not too much new under the sun ITT but ive had some interest from people about prop trading futures based on last weeks numbers and instead of saying the same thing in half a dozen different windows, im going to just vibe here for a few minutes.
the flow is like this;
https://apextraderfunding.com/ is a business that essentially gives you money to trade futures with once you 'prove yourself' by passing a test, which is paper trading futures until you pass a certain profit threshold, while also trading a minimum number of days.
afaik they make their money three ways basically;
* people failing/resetting the test accounts
* charging a small fee for every trade you make
* raking 10% of your profits when you cash out an aggregate amount exceeding $25,000.
when you pass your test account, you are given a live funding account, usually referred to by some absurdly large amount of capital like "the $100,000 account" or "the $50,000" account. these numbers are clickbait. the only number that matters is called the 'drawdown'. the drawdown is how much money you can lose before you are locked out of the account. in the $50,000 account, for example, your drawdown is $2500.
so what you need to do, is stop thinking in terms of the number $50,000, and start thinking in terms of $2500. you have $2500 to bet with on that account, not $50k.
and youre probably wondering; how do prop shops not go broke when you can spend $220 to get $2500 in gamble equity? yeah theres 2 things they do to protect themselves:
1) they run algs that basically close out your position when it stops being profitable but you dont see your position closed. and the algs jump back into your position should it reverse and be profitable. so you might end up down $2000 on a position but apex's actual risk is maybe $200 because they closed out your position a while ago and will simply re-open it if you end up green again.
2) the overwhelming majority of traders never make money because trading futures is fucking hard.
so you have people who might spend thousands of dollars to get $2500 in bet equity, and then apex only has to risk a few hundred of that bet equity in a live betting market while the trader blows it all up and has to start over again. thats the cruel economy of prop firms, laid bare. thats the profit model.
and then theres the number of contracts they let you bet, which justifies the "$50,000" etc label. this is also a huge fucking trap designed to lure you into blowing up your account; responsible professional traders will never risk more than 5% of their capital on a given trade.
if you have an account with a $2500 drawdown, your capital is $2500. you shouldnt be taking trades that risk more than $125 before you stop loss out if you want to approach this from a pure risk management perspective. if you even trade a single ES contract, thats $50 a point. if youre setting your stop loss at 3 points, which is pretty fucking tight, youre already over the 'responsible' risk boundary for a $2500 bankroll. but you can trade up to 10 contracts on a $2500 account. meaning your profit/loss is $500 every single point, not $50.
the odds of not blowing up an account almost immediately if you trade 10 contracts at a time are incredibly slim. and apex cant wait for you to try, because once the market fucks you and you get emotional about it, you might try to flip 10 contracts into a few grand of profit 7 or 8 times in a row and fail every time. and every time youre paying apex to reset the account.
see the hustle?
the flow is like this;
https://apextraderfunding.com/ is a business that essentially gives you money to trade futures with once you 'prove yourself' by passing a test, which is paper trading futures until you pass a certain profit threshold, while also trading a minimum number of days.
afaik they make their money three ways basically;
* people failing/resetting the test accounts
* charging a small fee for every trade you make
* raking 10% of your profits when you cash out an aggregate amount exceeding $25,000.
when you pass your test account, you are given a live funding account, usually referred to by some absurdly large amount of capital like "the $100,000 account" or "the $50,000" account. these numbers are clickbait. the only number that matters is called the 'drawdown'. the drawdown is how much money you can lose before you are locked out of the account. in the $50,000 account, for example, your drawdown is $2500.
so what you need to do, is stop thinking in terms of the number $50,000, and start thinking in terms of $2500. you have $2500 to bet with on that account, not $50k.
and youre probably wondering; how do prop shops not go broke when you can spend $220 to get $2500 in gamble equity? yeah theres 2 things they do to protect themselves:
1) they run algs that basically close out your position when it stops being profitable but you dont see your position closed. and the algs jump back into your position should it reverse and be profitable. so you might end up down $2000 on a position but apex's actual risk is maybe $200 because they closed out your position a while ago and will simply re-open it if you end up green again.
2) the overwhelming majority of traders never make money because trading futures is fucking hard.
so you have people who might spend thousands of dollars to get $2500 in bet equity, and then apex only has to risk a few hundred of that bet equity in a live betting market while the trader blows it all up and has to start over again. thats the cruel economy of prop firms, laid bare. thats the profit model.
and then theres the number of contracts they let you bet, which justifies the "$50,000" etc label. this is also a huge fucking trap designed to lure you into blowing up your account; responsible professional traders will never risk more than 5% of their capital on a given trade.
if you have an account with a $2500 drawdown, your capital is $2500. you shouldnt be taking trades that risk more than $125 before you stop loss out if you want to approach this from a pure risk management perspective. if you even trade a single ES contract, thats $50 a point. if youre setting your stop loss at 3 points, which is pretty fucking tight, youre already over the 'responsible' risk boundary for a $2500 bankroll. but you can trade up to 10 contracts on a $2500 account. meaning your profit/loss is $500 every single point, not $50.
the odds of not blowing up an account almost immediately if you trade 10 contracts at a time are incredibly slim. and apex cant wait for you to try, because once the market fucks you and you get emotional about it, you might try to flip 10 contracts into a few grand of profit 7 or 8 times in a row and fail every time. and every time youre paying apex to reset the account.
see the hustle?
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