Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
Given the stringent rules, for almost all the customers of these firms, there never is a payout. So, if in effect, most people are paying to sim trade.
This is a lot like a carnival game: sure some people can throw the ball into the milk bottle and win the giant stuffed animal, but most people just waste money trying in vain.
Thanks for clarifying your point. I was scratching my head about it, but now I understand, and semi-agree. (Which means semi-disagree, of course, but not entirely.)
I would state the same facts somewhat differently. Most people are not paying just to be able to sim trade. They are hoping to strike it rich, and they are paying for that. As a rule, they aren't going to, because they don't realize that, like most others who attempt to get rich from trading, the odds do not favor them. They overestimate their prospects and their trading skill, and underestimate their competition.
I personally do not think that the rules are generally that terrible. Take a look at what you have to do: basically, just not lose too much. There is some intense criticism of how unfair some rules are, often from the people who lost under them. I do not think I am too cynical to think many would have lost their shirts if they had been trading their own money in their own accounts with their own rules too. I think they would have just forgiven themselves and pumped more money in. Which, I expect, we have all done.
But with that said, I do pretty much agree with your assessment of the likelihood of success. I don't think the rules are horribly unfair. I just don't think the traders are usually ready for what they are attempting. Reading a lot of trade journals, I can tell you how many consistently follow even their own rules and stated practices: few. And it's another question whether those practices actually work. Not every method does, even if it is actually followed without the trader going off the rails emotionally, which very often happens.
In general, I think most will be better off trading micros with very small size in their own accounts, but a trader is going to take their lumps then, too. I don't think it's a matter of unfair rules, although it is possible to try to parse out one set of rules vs. another, and some may be better, some worse. I think the rules that are the most difficult are those of arithmetic: losses add up.
My point is that it's not all that easy. There can be discussion about whether to trade pure sim, or your own account with small size, or try one of the funding companies, or anything else, but it is going to be hard to hit that milk bottle, in all cases. I just hope that traders will make more realistic self-assessments as they try to decide what to do about it.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
Trading: CME Futures & US Treasury Bonds Futures (week) and Bitcoin (week-end)
Posts: 88 since Feb 2021
Thanks Given: 95
Thanks Received: 65
It took a little less than 48 hours.
It's "included" in a $88/month maintenance fee.
I have access to CME, CBOT, NYMEX and COMEX top of book.
So you were right on all accounts it's a sim you get paid for.
I actually prefer it that way considering all this, it reduces the monthly cost to access a paid sim, your orders have no impact on the market which is mainly a good thing as I mainly use limit orders.
My concern was that in the case "funded" accounts collective payouts exceeded the company's monthly income generated through reset fees, maintenance fees and 80/20 percent split, how would they be able to payout everyone? I understand that is their biggest risk.
I just hope this doesn't happen before I funnel my profits into my personal trading account.
An understandable concern. I think the main answers to this are (i) that it almost never happens, because so few pass anyway, and (ii) that they can (and some do) offset their own net liabilities arising from their "funded" traders in an underlying market so they don't have to worry about it (this is certainly FTMO's model, and I strongly suspect they're not alone).
I think it's probably, effectively, their only risk (rare though it is).
Good luck playing on, and withdrawing some profits!
Don't get me wrong, I agree with you, I have no objection to sim accounts in general, it is usually faster to set up and cheaper to trade than a real account, so has benefits for the trader. There are also obvious benefits for the company not losing real money on those that draw down the account.
No specific comment on the funding company you have chosen as I haven't closely looked through their site, but I do think a company should be very clear whether an account is sim or not and clearly lay out all the details as some people feel strongly about sim funded accounts.
Looking at the LeeLoo review thread here it began in May 2019, so they have been around at least that long so I doubt they are suddenly going to go broke. Especially since I believe a lot of trading companies did well during the pandemic with the public suddenly at home looking for extra income, and often having support checks to spend. And as a business they choose to use sim accounts which must be because it costs them less in losses that can then offset the less frequent profitable traders they pay out themselves.
I know one company has a $5000 max balance for their sim accounts, if you reach that then you are moved on to a real account, as Tymbeline says, I would imagine any company that doesn't do that would certainly do something to match profits and balance their books if they had a trader that was consistently profitable in a sim funded account.
All these companies have Risk Managers but as the trader's risk is programmed in to a computer and will limit maximum contract size or maximum drawdown automatically, it is the company's risk they are managing.
So personally I wouldn't become a little nervous until I was consistently making larger and larger sim profits, or holding a large sim account balance, but as Tymbeline also said, if you're profitable, take out some of those profits as you go along to be on the safe side.
And echoing others, well done on getting funded, good luck and trade well.
You do not win as a trader, you just get to play again the next day. If that game doesn’t appeal to you then you should not trade. Gary Norden
If some of these firms have funded traders actually just trading on sim, it seems like a matter of time before some event wipes them out. A lot of forex brokers were wiped during the Swiss Franc peg issue some years back, and could not pay out their customers.
As of today, there are quite of few props out there and their drawdowns differ from each other. Some even have a different name for drawdown like "trailing threshold" or something like that!
They all use 3 different types of drawdowns:
- Live drawdown
- End of Trade (EOT) drawdown
- End of Day (EOD) drawdown
The most dangerous is the Live one and should be a complete "NO NO" for any trader wanting to join of these companies. As your drawdown gets updated as the market goes up, for example if you up 30 tick and the market crashes down, and you end up closing the trade at 10 ticks of profit, guess what your drawdown is 250 dollars shorter now if you are trading the ES.
With EOT your drawdown gets updated at the end of each trade
With EOD your drawdown gets updated at the end of each trading day (at 5pm eastern time)
It is obvious that the best plan is EOD.
The other thing you want to stay away from is something called the "Consistency Rule", by all means do not join any prop with this rule. This means even if you meet your target they might disqualify you if they feel you broke this rule. The markets are too inconsistent and trading with this rule is like have a shotgun pointing at you. Stay away.
The only two companies that I'm aware that have EOD drawdown and that do not have a "Consistency Rule" are TST and Uprofit Trader. These are the only ones I would consider joining if I was looking to join one!
