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Self funded vs prop firm… truth behind it

  • #61
  • Dec 29, 2023 7:01pm Dec 29, 2023 7:01pm
I do this calculation.
It’s the simplest shit ever.

I trade 2 instruments. Cable, oil.
I can draw approx 7 (more but say 7) trades x week.
Cable -Avg sl is 25 p avg tgt is 40p, - why: a trade where I have to set a sl larger than that, is surely a wrong trade,
Oil - avg sl is 70, avg tp is 180

I rarely trade both, but happens
I have a max Dd allowed 5% on a day and total 10% did.
Equity 50k

what’s my trade size? Simple:
1lot for cable or 250$
3lots for oil or 210$
7 trades x 2 instruments is 14 trades.
14 x 230$ is 3220$

if I get all trades wrong, because I become an idiot, I still would have not reached the 10% max DD.
if I get everything right, I have approx 7k profits.
90% of traders use TA, indicators and prediction
  • #62
  • Dec 29, 2023 7:15pm Dec 29, 2023 7:15pm
Quoting mastersplint
{quote} Yes its 400 But in order to pass youre 400 becoes 800 becomes 1600 phase 1 done 1600 - 3200 phase 2 and funded. Also in this example, once your funded you almost have the amount you can play with for daily limit. Now you have 3200, not just 400$ back and account back to break even. Self funded will always trump prop firms. It took me a little to realize this, I even fought the idea in my head for so long. Then I realized, well lets try self funded with higher risk. If I know I can pass challenges, I can handle higher risk lower funds. In...
Nice to see someone that understand business.
That simple double the fee example is an efficiently poor example where still works but it can be way way more efficient than that.
Of course, a trader see 400$ vs 5k and is easy jump if not looking into details (those 5k are daily).

I can fully admin that is hard to trade from the start those 400$ vs 5k ... in an account, because maybe in the 5k account you take trades of 0.5 / 1lot ... but in the 400$ account you take, what? 0.06 lot? or should it be 0.08 lot? ... when balance is 700$ you take 0.17lot? ... when balance is 2xxx you take what? ... Super hard!
But, there is a solution for that too!!! No longer keen to say it over and over, as it is days from getting started.
  • #63
  • Dec 29, 2023 7:20pm Dec 29, 2023 7:20pm
Quoting aa4fx
{quote} Nice to see someone that understand business. That simple double the fee example is an efficiently poor example where still works but it can be way way more efficient than that. Of course, a trader see 400$ vs 5k and is easy jump if not looking into details (those 5k are daily). I can fully admin that is hard to trade from the start those 400$ vs 5k ... in an account, because maybe in the 5k account you take trades of 0.5 / 1lot ... but in the 400$ account you take, what? 0.06 lot? or should it be 0.08 lot? ... when balance is 700$ you take...
Show us live examples by january end.

Because, it is high risk category account.

For some, psycology also will be problem in dealing with high risk account.
Intraday only.
  • #64
  • Dec 29, 2023 7:32pm Dec 29, 2023 7:32pm
Quoting _BBKing_
{quote} I don’t get the point in having more DD possible. what makes you feeling better having more DD? If you have 100k to fund an account, would you trade that account opening such a large trades or such a large non sense stoploss causing a 20k drawdown?! And what would you do at that point? I mean, you opened a 50lots trade and market goes against you: what would you blame first? The fact you opened such a large trade? Or the fact you allowed too large stop loss? Or would you blame yourself for misunderstanding of market in that move? now, let’s...
I can fully agree that a big dd is not good, but if it is part of the trader style, that at one certain moment for any reason he can take more risks and allow it - with all the risks that implies it, ... then, a prop daily dd that is fixed is painful and easy to violate.

That advice that all talk about ...1% on a trade, do you really think that is respected?
Random case: Buy 10lot?or 8lot? or 6.5lot? eurusd in an 100K account or 65234$ account? at quote 1.086 -> where is your stop loss when you open that trade? ... when it reaches a 1k loss? (continue with 100k acc) how you set it? ... you close the trade manually? ... you set the sl at 1.xxx? you have the time you make it precise when you open that trade? ... many questions, I know, and a few more... what if let's say you are - 0.8% down in that trade, ... and then there is a spike (or you away) ... and get it to -1.4% ... you have a script to close it? ... what if you were away, it was - 1.4% and then back to -4% ... lucky no? ... oups ... in a case like that your daily dd limit could have been violated and you're out.
Maybe those that mention 1% in a trade adapted their approach and see the stop as maybe a equity % loss ... as you can have a batch of trades 3lot + x lot, various levels ... then, if all go under x% then close ... or maybe have various pairs traded at same time.

