DislikedOn my funded accounts, all of my risk is based on available DD.Ignored
Unfortunately, most of the people that are signing up for these programs lack the proper experience, it seems. I would even say many of them are complete amateurs, just based on the questions that they are asking.
It does not help that these prop firms are setting a very irresponsible bar by requiring traders to generate 100% profit in 30 days. I say 100%, because your target is usually 100% of your overall draw-down allowance. And although flipping an account may be easy, it is not something that you should be aiming for because it will not be sustainable over the long-term. No professional trader would ever consider trading this way.
If you have a small, just-for-fun, account that you trade on the side, then sure, go for it. The odds are easily much better than what you might see at the casino on the weekends. But if you are hoping to trade for the long-term, then you need to learn how to manage risk properly.
I would venture to guess that most people that are getting funded, are losing their accounts shortly thereafter, because they are not practicing proper risk management. They are probably risking 1.5% to 3% on their single 200K account, thinking that they are going to make a great living, making 1K to 2K/day after taxes. Or, even worse, they are trading in the same way that they traded their challenge. But, as previously pointed out, the 1.5% to 3% should be based on draw-down allowance, because that is really what you are working with.
It is only a matter of time until the account gets blown.
What people should be doing (in my opinion), is this (just one example):
Get as many 200K accounts as you can. Try to aim for having at least 10 accounts. Recycle the refunded fee to acquire more accounts if your capital is limited. If you have the funds and the ability/confidence, trade multiple challenges at once, using a trade copier. Once you have multiple, funded accounts, trade the accounts using a reliable trade copier.
Start small. Instead of aiming for 3K profit, per account, per day, aim instead for about $300 per account, per day. You can still make your 3K/day (or 1K after-taxes) profit, but without taking on nearly as much risk. You allow yourself a ton of breathing room in the event that you hit a losing streak.
You can even transition to trading the accounts individually in order to mitigate risk if ever you take on too much draw-down and do not want to risk losing all of your accounts. Hopefully, you would not get close to doing that, though.
Between MFF and FTMO, you can have (5) 200K accounts. The other five accounts can come from other firms of your choosing. The more accounts that you have, and the more firms that you have accounts with, the more that you mitigate your overall risk.
You can elect to trade your master account on a VPN for additional protection, and just use an automated TP/SL to ensure that all of your slave accounts are protected in the event that something happens.
It might take some time to get this going, but the time and effort will be very worth it. Some of these firms have 5 or less required trading days now, so you can secure accounts very quickly. If ever you lose a challenge, treat it as a tax write-off.
It really irks me when I see some of these firms showcasing accounts that are generating a crazy amount of profits in a single month, as if it is something impressive. It is not impressive. It is irresponsible and reckless, and it sends a poor message.
Taking profit from the market is easy. Even flipping an account is easy. But learning how to not give it all back is the difficult part, and it is what separates seasoned traders from amateur traders. That may sound harsh, but it is the truth.
It is true, that only a small percentage of people are successful in trading. That is not because it requires genius-level thinking or because trading is so complex and difficult to learn etc.. Most people do not fail at trading. Most people quit at trading. That is the simple truth. The statistics are representative of that. People simply do not invest the proper amount of time to learn how to trade properly, with good risk-management, and they quit before they ever learn what is needed.
People pay a lot more money and spend a lot more time going after college degrees that yield them only a small fraction of the returns that trading can offer, where they end up having to work long hours, making someone else a lot of money, usually stuck in one place, waiting for their vacation time to roll around so that they can travel.
If someone asked you if you were willing to invest 4 years of your life, learning how to trade, but at the end of it all, you would be able to pull money out of the markets like an ATM machine, and never have to worry about money again, would you do it?
Unfortunately, most people do not think this way. They want to be rewarded as quickly as possible, making the maximum amount of profits as possible.
Either way, there has never been a better time in history to be a trader.
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