Is the FTMo Forex challenge legit?
Just use your common sense and think about it once. If the maintenance requirement for a funded account is not 10% monthly profits with 10% Maximum DD why is the FTMO challenge demanding to make 10% profits within 30 calendar days. It is just like a tournament or game where they charge a huge entry fee and collect all the losers money. 90% or more challenge takers will easily lose the challenge trying to target 10% growth with tight trading restrictions.
While taking FTMO challenges unknowingly you pay a lot of monthly subscription fees, mostly lose the challenge or verification, re-take the challenge, finally get a funded account , break any of their trading rules, and you will start from scratch with a hope of having a 50K or 100K funded account and the cycle will keep repeating.
Even the 50K or 100K funded account that you get in the end is simply a myth, because there are ridiculous restrictions on the margin you can use and drawdowns that you can have daily or maximum.
Meanwhile you could have started with just a $1500 capital of your own, grown it steadily week after week and after an year you will have much more money than when you started and than from trading for any prop firm.
I'm sure with prop trading firm, most likely, you will end up with lesser money than when you started, unless you get a very friendly ranging market for several consecutive months.
The sad thing is it is mostly the naïve investors with very little money who think they can trade with $50K, $100K capital, who fall for this trap time and again. They keep paying the subscription fees multiple times which will finally amount to a decent starting capital to trade with own money. It is a ‘Penny Wise Pound Foolish’ phenomenon.
Prop trading firms have such a business model. They want their majority traders lose with tight trading restrictions, collect the losers subscription money and pay the few winning traders. Of all the prop firms, FTMO is slightly better, since they don't put a cap on the maximum trades we can open, offer a 1:100 leverage, allows hedging and any strategy we like. However, it is not a good idea in long-term.
The concept of prop trading firms - "trade with their capital" sounds attractive. Except, it's not real. The business model of prop firms is to attract starry-eyed newbies to pay "entry fees." Most people don't succeed, so they pay the fees again and again. A few people do succeed, which is great. Great for the prop firms, that is, because they need a few smiling "faces" to use in their advertisements. (The ads don't tell you the percent of people that fail the entry process, and who pay multiple fees to try again.)
What about those lucky few who do win a chance to "use" a prop firm's capital? In reality, all winners share a single small pool of capital. How is it possible that multiple winners "share" a small account? Simple. The prop firms impose ridiculous restrictions on how winners can trade. Only a small amount of margin can be deployed at any one time. Only a small drawdown is allowed. Only a small loss can be sustained. So while firms claim you "get an account" with $25,000 or $50,000 or $100,0000 in it - in reality you have access to much less than that. Sure, the Prop Firm's software shows you $100,000 on your screen. But you can only trade as if you have $7,000.
Prop Firms pretend that you can trade with their dollars. In reality, they restrict the way you can trade, so that you can wind up trading with mere pennies.
Please give an upvote if this information was insightful and the myth of prop trading firms was busted in your mind. Please drop comments if you have any questions or clarifications required. You may check my profile to read about more realistic way to make profits from forex market.
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