The questions are not looking to have an answer, are just questions that one should have in mind, ... some scenarios, that we could find infinite ones ...
  • #65
  • Dec 29, 2023 7:35pm Dec 29, 2023 7:35pm
Quoting navk
{quote} Show us live examples by january end. Because, it is high risk category account. For some, psycology also will be problem in dealing with high risk account.
There is no high risk in the traders mind, he will trade under the same psychology as the daily dd limit of those prop firms, in a easy way not to mess up his mind.
  • #66
  • Dec 29, 2023 7:42pm Dec 29, 2023 7:42pm
Quoting _BBKing_
I do this calculation. It’s the simplest shit ever. I trade 2 instruments. Cable, oil. I can draw approx 7 (more but say 7) trades x week. Cable -Avg sl is 25 p avg tgt is 40p, - why: a trade where I have to set a sl larger than that, is surely a wrong trade, Oil - avg sl is 70, avg tp is 180 I rarely trade both, but happens I have a max Dd allowed 5% on a day and total 10% did. Equity 50k what’s my trade size? Simple: 1lot for cable or 250$ 3lots for oil or 210$ 7 trades x 2 instruments is 14 trades. 14 x 230$ is 3220$ if I get all trades wrong,...
You created a system that is easy to use for you, that will not mess up your mind when you'll trade. Due to that, you manage to stay within your limits because you know already what bullets you can use while being to war. But, while opening those orders you may not know the real cost of each trade related to the account size that could vary, etc. Is more an global overview.
  • #67
  • Dec 29, 2023 8:00pm Dec 29, 2023 8:00pm
Quoting aa4fx
{quote} There is no high risk in the traders mind, he will trade under the same psychology as the daily dd limit of those prop firms, in a easy way not to mess up his mind.
Assume this scenario :

1 ) I bought ( or ) have a funded account 100k.

2 ) My daily dd limit is 5 % or 5000 dollars.

3 ) I trade only.. ( only ) 1 standard lot in a day gbpusd or eurusd and wait for 20 pips profit or 200 $ profit.

4 ) Assume that I am using day trading strategy.

5 ) I will never, ever blow my account, because 1 standard lot can never breach daily dd ( 5000 $ )
The trade which I opened can never, ever go against me 500 pips !!

6 ) I make 200 $ in a day, which is 4000 $ in a month or 48000 $ in a year.

Now, please write here how you make 200 $ in a day or 4000 $ in a month or 48000 $ in a year ? ( with 400 $ real money account )
Intraday only.
  • #68
  • Dec 29, 2023 9:33pm Dec 29, 2023 9:33pm
Quoting navk
{quote} Assume this scenario : 1 ) I bought ( or ) have a funded account 100k. 2 ) My daily dd limit is 5 % or 5000 dollars. 3 ) I trade only.. ( only ) 1 standard lot in a day gbpusd or eurusd and wait for 20 pips profit or 200 $ profit. 4 ) Assume that I am using day trading strategy. 5 ) I will never, ever blow my account, because 1 standard lot can never breach daily dd ( 5000 $ ) The trade which I opened can never, ever go against me 500 pips !! 6 ) I make 200 $ in a day, which is 4000 $ in a month or 48000 $ in a year. Now, please write here...
You are missing one important step, that you are mixing the day you are funded with the value of the fee of 400$
In order to make 200$ in a day and have them transferred into your account, you need to pass 2 challenges. While passing those challenges the 400$ fee could grow to the value of an real account with a balance bigger than the daily dd limit of 5k. How, below is how, but we'll forget this aspect for the moment as we are about to be very rich, at least on paper if we make those 200$ as mentioned.

Answer: simple, in only 123 days the value is 49,792$ and in 1 year = 240 days -> 4,898,480$ (I told you I took an excel training few days ago, I become expert now) - I added the number separator for a better visualization of the profit number.

You ONLY have to relate the 5k daily dd limit (forget about that 100k - that's just illusion) to the 400$ real.
When you make 200$ in the funded account, related to the 5k daily dd limit, it means you made 4% in a day.
Take a demo account with the balance of 5k, copy the trades with risk 1:1 into the 400$ account. You never break 5k, you will never breach 400$ account too.

