Alternatives to Darwinex

[CavaliereVerde]

@Naragot
You have been using Alpari for many years, what is your opinion compared to Darwinex ?

 

[McQuant]

Hi @itstradingtime, just wondering how you are getting on with FTMO? I'm thinking of going for it and trying to find a sensible opinion about the company and the challenge?

My personal issue with so called prop firms (FTMO, The5ers, t4t etc.) is that they actually are not a prop firm at all but rather companies running "pyramid scheme" business. They simply profit from fees. Unsuccessful traders pay out the successful ones. There is no real capital behind them.
Does anyone seriously think that 80/20 payout model in trader's favour can be real business model for prop company being backed with savvy capital?

To me it's dubious, immoral business model.

@LongVision
What can you tell us about Axitrader+Psyquation?

Axitrader + Psy have got different business model much more realistic.

Darwinex model sounds the best one for me, I've been following Darwinex from the beginning (from times when they were only on Stocktwits) however my trading competences are not good enough to create my own Darwin .

 

[LongVision]

I personally have problems with most of so called prop firms (FTMO, The5ers, t4t etc.). They actually are not a prop firm at all but rather companies running "pyramid scheme" business. They simply profit from fees. Unsuccessful traders pay out the successful ones.

I agree, They actually are not a prop firm but I can't call this pyramid scheme as long as they are paying winners, Pyramid schemes are unsustainable but this a profitable business model for these so-called prop firms.

 

[McQuant]

I agree, They actually are not a prop firm but I can't call this pyramid scheme as long as they are paying winners, Pyramid schemes are unsustainable but this a profitable business model for these so-called prop firms.

Hypothetically it's sustainable as far as there is more eager and unsuccessful payers then successful payees. That said, you are right, there is one born every minute

 

[CavaliereVerde]

Exact even if they pay their business model is based on losers.
It is very sustainable because the supply of losers is unlimited.
Exactly like casinos and brokers.
Maybe they will change if they find real winners.
Darwinex is a mixed model because with Darwinia they lose money paying winners but they gather good trackrecords that attract private investors with real money, and they make money with that volume.

 

[IlIlIlIlI]

My personal issue with so called prop firms (FTMO, The5ers, t4t etc.) is that they actually are not a prop firm at all but rather companies running "pyramid scheme" business. They simply profit from fees. Unsuccessful traders pay out the successful ones. There is no real capital behind them.
Does anyone seriously think that 80/20 payout model in trader's favour can be real business model for prop company being backed with savvy capital?

To me it's dubious, immoral business model.

First: I accept what you wrote as your opinion, the same is with the author of your link.

As long as you cannot prove it, IMO it is an immoral accusation.
It might be easier for you than most of others here as you should speak their language.

Did you ever contact them?
Can you provide a link where czech companies have to publish their financial business reports?
I know where to search for German, English and Slowakian companies, but unfortunately not for Czech companies. ARES currently does not give answers, only errors.
Did you ever calculate how much fees they must have generated to run their business since years? I'm sure the fees are important for them, but I would not say their award winning business model is immoral before I can prove it.

They run 3 companies in Prague, and you might be right for one or maybe 2 of them.
As you didn't ask, you can't have knowledge about their investors in the traders account.

IMO it is naive to believe that they have to fund a 100k trader account the same way a private trader has to do. There are a lot of other options -including Darwinex' institutional accounts - to follow a traders signal with much less money.

The funny thing with it for me is that nobody thinks about an existance of their investors.
I'm sure there are investors who prefer a trader who is kicked out of the game when he makes 10% DD and had proven that he can hold rules under stress and get the high results (10% profit in 30 days). I'm sure the one or other investor of their famous Darwin HFD would have been happy if Darwinex would have suspended it when it reached 10% DD.

 

[McQuant]

Look, I've been looking on them for quite long time and based on their story lines I see they are not financial company whatsoever:

1. 2 students during university studies have founded company for evaluation of traders. Meaning, they created system that can calculate similar numbers and statistics like fxblue, myfxbook etc. There were not any intention of capital management, funded accounts, or anything similar. Just trading evaluation. So far so good.
   
   But then:
   
   
2. FTMO z.s. was founded, its line of business is "Education on trading Forex and other financial assets". This is only one company that mentions trading in the line of business. This one is in liquidation though.
3. They started to sell "funded accounts" without any legal compliance or permission.
4. Last year they created several new companies. All of them have "Offices and other reality rentals" on the first place as main line of the business,. They also have got registration for doing everything else which is not regulated (which means e.g. common street shops). I'm sorry, but this is really weird. Reality company which offers "funded accounts"?
5. Here you go your link about all FTMO businesses. No single financial statements published from them for any company. But since all of them were registered at 2020 it not a problem yet. Majority of the companies have only symbolic equity capital ~10-50k which is ~500 - 2000 USD. Only FTMO Holding a.s. has equity capital of 2.000.000 CZK ~ 90.000USD. but his one was founded as ready made company called Sandersone Corp a.s. so FTMO did not really pay 90.000 USD of equity capital but likely its fraction.
6. All their so called funded accounts run on DEMO platform. So technically, if they provide "signals" to any fund or investor they must do it through several server layers. This is nonsense. Specifically in financial industry and trading where every millisecond counts they use demo server from LMAX to distribute signals to real servers of the investor?

