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  • #13,361
  • Jan 6, 2023 12:12pm Jan 6, 2023 12:12pm
For most traders, even 5% gain a month on their personal account is beyond their ability. So trying to constantly hit 10% gain when you can't lose more then 5% or even 8% at any time is incredibly difficult. And if you hit to 3 or 4% loss, trying to recover again is practically impossible. That is the sorry truth especially with the instant funded model.

The only way to succeed is to trade very small lot size and try to build the account over the long term but most of us don't have the patience required.
  • #13,362
  • Jan 6, 2023 12:13pm Jan 6, 2023 12:13pm
Quoting pipmaster77
{quote} That $1250 account with 4% DD is really a $50 account, it cost you $90........IT'S NOT A GOOD DEAL. You see, your risk is not based on the "equity", that amount is meaningless, your risk needs to be based on your max loss. I have been trading with props for 3 years, unless you are getting DD 5x or more what your fee is......better off in a personal account. Instant funding is the opposite, fee is higher than max loss allowed, you actually start losing money from day 1.
I think I will start a prop firm with instant funding where I will provide 1 billion USD capital per trader.
I will charge 10.000 USD which is complete bargain for such an amount.

DD is 1.000 USD but that's a small detail. Who cares about that when you can have 1 billion to invest ?
  • #13,363
  • Jan 6, 2023 12:26pm Jan 6, 2023 12:26pm
Quoting Bizziebee
For most traders, even 5% gain a month on their personal account is beyond their ability. So trying to constantly hit 10% gain when you can't lose more then 5% or even 8% at any time is incredibly difficult. And if you hit to 3 or 4% loss, trying to recover again is practically impossible. That is the sorry truth especially with the instant funded model. The only way to succeed is to trade very small lot size and try to build the account over the long term but most of us don't have the patience required.
Exactly. You need to trade very small lot size based on the DD allowed, 1% of DD allowed is equal to 1% of your ENTIRE personal account. I can give you a 1 million dollar account, if the DD is $1,000..........it is a $1,000 account for risk purposes. Therefore, any offer where your fee is equal to or more than what they are allowing you to lose offers ZERO, ZILCH, NADA value to a trader. On top, most of them have you giving up 50%.....the scaling is a facade, you are not scaling when you make 10%, you are scaling when you make 200% (10% with 5% DD)....so of course they double you, you just doubled in a personal account.
Easiest way for one to see for themselves is purchase the smallest of the instant funding so as not to waste your money, because after the experiment you will not wish to move further. Put the same exact amount as your fee in a personal account and trade them side by side......in this way, you will actually experience first hand what I am explaining.
  • #13,364
  • Jan 6, 2023 12:28pm Jan 6, 2023 12:28pm
Quoting Capablanca
{quote} I think I will start a prop firm with instant funding where I will provide 1 billion USD capital per trader. I will charge 10.000 USD which is complete bargain for such an amount. DD is 1.000 USD but that's a small detail. Who cares about that when you can have 1 billion to invest ?
Exactly. I just cannot understand why folks cannot grasp this very simple concept....here is a billion dollar account, oh, you lost $1, sorry, account violated, that was the DD allowed.
  • #13,365
  • Jan 6, 2023 12:29pm Jan 6, 2023 12:29pm
the only benefit of instant funding is supercharged leverage and ability to trade out of a drawdown. Otherwise its not really worth it .
  • #13,366
  • Edited 12:51pm Jan 6, 2023 12:35pm | Edited 12:51pm
Quoting pipmaster77
{quote} Exactly. You need to trade very small lot size based on the DD allowed, 1% of DD allowed is equal to 1% of your ENTIRE personal account. I can give you a 1 million dollar account, if the DD is $1,000..........it is a $1,000 account for risk purposes. Therefore, any offer where your fee is equal to or more than what they are allowing you to lose offers ZERO, ZILCH, NADA value to a trader. On top, most of them have you giving up 50%.....the scaling is a facade, you are not scaling when you make 10%, you are scaling when you make 200% (10%...
Okay so you trade on lets say 100k account on 10% DD. How much do you usually risk per trade? Is it around 0.4-0.6% per trade from 10 000?