Day 1: 4% on 400$ -> balance is 416$
Day 2: 4% on 420$ -> balance is 432$
...
Day 123: 4% on 47877$ (that is from day 122) -> balance is now 49792$
...
Day 240: can you handle again the number? I take my risk: 4898480$

Was it that simple? ... and this is where most get it wrong:
Day 1: 5k dd limit account -> is making 4% = 200$ and the 400$ account was making 16$
The start of the day 2: the demo account is now 5200$ and the fee account is 416$

IF, we continue in this setup, of course, we will not make it, because making now 200$ in the 5200$ account is less then 4%, and it will decrease each day.
BUT!
What is your daily dd limit? 5k... then, why do you continue to trade in the 5200 account?
Solution:
Create a new demo account (your demo account, as in day 1!) with the capital of 5k and start the day 2: 5k demo account -> copy trades 1:1 risk into the 416 account.
You make 200$ in the 5k account -> 4% -> in the fee account you have now 432$

Day3: a new demo account -> 5k start ...
If you don't want to have everyday a demo account, ask the broker to reset the demo account to 5k every day, or take a broker that offer such feature for demo accounts (I saw they exist).

I know, is hard to have that demo account every day, but seeing the price you paid, does it worth it?
Btw, are you still planning to trade prop accounts now or you decide to be rich and adapt your trading?


Is the trader mentality affected somehow? NO, he has every day a 5k account in which he has to make 200$ profit. Every day trade the same! Everything else is done behind the scene.

If this is still not enough, you can pass by my journal from time to time and see more details. I don't look into moving the discussion there, that is just a personal (open to public) journal that may inspire others. Also, I am not looking into more explanations about this as I would like to have the focus on other aspects.
I am just done with the setup I plan to use ... not yet documented on my jurnal, but it will be soon.
I mentioned that I will offer real case examples, and for sure it will be. The only requirement into having them rely on my trading skills that I wish Icould have as great as some traders in here.
  • #69
  • Edited 10:19pm Dec 29, 2023 10:02pm | Edited 10:19pm
Quoting aa4fx
{quote} You are missing one important step, that you are mixing the day you are funded with the value of the fee of 400$ In order to make 200$ in a day and have them transferred into your account, you need to pass 2 challenges. While passing those challenges the 400$ fee could grow to the value of an real account with a balance bigger than the daily dd limit of 5k. How, below is how, but we'll forget this aspect for the moment as we are about to be very rich, at least on paper if we make those 200$ as mentioned. Answer: simple, in only 123 days...
Thanks for your detailed explanation.

Yes, with a demo account 5k, trading for 4 % profit in a day, you are taking off emotion part.

You can copy trade from 5k demo account to 400 $ real money account.

Using a trade copier

Good stuff.

Thanks
Intraday only.
  • #70
  • Dec 30, 2023 1:10am Dec 30, 2023 1:10am
Quoting _BBKing_
I do this calculation. It’s the simplest shit ever. I trade 2 instruments. Cable, oil. I can draw approx 7 (more but say 7) trades x week. Cable -Avg sl is 25 p avg tgt is 40p, - why: a trade where I have to set a sl larger than that, is surely a wrong trade, Oil - avg sl is 70, avg tp is 180 I rarely trade both, but happens I have a max Dd allowed 5% on a day and total 10% did. Equity 50k what’s my trade size? Simple: 1lot for cable or 250$ 3lots for oil or 210$ 7 trades x 2 instruments is 14 trades. 14 x 230$ is 3220$ if I get all trades wrong,...
interesting insight ! but catching a setup and trade having such low sl actually very tough , possible with perfect timing and utmost vigilance , may with pending orders. lets take all done perfectly and still a chance of sl hunting 50% times as back up , may more though . say only gu trades run throughout the week. 7x250=1750 $ loss vs 7x400=2800 profit possible . possible total profit average 1050/ week , again for back up for further uncertainties add minus 300 , so range still profit 750 - 1350 . total loss possible 7% while average profit possible 2% . may ok personal account for time being , but to extreme stain in prop type ! so may sl , tp to increase and set be and forget may apply to minimise further risks with using perfect setups ! take care
Not understand?better not follow my analyses!doubt clearer first, risks ++
  • #71
  • Dec 30, 2023 1:57am Dec 30, 2023 1:57am
Quoting fontu
{quote} interesting insight ! but catching a setup and trade having such low sl actually very tough , possible with perfect timing and utmost vigilance , may with pending orders. lets take all done perfectly and still a chance of sl hunting 50% times as back up , may more though . say only gu trades run throughout the week. 7x250=1750 $ loss vs 7x400=2800 profit possible . possible total profit average 1050/ week , again for back up for further uncertainties add minus 300 , so range still profit 750 - 1350 . total loss possible 7% while average...
yes true.
my setup is to get trades like example on yesterday
buy gbp usd @1.27
i would never buy that price yesterday with a stop loss lower than 1.2680. So approx 25 pips. (Got entry 2703).