From all of this I can see only one intention which is to stay under the radar of regulators. They closed one company that had been mentioning trading. From 2020 they only run common commercial and reality companies which do not have any connection with trading, finance, and-or managing funds. Last but not least, they refuse to disclose the fund they are providing traders for with note that it's trade secret (would you expect anything else though?).

From all above FTMO to me is not transparent, have not got any financial line of business (if we won't count reality as financial type of business).

 

[McQuant]

FTMO CHALLENGE - FF Trader s.r.o. Trademark Registration

Trademark registration by FF Trader s.r.o. for the trademark FTMO CHALLENGE.

uspto.report

Mark For: FTMO CHALLENGE™ trademark registration is intended to cover the categories of educational services, namely, providing web-based virtual training in the field of finance, trading, and exchange markets; educational services, namely, providing online courses in the field of finance, trading, and exchange markets; Education services, namely, an online course and evaluation in the fields of trading, securities, financial markets, and options; educational services, namely, providing online webinars, videos and articles
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By emphasizing words like education on every material you distribute then even US regulator won't care about you ....

 

[McQuant]

Technology Fast 50 CE 2019 Results -
1 FF Trader FINTECH 1 465% Czech Republic - FF Trader s.r.o. developed an online training platform for traders on financial markets. The platform is built to educate clients about proper risk management techniques and to motivate them to be disciplined in trading. Otakar Šuffner, Marek Vašíček www.ftmo.com; www.fftrader.cz Founded: 2015 Last Year’s Rank: New

Technology Fast 50 CE 2020 Result -
FTMO (FF Trader s.r.o.) FINTECH 2 356% Czech Republic FF Trader s.r.o. developed an online training platform FTMO for traders on financial markets. The platform is built to educate clients about proper risk management techniques and to motivate them to be disciplined in trading. For those who pass the evaluation process, the company offers attractive cooperation with its own trading company. Otakar Šuffner www.ftmo.com

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There is no evidence any of such company really exists though. I saw couple of videos with funded traders and all mentioned they are funded and payed by FTMO. But FTMO itself does not hold any legal permission to do such business like trading, finance/account management, simply nothing like that. So which company it really is? Since it's nontransparent hence I think they pay successful traders by collecting money from fees of unsuccessful ones.

 

[IlIlIlIlI]

Look, I've been looking on them for quite long time and FTMO and based on their story lines I see they are not financial company whatsoever:

1. 2 students at the high school have founded company for evaluation of traders. Meaning, they created system that can calculate similar numbers and statistics like fxblue, myfxbook etc. There were not any intention of capital management, funded accounts, or anything similar. Just trading evaluation. So far so good.
   
   But then:
   
   
2. FTMO z.s. was founded, its line of business is "Education on trading Forex and other financial assets". This is only one company that mentions trading in the line of business. This one is in liquidation though.
3. They started to sell "founded accounts" without any legal compliance or permission.
4. Last year they created several new companies. All of them have "Offices and other reality rentals" on the first place as main line of the business,. They also have got registration for doing everything else which is not regulated (which means e.g. common street shops). I'm sorry, but this is really weird. Reality company which offers "funded accounts"?
5. Here you go your link about all FTMO businesses. No single financial statements published from them for any company. But since all of them were registered at 2020 it not a problem yet. Majority of the companies have only symbolic equity capital ~10-50k which is ~500 - 2000 USD. Only FTMO Holding a.s. has equity capital of 2.000.000 CZK ~ 90.000USD. but his one was founded as ready made company called Sandersone Corp a.s. so FTMO did not really pay 90.000 USD of equity capital but rather its fraction.
6. All their so called funded accounts run on DEMO platform. So technically, if they provide "signals" to any fund or investor they must do it through several server layers. This is nonsense. Specifically in financial industry and trading where every millisecond counts they use demo server from LMAX to distribute signals to real servers of the investor?

From all of this I can see only one intention which is to stay under the radar of regulators. They closed one company that had been mentioning trading. From 2020 they only run common commercial and reality companies which do not have any connection with trading, finance, and-or managing funds. Last but not least, they refuse to disclose the fund they are providing traders for with note that it's trade secret (would you expect anything else though?).

From all above FTMO to me is not transparent, have not got any financial line of business (if we won't count reality as financial type of business) and as such .

Wow - thank really a lot for this answer. I didn't expect such a quality. Great, really great.

I find 7 FTMO Companies under the same adress in Prague, including 2 trading companies and a hotel company and the first one will be closed if I got it right.
The Trading companies like FTMO Trading US s.r.o. are the interesting ones, but of course there is nothing disclosed which could give a hint and I assume they would need a licence in the Czech republic before they can start trading.

What I can fully agree - transparency is not given. It is also not a quality sign if companies are closed within 2 years as the first one.

 

[McQuant]

I assume they would need a licence in the Czech republic before they can start trading.

