Why Prop Firms Will Keep Taking Your Money | You Lose

prop firms have been taking people's money right out of their wallet for years and years and they're going to continue to do so trust me you don't want to be like the guy who continues to buy challenges max out a credit card open a new credit card or jump to the new credit card do the exact same thing and continue the cycle only looking for this magical funding that's going to change their life and make them this profitable Trader making millions and millions of dollars because they can get access to hundreds maybe even 500 maybe even a million dollars of other people's money prop firms prey on the mentally and emotionally weak and unfortunately especially in today's society that is becoming more and more prevalent if you ever get a chance to listen to some podcasts interviews and dive deeper into the prop firm space some of the people who are on the backside who know the numbers it's like 90 plus and maybe even more like 95% of people who buy prop firm challenges or these audition phases that they can try to prove that they're profitable over 90% of them never actually get a funded account many of these accounts aren't actually real funded money but they never make it to that phase where they can withdraw any profits and of the people who even get past the initial evaluation stages there's even a smaller amount who actually Contin be profitable make money and then be able to withdraw that money before losing it or at least breaking one of the rules but why is this the case like You' got to think that that number is should be closer to 50% not saying that 50% of people are profitable consistently long term but instead of 90% failing maybe it's like 75 70% failing and never actually getting to the funded stage of a prop firm why is that the case I mean just think of flipping a coin right like at some point you're going to be right like some people are going to make it there but that's not the case it's actually wrong to even think that and there's a a lot of reasons why first things first the audience that a prop firm appeals to there's a certain demographic you've got people ideally who are fairly new or starting out in the first couple of years of their trading Journeys or their careers if you want to call it that and most of them never really make a career out of it but let's just call it a career uh to make it simple this audience of people they think that they can get more money faster and that this is the best route rather than growing a small account or they they see all the fancy cars and the flashy things on social media and they want to get there as fast as possible and so this is the way to do it this is the way to now say yeah I got a $100,000 account that I trade you know and make a couple percent per week and like I pull it out it's a couple Grand like that is the mindset that a lot of these people have and that's not a great place to be in because it's disregarding the actual process of what's going to get you to pulling money out and the consistency in the actual Trading strategy and all that goes into it there's also trading rules I mean there's trailing draw down rules on some prop firms many are going away from the trailing draw Downs to make it a little bit easier on managing risk this way if you're up unrealized gains on something then all of a sudden you know it falls back against you you know you can't lose the account even if technically you didn't even lose any money it just went really largely in your favor and then it came back to break even and stopped you out sometimes because of trailing draw down rules people could actually lose their account because they broke the trailing draw down of whatever percentage it is 5% 8% whatever the number is stop losses some prop firms require you to have stops some don't that could throw you off mentally and it just makes it more challenging sometimes to now have to always put a stop- loss on easily get stopped out and then many prop firms have gotten caught now we've been seeing more and more coming out that have been messing with fills messing with orders widening spreads while positions get close to people stop losses yeah like that throws it off and many people don't necessarily trade the way that you're required to trade once you now sign up for a prop firm there's also asset classes so maybe you're used to trading stocks and now you got to trade Futures and you can't trade stocks or maybe you're used to trading this and you got to trade that and there's just some restrictions upon the asset classes that you can trade depending on the pl from you choose and that really shouldn't be a huge problem but for some people that is something that is important and can throw them off their game and let's not forget the biggest and probably the most obvious Point here trading is hard like it's not an easy thing to be able to do it can be simple but simple is not easy and if all that is not enough the simple concept is just being taken advantage of the who are trading on a prop firm are not profitable most of them I would argue probably 90 plus% are not not actually consistently profitable and have not proven that in their own trading for a sustained period of time you don't have an edge they don't track their trading data and they switch up their trading strategy the second they see someone on YouTube post this new strategy that made them $20,000 in 5 minutes that's not the recipe to beat the prop firm and you're not beating the prop firm they're going to win the game is now you really pulling from the pool of the 90 plus per who keep buying buying buying losing you pulling from that pool and getting your peace out of the pool if you're profitable that's all it is back to that simple versus easy the recipe to being successful with the prop firm is quite simple it's not easy prove your profitable whether that's on a simulation account whether that's in your own account on a smaller account prove your profitable to yourself trade for three four five six seven eight months and be like yo I'm profitable I have traded this way for a long time I'm feeling really confident like I've got it down I know what I'm doing I know how to handle myself in draw down I know how to handle myself when I'm on a streak you've had the experience of being profitable and obviously you probably have had the experience of not being profitable for many many years months prior to that so you at least come into this with the confidence and the understanding that you know what to do you're just looking for a little extra funding so that now the dollar amounts mean a little bit more I hear people say all the time well the way you're going to trade a prop firm you know evaluation phase is different from how you're going to trade you normally what the is that why why why why would you trade any different when you pass the evaluation doesn't make any sense you would just trade the same way you were trading before now with the prop firm maybe that the broker's different the executions are a little bit different but you trade the same concept the same way the same strategy and then if you get funded you trade the same exact way there's nothing to change and that occurs when it occurs there is no time limit now some of the prop firm have time limits so you got to be careful of that that's a component to why it's hard right why it's even harder than regular trading your own money I guess but it happens when it happens you size accordingly to the account size so that you know one trade's not going to blow me out right it's going to take five 10 20 30 trades that I would have to lose maybe not in a row in order for me to hit these draw down requirements which then means it's going to take 50 60 I don't know how many trades total for you to get past the evaluation phase and you just back your way into that math how many trades do I take a week on average and then you size accordingly so that this is something that you give yourself plenty of time to do but you're not rushing through it just to try to get funded do things that you don't normally do maybe it works maybe you get lucky likely you don't and you have to re re buy the challenge anyway but if you do get lucky what ends up happening is then you get to the funded phase and then you lose your money and then you break the rules and then you lose the account so what's the point of getting funded if you're going to lose the account anyway doesn't make sense to me the progression that you can see once you're funded and the scaling up that you can do in your own with your Capital now your Capital that you've earned is really remarkable and that will come as long as you're patient and it can come quick think of it as like an exponential curve right if you're profitable and you get funded you can start stacking some Capital away that Capital you can either use for your own needs your own income whatever or you can put that in an account and save it for your own money so then you can trade your own money ultimately as you build that that account up or that money will then allow you those profits then allow you to buy a larger account size so then if you pass that account now guess what from 50k 100K 200k 500k you now have a lot more Capital to play with and a 1% gain in a given week starts to become a lot more meaningful again just think of that exponential curve and that's just that's what it comes down to if you want a place where you can track Journal log all your trades I'll link up trade zel below this video highly recommend you at least know your data know your numbers before you ever ever sign up for a prop firm many of the prop firms you can even track through trade zal you can track all your stats and data with the accounts you're trading on a prop firm evaluation phase thanks so much for watching leave a like maybe subscribe and I'll see you guys in the next one peace

Channel: TC Trading

Views: 773

Keywords: TC Trading, Trading Tutorials, Trading, prop firm, trading with a prop firm, the downsides of prop firms, prop firm scam, are prop firms scams, the truth about prop firms

Id: ET4JTjYoRJs

Length: 9min 53sec (593 seconds)

Published: Mon Jan 22 2024