In oil trading I would never allow more than 70p on a trade. If that goes so far, means my trade is wrong.

ok, it’s just my strategy. Fits for me
90% of traders use TA, indicators and prediction
  • #72
  • Dec 30, 2023 1:59am Dec 30, 2023 1:59am
Quoting aa4fx
{quote} You created a system that is easy to use for you, that will not mess up your mind when you'll trade. Due to that, you manage to stay within your limits because you know already what bullets you can use while being to war. But, while opening those orders you may not know the real cost of each trade related to the account size that could vary, etc. Is more an global overview.
no ok, I calculate anything prior of opening the trade.
but this works for me. Over the years I learnt to act this why.
mine was an example.
90% of traders use TA, indicators and prediction
  • #73
  • Dec 30, 2023 2:00am Dec 30, 2023 2:00am
Ok so,
I will give this prop industry a try.
will try get funded on an FTMO account.

meanwhile will still leave few $ on a real account.

and try them both.

i will then update you on how it goes.

90% of traders use TA, indicators and prediction
  • #74
  • Dec 30, 2023 7:55am Dec 30, 2023 7:55am
Quoting _BBKing_
Ok so, I will give this prop industry a try. will try get funded on an FTMO account. meanwhile will still leave few $ on a real account. and try them both. i will then update you on how it goes.

You should look into copy trading, its all about maximization
If you know you are profitable, then why not give others the opportunity to copy your live trades and earn a Performance fee?

I think its even better then prop Firms in the first place, there is no unnecesarry conflict of interest or fee that you have to pay.
If you are gonna trade a real Account, there is no reason not to do copy trading to maximize your own profit potentiall
You just trade your own money and once you have a big enough track record and proof of profitability, others can copy.

Its positive for the industry when good traders offer other traders a winn winn structure.
No scams, no up Front monthly fees, no conflict of interest.
The biggest copy trader i ever saw had 16.000x copy traders and a 30% Performance fee.
He him self tradet a 10-15k Account, but through the 30% Performance fee and 16k copy traders, he made 400k - 600k usd a week in performance fees, just for 2-4% gain a week.

Even in the Perspective of a beginner trader that never will trade profitably in the first place, its better for him to diversify his capital between 3-5x copy traders/signal providers and have good odds of growth.

Thats better then paying for challenges and losing, the average prop firm Client that passed a challenge lost 7-8x befor getting a payout.
98% of fundet challenges are failed.
Prop Firms attract emotianl traders through their offers and Marketing that are more likely to fail.

Im not saying prop Firms are bad, just saying you put your self in a bad Situation by paying a fee and having to reach hard targets twice.
Its clear that there is a conflict of intrest and their terms of Service show you dont trade real money in the first place
You cant tax your profits as capital gains, you have to invoice them for your "Service" to get a payout and refund.
1k to 100k Copy Trading All Time Return: 367.9%
  • #75
  • Dec 30, 2023 8:13am Dec 30, 2023 8:13am
Quoting Thomas.
{quote} You should look into copy trading, its all about maximization If you know you are profitable, then why not give others the opportunity to copy your live trades and earn a Performance fee? I think its even better then prop Firms in the first place, there is no unnecesarry conflict of interest or fee that you have to pay. If you are gonna trade a real Account, there is no reason not to do copy trading to maximize your own profit potentiall You just trade your own money and once you have a big enough track record and proof of profitability,...
yes I will check also the copy trader thing in second stage. Could be interesting!
also you pointing out important fact about income tax.
in my country (Italy) capital caring has a fixed tax 26% which is among highest in Europe.
Prop trading is taxed as any other job so meaning you pay a fixed 24% in first 5k yearly.
more than those 5k …well, depends. But about prop trading means at least a net approx 25% until 85k yearly. Over that is about even a 40%.
calculation is anyway somehow complicated so using the “approx”

this means that if I am profitable, the calculation is as follow
say 50 k gross profits
40k is my split (80%)
Tax will be approx 15k
so 40 - 15 is 25k.

