account. Staying in a funded account should not be the destination. The destination should be a self funded account (s).

Quoting Anotan
2. Odds are double stacked against you with prop firms - The odds are already stacked against you in trading, on top of that prop firms have rules that you have to follow that are designed to make you fail. I don't know a ton about prop firms but apparently a trader would fail with a 80% win rate and a 2:1RR because the prop firm has a trading consistency rule about 3:1RR?
The rules vary from firm to firm. For Topstep (full disclosure, I am a $150,000 Topstep funded trader), there is a consistency rule during the combine. You cannot have a winning day that makes up more than 1/2 your total profit goal. In other words, if you have to make $3,000 to pass the combine, the trader cannot have a single day that makes more than $1,500. But once funded, there is no consistency rule.

There are funding companies out there that use a consistency rule in order to NOT pay traders................

Quoting Anotan
Also taking OP at their word that 90% of traders don't make it to the 2nd payout, should put things in perspective on how easy it is to lose your account and any long term consistency with prop firms.
I don't know where this stat comes from, but it makes sense. The overall failure rate in trading is about 90%. Which is the point. Why put $5,000 into an account which you may likely lose, when you can purchase a "challenge" for $100.00? The probability of losing remains the same, but the risk to ruin is considerable better.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #20
  • Dec 18, 2023 3:03pm Dec 18, 2023 3:03pm
Sheesh.. all this loss talk. Deflating my Quann
Don't compare your trades to others. Most often the masses are the asses
0 traders viewing now