The way how majority of prop firms likely operate (?)

[McQuant]

I've been long time very skeptical about so called prop firms. They came from nowhere, usually found by unknown people in trading community (even by university students! ), pretending (without any evidence) to have multimillion dollars of capital for traders and only one thing to be funded by them is pay small fee and that's it.

Recently there were a case with Funding Talent prop company which was investigated by Nova Scotia's authorities [1]. The case disclosed truth about how majority of so called prop. firms really operates.

The whole business is based on lie of having capital to fund traders. But the only money they manage comes from fees.

I strongly believe this business needs some sort of regulation.
[1] 2021-03-26 ForexTips101 Ltd et al Decision.pdf

 

[McQuant]

2021-03-26 ForexTips101 Ltd et al Decision.pdf

Is anybody surprised the whole business is based on fees and not backed by real capital? Once authorities start taking care, suddenly it's completely different business...

"A member can earn credits and take a portion of those credits out as cash which is funded through subscription fees collected from other Members" (see h point below)

In the Ghaney Affidavit, Ghaney represented that:

a. the Company is an online pay-to-play learning platform for Members who want to play and learn about retail investing;​

b. none of the Accounts contain real dollars and no funds are ever deposited or withdrawn from the Accounts;​

c. Members who play within the Rules set by the Company and generate fictitious profits are paid a “Talent Bonus” which is paid from revenue generated through subscription fees;​

d. the real accounts do not contain real dollars. They are also simulated accounts and there is no real trading conducted in these accounts;​

e. Members using any type of account are never in the real market;​

f. Members are never provided with real money in which to trade and all trades are conducted on demo accounts offered by brokerages that the Company has chosen;​

g. for a subscription fee, a Member has access to what is akin to “monopoly money” to trade with on a simulated market; and​

h. there is no “profit sharing” of any proceeds from any real world trades. A member can earn credits and take a portion of those credits out as cash which is funded through subscription fees collected from other Members.​

 

[CavaliereVerde]

@McQuant
Filtering threads by number of comments you can find some old gems:
->https://www.trade2win.com/threads/top-step-trader.176392/page-7
TST is the original "game prop firm".
Do you know of any REAL prop firm?
IMO real prop firms are only hedge funds, they employ some traders and mix their results to grow the fund, with a public trackrecord and all required registrations.

 

[IlIlIlIlI]

@McQuant
Filtering threads by number of comments you can find some old gems:
->https://www.trade2win.com/threads/top-step-trader.176392/page-7
TST is the original "game prop firm".
Do you know of any REAL prop firm?
IMO real prop firms are only hedge funds, they employ some traders and mix their results to grow the fund, with a public trackrecord and all required registrations.

https://www.ripoffreport.com/reports/wwwtopsteptradercom/internet/wwwtopsteptradercom-mike-patak-aka-nebraska-they-make-you-pay-over-and-over-again-for-co-840089

Edit:
They are renamed to TOPSTEPFUNDED LLC, the address is a law firm in Chicago.
Source: https://lei.report/LEI/549300E6CR2O10LCKS89

 

[IlIlIlIlI]

Do you know of any REAL prop firm?

Looks like there is one:
https://www.buoytrade.com/buoy-paylater

But:
The main difference is that you can trade there only with a 1:20 or 1:10 (CFDs) leverage while FTMO offers 1:100 leverage. That makes Buoytrade's 45 days period much tougher than the 30 days at FTMO.
They don't support demo accounts so interested traders have to read the conditions exactly.

 

[McQuant]

Do you know of any REAL prop firm?

How about Lepus Proprietary Trading? They seem to be a real prop firm.

 

[IlIlIlIlI]

How about Lepus Proprietary Trading? They seem to be a real prop firm.

If you don't need their trading courses and mentoring ..

.. and you are patient with a 2k account, it could be a nice alternative.

But you have to trade your own A$ 2k at Multibank (which IMO is not the best broker, but better for sure in this case).
I'm sure they get a affiliate commision there

As far as I got it in a quick overview, they don't take fees if you don't need their training program.

It would be interesting if anybody tried it out and to read the experience.

 

[TickCOM]

My experience is 99% of trading courses are useless, the methods they use are too complicated and far away from how profitable traders do. But there are some having a free trial one can attend to get some ideas for your own trading. But many of those posting a useless chart full of lines, hot zones, 8 moving averages etc actually believe what they teach/post is useful. Profitable traders never tell what they do, never post trading charts or make courses, they are too busy trading.

The best strategies are still those you develop your self.

 

[Emanita]

In this video, this guy explain how rich these companies are.

Their business are very profitable. That’s why they can pay the winning trader easily.

 

[TickCOM]

It has always been the smart players outsmart the lazy, naive and uninformed.
There is this post in the commercial section "Beta testers needed for new stock scanner/screener software", not a single comment..... The most important in trading is to stay updated on new tools and ideas.

 

[McQuant]

My experience is 99% of trading courses are useless, the methods they use are too complicated and far away from how profitable traders do. But there are some having a free trial one can attend to get some ideas for your own trading. But many of those posting a useless chart full of lines, hot zones, 8 moving averages etc actually believe what they teach/post is useful. Profitable traders never tell what they do, never post trading charts or make courses, they are too busy trading.

The best strategies are still those you develop your self.

Even though I sort of agree with your opinion the thread's subject is not about courses but about "business" called prop firms in which so-called pro firms scout wannabe traders and operate rather like the Ponzi scheme.
But yeah both businesses, course and prop, is overcrowded with a lot of scammers.

 

[0FXTrader0]

Prop trading used to be about getting a seat in a London office with the fastest access to the futures market now its about companies taking advantage of newbies putting them on demo accounts charging fees so they can become the fastest growing companies in europe. The fee is a lot less than the monthly desk fees that proper prop firms charged but that does not make the offer of any value

 

[CavaliereVerde]

@Forexintradiadarwin
Here you can find other info about FTMO and similar businesses.

 

[angelandrews]

Prop trading firms are doing no good to the newbies and some of them are just aiming at earning in any way possible due to which their user base is getting affected.

 

[richerichdersons]

I personally believe that prop firms offer several advantages over retail trading. You get access to more money than you would have if you were a retail trader. The added benefit is the proper training that you get so that you are prepared to trade in the live market.

 

[McQuant]

Are prop trading firms any good? They are throwing their hands everywhere and that's why people are losing interest in them

Those firms we see throwing their hands everywhere, as you said, are rather casinos than serious prop firm businesses. I guess that sooner or later regulators will act.

 

[Parky]

It is unfair to lump all Prop shops into one bucket. As TickCom said above, anyone offering "trainee trader courses" especially those expecting you to pay for them, are not worth looking at. But there are prop shops that have been around since the trading floors closed, that are reguated, are members of the exchanges that they trade on and do offer valuable services. If you are a proffessional trader, looking for a trading room with other professional traders, that offers IT services, compliance services, clearing and settlement services and interactive risk management services then, they are out there.