will have about 50% of gross profits.

if I could have 50k gross profits from own capital it would be
50 x 26% is 13k
so net 37k.

with prop firms I leave about 12k on the way.

the point is still the same: do I have own money to trade such an account allowing me for a 50k yearly profits?
the answer to this question is the reason why me and many others, if anything give a try to prop firms.
90% of traders use TA, indicators and prediction
  • #76
  • Dec 30, 2023 8:15am Dec 30, 2023 8:15am
Found this blog in FTMO website,
Really worth a read!

this one is a good summary of one of my favorites books which I will certainly read again in next days
trqding in the zone, mark douglas
https://ftmo.com/en/how-to-trade-in-the-zone/

this other explain a good point about psychological aspects in trading small accounts
https://ftmo.com/en/you-cant-expect-...small-account/
90% of traders use TA, indicators and prediction
  • #77
  • Dec 31, 2023 5:20pm Dec 31, 2023 5:20pm
Quoting aa4fx
{quote} You are missing one important step, that you are mixing the day you are funded with the value of the fee of 400$ In order to make 200$ in a day and have them transferred into your account, you need to pass 2 challenges. While passing those challenges the 400$ fee could grow to the value of an real account with a balance bigger than the daily dd limit of 5k. How, below is how, but we'll forget this aspect for the moment as we are about to be very rich, at least on paper if we make those 200$ as mentioned. Answer: simple, in only 123 days...
I have done my studies in the holidays.

1.One needs a demo account resettable every day or every week ( atleast ) 5000 $ account.

2. A real money account for 500 $.

3. Trade in demo account, maximum lot size 1.0

4. Copy demo account trades to real money account. Use a trade copier. I
When you use trade copier, the lot size multilpication will be according to account balance in the receiver account.

( If you prefer to copy the trades to prop account, you must use proper multiplication facotor based on prop account capital )

5. Target is 20 pips only per day. In otherwords, 200 $ in demo account.

6 . The copier does the rest in real money account, and it grows automatically.
Intraday only.
  • #78
  • Jan 1, 2024 1:34am Jan 1, 2024 1:34am
Quoting Thomas.
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...
*truly.
All you touch and all you see, is all your life will ever be.
  • #79
  • Jan 1, 2024 4:02am Jan 1, 2024 4:02am
Quoting navk
{quote} I have done my studies in the holidays. 1.One needs a demo account resettable every day or every week ( atleast ) 5000 $ account. 2. A real money account for 500 $. 3. Trade in demo account, maximum lot size 1.0 4. Copy demo account trades to real money account. Use a trade copier. I When you use trade copier, the lot size multilpication will be according to account balance in the receiver account. ( If you prefer to copy the trades to prop account, you must use proper multiplication facotor based on prop account capital ) 5. Target is 20...
Exactly!

Small comment on:
3) no one stops the trader to trade 2lot or 3lot or … but should not go under 0.1lot in a single trade because the risk will no longer be 1:1 between the accounts on the trade that is open

4) indeed, copy into prop account, the risk should be adjusted and not 1:1! Super important!

interesting those 20 pips to make, that could happen at any time, even if let say the trader open 1lot - and is wrong, even 100 pips or 200pips, the account is not lost, and when he marks 20 pips -> close the trade, reset-> new step.
and could have several batches of trades, one every day, less volume = less money, … like a dummy trade placed - buy / sell … maybe a strategy could be set in place. Some calculations on the loosing side / exposure should be made too.
  • #80
  • Edited 11:05am Jan 2, 2024 8:38am | Edited 11:05am
Quoting aa4fx
{quote} Exactly! Small comment on: 3) no one stops the trader to trade 2lot or 3lot or … but should not go under 0.1lot in a single trade because the risk will no longer be 1:1 between the accounts on the trade that is open 4) indeed, copy into prop account, the risk should be adjusted and not 1:1! Super important! interesting those 20 pips to make, that could happen at any time, even if let say the trader open 1lot - and is wrong, even 100 pips or 200pips, the account is not lost, and when he marks 20 pips -> close the trade, reset-> new step....
I have started with real money account today.

Just 481 $.

Let us see how it goes.

First day, made 12 % ( sorry, 24 % made )


No reason to trade anymore.
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