EDIT: sorry 4-7% of 10 000
How to succeed in zero sum game?
  • #13,367
  • Jan 6, 2023 12:39pm Jan 6, 2023 12:39pm
Quoting pipmaster77
{quote}and that's fine.......my point is take the $90 and trade it on your own.......the outcome is the same without giving up 50% or whatever split. There is simply no advantage whatsoever to instant funding over personal. Your risk per trade is the same on $90 as it is on a $100 account. Done proving my point, it is simple math. You either get it or you waste your time with instant funding. Choice is ultimately yours. Why do you think nobody here is using any of the instant funding companies?
I think they will because many people understand that paying $500 in order to possibly get to trade a non-scaling account after 2-3 months is a bad idea. 90% of the people fail on those challenges because that's the main business idea with those prop firms.
I also find your reasoning a bit strange. The risks on all the accounts are based on max loss and profit targets. Trading my personal account from $90 to 40K with the same risk settings as on the $1250 funded account will take me 65 months. The outcome will not be the same. Looks like you might be ignoring the scaling here.
On month 6 my $90 account will be $150 and my scaled account at 40k. My expected profit on month 7 on my personal account will be $15 and on the funded account $2000 net after PF.
After around 80 months of trading the profit from my personal account will be the same as from the funded account. But during the 80 months I could have invested the 160k profits from my funded account on my personal accounts making insane profits.
  • #13,368
  • Jan 6, 2023 1:02pm Jan 6, 2023 1:02pm
A few key points that are often missed regarding instant funding models:

1. The buy-in is often not refundable, unlike challenge models. Of the models that offer refunds, they are usually impossible for most as they require you to reach your maximum scaling level as well as receive several payouts first. So, getting the refund is actually a lot harder than a 2-phase challenge account.


2. The profit split, alone, is usually enough to make it a bad deal. Of the models that offer >50%, most traders will never experience that for the same reasoning as described in point #1.


3. The time-to-live for challenge accounts is not always 2-months, as some firms offer fast-track solutions. This is one of the biggest arguments or selling points for instant-funding model advocates.


4. The scaling is usually artificial, coming from your own profit. Not only that, but the profit targets for scaling are usually 100% or more of your draw-down allowance, meaning that it is equivalent to flipping an account each time.


5. The model is usually designed to encourage keeping funds in the account, which is one of the best ways to never earn anything because you will likely blow your account first. Prop firms very much understand this.


6. The leverage offered is usually not on par with challenge models, and certainly not on par with what you can get with an offshore broker, where you would keep 100% of your profits.


7. The bigger account sizes are usually not possible without scaling. So you are basically doing multiple challenge phases whether you realize it or not.