Yes. If they would be anyhow engaged in the trading business, advisory services or account management services they would need to be at least registered entity by Czech National Bank (try searching for FTMO or FF Trader, none is regulated or registered entity).
On the other hand FTMO representative always emphasize they do not need to be regulated, because they do not provide any services which require regulation.

If it can be considered as crystal clear business is on everyone's decision though.

 

[IlIlIlIlI]

On the other hand FTMO representative always emphasize they do not need to be regulated, because they do not provide any services which require regulation.

That is correct with their business model, also in other countries including Germany. They accept an invoice for a service like signal provider service. That is not a financial service and therefore there is no regulation required.

But - the money they pay to the successful traders needs a legal source.

 

[McQuant]

That is correct with their business model, also in other countries including Germany. They accept an invoice for a service like signal provider service. That is not a financial service and therefore there is no regulation required.

But - the money they pay to the successful traders needs a legal source.

Genau

 

[IlIlIlIlI]

The platform is built to educate clients about proper risk management techniques and to motivate them to be disciplined in trading.

Their "analysis" ...

for this trial account

(which I burned intentionally because I wanted to know how and when they execute margin calls)

 

[trendie]

I have just noticed on FTMOs website that they have made the Verification process less onerous.

For the 50K Challenge as example;
The Verification appears to have been changed from Profit 5K in 30 days to 2.5K Profit in 60 days. (based on the "strike out" and new levels in green)

FTMO would appear to think that the Challenge and Verification are too demanding and have eased off for the Verification stage, for new entrants.
If they are a bit dodgy, or even a pyramid, why put themselves in a situation to have to be more likely to pay out?

FTMO - Modern Prop Trading

Trusted modern prop trading firm. Looking for serious traders. Start trading with up to $200,000 on a demo FTMO Account.

ftmo.com

 

[IlIlIlIlI]

I have just noticed on FTMOs website that they have made the Verification process less onerous.

For the 50K Challenge as example;
The Verification appears to have been changed from Profit 5K in 30 days to 2.5K Profit in 60 days. (based on the "strike out" and new levels in green)

FTMO would appear to think that the Challenge and Verification are too demanding and have eased off for the Verification stage, for new entrants.
If they are a bit dodgy, or even a pyramid, why put themselves in a situation to have to be more likely to pay out?

FTMO - Modern Prop Trading

Trusted modern prop trading firm. Looking for serious traders. Start trading with up to $200,000 on a demo FTMO Account.

ftmo.com

That happened last year if I remember it right.
The last change they made was adding the 200k account and reducing the number of accounts with them from 3 to 2 simultanously.

I've never read that they refused a payout besides the rules were broken. From time to time I look for that at their FPA record.

So I think the typical successful FTMO trader would pass the challenge in a lucky month, pass the verification (with reduced requirements) in one of the following month and will trade very carefully to make about 1-2% of the account size per month where he might get less than 1k for some months - until any rule (mostly the daily loss rule) is broken by the market behaviour.

 

[McQuant]

The "survivorship" of successful traders is unknown variable in the equation. But I think similarly to what @IlIlIlIlI expressed above.
I do not think that most of successful traders survive more than 2-3 months. The FTMO program is IMO intentionally designed for eager traders who wants to be "rich" quickly, and it has its own consequences.

 

[McQuant]

Here is the example of how simply can be eliminated the doubts about source of the capital and its possible existence (at least in my amateurish eyes). The luxtradingfirm.com claims to be under the patronage by someone from regulated cheltonwealth.com - the "bigger boy" in the role of managing partner.
I do not know if it's true or not, it can be marketing of course (but hardly without cheltonwealth awareness and without FCA knowing).
IMO it looks more credible then majority of other "prop-firms" who's capital provider is "business secret" (hm, its abbreviation is BS ).
That said, I do not know facts about UK financial market hence I would appreciate if someone from UK can do some due diligence in the Home Office registers though.

(I'm neither affiliated nor client of lux...)

 

[IlIlIlIlI]

Here is the example of how simply can be eliminated the doubts about source of the capital and its possible existence (at least in my amateurish eyes). The luxtradingfirm.com claims to be under the patronage by someone from regulated cheltonwealth.com - the "bigger boy" in the role of managing partner.
I do not know if it's true or not, it can be marketing of course (but hardly without cheltonwealth awareness and without FCA knowing).
IMO it looks more credible then majority of other "prop-firms" who's capital provider is "business secret" (hm, its abbreviation is BS ).
That said, I do not know facts about UK financial market hence I would appreciate if someone from UK can do some due diligence in the Home Office registers though.

(I'm neither affiliated nor client of lux...)

I wonder whether they ever need a trading company with a 4% DD rule - and you have to make 6% profit to pass the evaluation. If I got it right you need 10% profit - with 4% DD on the initial balance - to be paid.
I don't know any trading account at Darwinex which could hold these rules.

 

[McQuant]

The ~4 % DD limit is very widespread requirement in this business, but the reason why exactly 4% (why not 6%, 8%, or 3%) is not clear to me. There might be some sophisticated rationale logic behind that

Darwinex and PSY are different since trader require to be trading his own capital.