I can certainly understand the need for a direct funding model. Just not the way that they are structured now. Currently, there is no real benefit to the trader over trading a personal account so long as you have access to a good broker with reasonable leverage etc..
The difficulty is figuring out what that could look like, since the firm would need to minimize risk considerably, given that there would be no challenge or assessment involved.
Maybe one alternative could be a hybrid model that involves having traders trade on a demo account for a month, and if they can trade within the rules without violating draw-down, then the profit splits begin with reasonable draw-down allowance. This way, the trader can earn from day one and the firm would not have to risk anything upfront and could also ensure that they are not backing a loser.
Not sure if this model could work unless the firm has other models that bring in lots of revenue (like challenge models). I saw a firm recently with a model similar to this, where traders start on a demo account, but could still earn a percentage of the profits that they make during their challenge. I would think that a firm would need to be seeing a very nice income stream from failed challenges (or subscription-based models) in order to support something like this, though.
The difficulty is figuring out what that could look like, since the firm would need to minimize risk considerably, given that there would be no challenge or assessment involved.
Maybe one alternative could be a hybrid model that involves having traders trade on a demo account for a month, and if they can trade within the rules without violating draw-down, then the profit splits begin with reasonable draw-down allowance. This way, the trader can earn from day one and the firm would not have to risk anything upfront and could also ensure that they are not backing a loser.
Not sure if this model could work unless the firm has other models that bring in lots of revenue (like challenge models). I saw a firm recently with a model similar to this, where traders start on a demo account, but could still earn a percentage of the profits that they make during their challenge. I would think that a firm would need to be seeing a very nice income stream from failed challenges (or subscription-based models) in order to support something like this, though.
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