So, even if you can argue that an instant funding model looks better than trading your own account, it is usually impossible to argue that such models are better than challenge models.
  • #13,369
  • Jan 6, 2023 1:22pm Jan 6, 2023 1:22pm
Quoting Nsak3y
A few key points that are often missed regarding instant funding models: 1. The buy-in is often not refundable, unlike challenge models. Of the models that offer refunds, they are usually impossible for most as they require you to reach your maximum scaling level as well as receive several payouts first. So, getting the refund is actually a lot harder than a 2-phase challenge account. 2. The profit split, alone, is usually enough to make it a bad deal. Of the models that offer >50%, most traders will never experience that for the same reasoning...
Each model has its benefits and drawbacks. Your strategy can also make a big difference. If you can clear the challenges within a week or two then it's not a big deal but if your strategy requires a much longer time, you might want to check some other options. One step challenge could also be a good option.
  • #13,370
  • Jan 6, 2023 1:28pm Jan 6, 2023 1:28pm
Quoting TraderTero
{quote} I think they will because many people understand that paying $500 in order to possibly get to trade a non-scaling account after 2-3 months is a bad idea. 90% of the people fail on those challenges because that's the main business idea with those prop firms. I also find your reasoning a bit strange. The risks on all the accounts are based on max loss and profit targets. Trading my personal account from $90 to 40K with the same risk settings as on the $1250 funded account will take me 65 months. The outcome will not be the same. Looks like...
Once again, you are basing targets, risk, etc. on the fake equity amount. There is no way around it........if your max loss is $100, it is the same as trading a $100 personal account. Trust me, run them side by side, you will see exactly what I mean. To scale to that 40K, you need to earn 200% several times, not 10% as the marketing trickery has you believe. You must understand you are making 10% with 5% allowable loss, in a personal account, you have 100% allowable loss, so it is the equivalent of making 200% in a personal account.
  • #13,371
  • Jan 6, 2023 1:31pm Jan 6, 2023 1:31pm
Quoting Nsak3y
A few key points that are often missed regarding instant funding models: 1. The buy-in is often not refundable, unlike challenge models. Of the models that offer refunds, they are usually impossible for most as they require you to reach your maximum scaling level as well as receive several payouts first. So, getting the refund is actually a lot harder than a 2-phase challenge account. 2. The profit split, alone, is usually enough to make it a bad deal. Of the models that offer >50%, most traders will never experience that for the same reasoning...
Thank You for posting in such a clear, concise manner.
  • #13,372
  • Jan 6, 2023 2:01pm Jan 6, 2023 2:01pm
Quoting pipmaster77
{quote} Once again, you are basing targets, risk, etc. on the fake equity amount. There is no way around it........if your max loss is $100, it is the same as trading a $100 personal account. Trust me, run them side by side, you will see exactly what I mean. To scale to that 40K, you need to earn 200% several times, not 10% as the marketing trickery has you believe. You must understand you are making 10% with 5% allowable loss, in a personal account, you have 100% allowable loss, so it is the equivalent of making 200% in a personal account.
It's not the same thing. When comparing to personal accounts, you should use the same standard. It doesn't matter if the equity is fake, real investor funds or your own. If you make a 10% loss for an investor, you can be quite sure that he walks.

10% profit of $100 is $10 and 10% of $1250 is $125. If you want to risk 100% of your own funds in order to gain 125% profit that's fine but unrealistic.
  • #13,373
  • Jan 6, 2023 2:12pm Jan 6, 2023 2:12pm
Quoting TraderTero
{quote} It's not the same thing. When comparing to personal accounts, you should use the same standard. It doesn't matter if the equity is fake, real investor funds or your own. If you make a 10% loss for an investor, you can be quite sure that he walks. 10% profit of $100 is $10 and 10% of $1250 is $125. If you want to risk 100% of your own funds in order to gain 125% profit that's fine but unrealistic.
so to make 10% of 1250, what is your risk? IT IS NOT THE SAME as the risk on making 10% of $100. You need to trade the prop account based on max loss, not the fake equity number. You truly are not getting it.
  • #13,374
  • Jan 6, 2023 2:52pm Jan 6, 2023 2:52pm
Quoting pipmaster77
{quote} so to make 10% of 1250, what is your risk? IT IS NOT THE SAME as the risk on making 10% of $100. You need to trade the prop account based on max loss, not the fake equity number. You truly are not getting it.
My risk to make 10% ($10) profit with my own equity on $100 is 100% or $10 per 1%. My risk to make 10% profit on $1250 or $125 is $100 or $2.50 per 1% after PF.

At 40k my risk is still the same $100 whereas trading my own capital will always have a 100% risk.

I understand what you are trying to say, but my point is that you should treat your own equity exactly the same way as investor funds. With your own funds you don't get cutoff at 10% so trading can be easier but if you don't apply strict rules and proper risk management to your own trading, you will be losing also.
  • #13,375
  • Jan 6, 2023 3:55pm Jan 6, 2023 3:55pm
Quoting TraderTero
{quote} My risk to make 10% ($10) profit with my own equity on $100 is 100% or $10 per 1%. My risk to make 10% profit on $1250 or $125 is $100 or $2.50 per 1% after PF. At 40k my risk is still the same $100 whereas trading my own capital will always have a 100% risk. I understand what you are trying to say, but my point is that you should treat your own equity exactly the same way as investor funds. With your own funds you don't get cutoff at 10% so trading can be easier but if you don't apply strict rules and proper risk management to your own...
OK, one more time and then I cannot continue.....this explaining the simplest of concepts OVER and OVER makes my head hurt.
1.You have a $1,250 account with 8% DD, which is $100
2. You have a $100 personal account
3. For simplicity sake, you risk 1% per trade with a 1:1 RR
4. Here is the issue.....1% of $100 is $1 you have a risk of ruin at 100 trades, 1% of $1,250 is $12.50, you have a risk of ruin of 8 trades. Therefore, if you're strategy needs a risk of ruin of 100 trades, you MUST also trade $1 per trade on the prop, even though the equity says $1,250.
5. Second issue, scaling......keeping point 4 in mind.....to make 10% to scale ($125), you will also have made $125 in the personal account. Now the personal account has $225, the prop has $2,500, but guess what? your max loss is now $200....now you can trade $2 risk, BUT you can trade $2.25 risk with your personal.
I'll take it one more level and then I sure hope you get the idea...... 10% to scale again ($250), you will have made $281 in the personal. Now the personal account has $506, the prop has $5,000, once again max loss is now $400. The personal account will continue to outpace that prop account and eventually get into thousands of dollars.
If you still cannot grasp this, not much more I can do......this is as basic as I can break it down for you.
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  • #13,376
  • Jan 6, 2023 5:41pm Jan 6, 2023 5:41pm
Quoting Fagin
{quote} I don’t like the relative trailing but it’s not really a problem for me. You do need to adjust your mindset away from other prop trading expectations though .
It's actually a big mathematical problem. Your EV is just totally different. The disadvantage of a Trailing DD is terrible on the long run.
  • #13,377
  • Jan 7, 2023 1:38am Jan 7, 2023 1:38am
Quoting Nehemah
{quote} It's actually a big mathematical problem. Your EV is just totally different. The disadvantage of a Trailing DD is terrible on the long run.
Sorry I should have also mentioned that it becomes static after the trailing period, read the programme. So it’s no problem to me at all. Once I’ve got my head around using their equity as my drawdown as the pay off for no time limit and 100% scaling, it’s good. I prefer to work out my own withdrawal plan anyway. Yes the money is there because I have made it BUT I have only made it from THEIR money.

There has to be a compromise otherwise they can’t make money and take on all the front end risk and be successful unless you go back to depending on high turnover, high failure fees driven by what is ultimately an unreasonable proposal gamed to make people having to gamble their “challenge fee”. We have discussed on this on the thread numerous times.

Furthermore it’s the only prop I’ve found that is challenging the status quo of MFF and FTMO et al in terms of offering a sensible chance to trade your strategy from day one with sensible risk management (as you would your own account).

It highlights the hypocrisy and hype of the prop offerings. For me that’s worthwhile.

Each to their own, trade with who you want at the end of the day and if it works for you then good on you
  • #13,378
  • Jan 7, 2023 5:19am Jan 7, 2023 5:19am
Quoting pipmaster77
{quote} OK, one more time and then I cannot continue.....this explaining the simplest of concepts OVER and OVER makes my head hurt. 1.You have a $1,250 account with 8% DD, which is $100 2. You have a $100 personal account 3. For simplicity sake, you risk 1% per trade with a 1:1 RR 4. Here is the issue.....1% of $100 is $1 you have a risk of ruin at 100 trades, 1% of $1,250 is $12.50, you have a risk of ruin of 8 trades. Therefore, if you're strategy needs a risk of ruin of 100 trades, you MUST also trade $1 per trade on the prop, even though the...
"Here is the issue.....1% of $100 is $1 you have a risk of ruin at 100 trades, 1% of $1,250 is $12.50, you have a risk of ruin of 8 trades. Therefore, if you're strategy needs a risk of ruin of 100 trades, you MUST also trade $1 per trade on the prop, even though the equity says $1,250."

If your strategy needs a risk of ruin of 100 trades, you should not be trading at all. It's flawed to use the same risk of $1 on a $100 and a $1250 account.

Also, like I have mentioned several times you should have the same risk setting on the prop as on your own account. The source of funds should not make a difference. Would you trade your own 100k differently than a funded 100k? I would not.

In any case, I recommend that you take another look at your numbers and compare for example a 100K funded account for which you paid for example $500 to trading the $500 as your own account. Also included the time it takes to turn your $500 to 2 million. The City Traders prop account is a terrible example of anything.

Then make a another chart where you start adding the profits from your funded account to your own account. Going solely based on max loss is incorrect as in many cases the max loss is calculated from the initial deposit, not from floating equity.
  • #13,379
  • Jan 7, 2023 6:44am Jan 7, 2023 6:44am
Quoting TraderTero
{quote}Going solely based on max loss is incorrect as in many cases the max loss is calculated from the initial deposit, not from floating equity.
Going based on anything else then the max loss (= what you can afford lose) is difficult for me to understand.

The trading account may show its balance as high as $1mil but if you can afford to lose only $100 from it the way you trade it (from the risk management perspective) should be exactly the same as if your account balance was only $100 and you could spend all the money. Thee fact that $100 represents different %age of the balance on each account is irrelevant. This is about the actual money you have available for trading, not how much it represents from either some virtual amount the prop firm puts on your demo account (just to attract your attention) or from your personal assets you are ready to spend on trading (but don't put on your trading account yet).

One difference between the two cases might be the margin requirements. The $1mil accounts allows you to open 100 lots on Dow (even when you can only lose $100) whereas you would need a leverage of more than 1:33600 (at the time of writing) to do the same with $100 account. But it would be a stupid idea to open such a big trade with either account.

Another difference is the margin stop out level which means you can actually lose a little less than the full $100 until your broker starts to liquidate your open position. How much less it depends on the required margin (leverage) of the position you trade. The higher the leverage and smaller position size, the smaller the difference

So in order to be more accurate we should compare the $1,250 account (or $1mil account or of any other size) with $100 allowed DD to maybe a $110 or $120 personal account. But otherwise, all the other comparisons and calculations made by Pip still stay valid.
Money is made by sitting, not trading
  • #13,380
  • Edited 7:46am Jan 7, 2023 7:30am | Edited 7:46am
Quoting Vitore
{quote} Going based on anything else then the max loss (= what you can afford lose) is difficult for me to understand. The trading account may show its balance as high as $1mil but if you can afford to lose only $100 from it the way you trade it (from the risk management perspective) should be exactly the same as if your account balance was only $100 and you could spend all the money. Thee fact that $100 represents different %age of the balance on each account is irrelevant. This is about the actual money you have available for trading, not how...
"The trading account may show its balance as high as $1mil but if you can afford to lose only $100 from it the way you trade it (from the risk management perspective) should be exactly the same as if your account balance was only $100 and you could spend all the money."

If you think that the case is that, then why would anyone ever want to get any funding? Just trade your $100 bucks to millions. Maybe because with a one million funded account you can have a 50K max loss of some else money. It's much easier to turn 100K equity to 10K profit than $500 to 10k profit. If you trade your 100k funded account as if it was a $500 account, then it will be as hard but for me the $500 risk represent the risk I'm willing to take in order to gain a 10k profit. The max loss is just a value for my risk settings. In the scaling account the max loss $100 just happens to match the account opening fee but once the account is fully scaled my risk is still the same $100.

Please take a look at my Trade Explorer, I have made about 10% per month in profit. My scaling account with that would now be at 20k and my $100 around $150. It's quite obvious that I can make much more money with trading a 20k account with a max $1600 loss than with my $150 buck account.
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