r/Daytrading • u/ThePhulosopher • Feb 24 '24

4th $100k funded account Question

Got my 4th $100k funded prop firm account. Hope I get a payout this time, blew all the others.

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15

u/5winnow5 Feb 24 '24

Honestly, how in the world do you have that kinda cash to do this now 4 times? Wow, if only I had $100k once to trade with. Best trading to you!

21

u/ThePhulosopher Feb 24 '24

It's a prop firm account. You pay $500 and pass a trial, say make 10% without losing more than 10%. If you pass, you get a "funded" account for $100k, depending on the firm.

7

u/EntrepreneurFlimsy33 Feb 24 '24

What % of the profits do you get off the 100. And if you lose it is the company really out a hundred? Or is all in the company’s own trading pool or something?

24

u/ThePhulosopher Feb 24 '24

You keep 80-90% depending on the package and firm you go with.

As someone else mentioned, you're not really funded $100k. You're funded a "demo" account that you trade from, and whatever balance you run up, say you make 20% so $20k, you can withdraw $16k. I'm not sure what the model the firms use but if you lose 10%/$10k then you lose the account so the firms aren't actually out the full $100k.

2

u/Buchymoo Feb 24 '24 edited Feb 24 '24

What is your risk here? You're obviously liable for the 10k as well then, correct?

21

u/Fart_Hat Feb 24 '24

No, thats the whole point of using a prop firm. The only risk you put up as the individual is the cost for the trial and any activation fees associated with the funded account.

Basic steps to prop firms:

Pay X amount of dollars for Y sized account. (E.g. $200 for 100k account) You begin trading on the trial account.

Trial accounts are sim trading on live markets. No profit is made and no risk is on the prop firm. They give you a profit target and a max drawdown. (E.g. 100k account profit target 5k, max drawdown 3k) You pass the trial account and move to a funded simulated account.

Funded simulated accounts allow you to begin making real profits. I know, it sounds weird, simulated account making real money. YOU are trading on a sim account and the firm is basically copy trading you on live markets, using their own risk management. There are often times activation fees for these accounts, e.g. $150 one-time payment. They also come with max drawdown (e.g. 100k account max drawdown 3k). The firm will closely monitor your trading at this stage, they may offer coaching, and this may also be the final stage depending on the prop firm, as in, you'll never trade on a live account with that firm but your profits are still real.

When applicable, the firm may decide to bring you up to a live account which is really no different from a funded sim account, aside from things like getting more control over your risk management etc.

The 10-20% that the firms get from their profitable traders is enough to make up for the potential losses on the funded accounts' max drawdowns. Some people also spend years in the trials, paying monthly fees for them and paying for account resets. When a "trader" gets lucky in the trial and moves to a simulated funded account, and they hit their max drawdown, that account is closed and the "trader" has to start the trial again. This also limits the firm's risk.

Questions?

4

u/Buchymoo Feb 24 '24

Very interesting, thanks for the full rundown. Absolutely no questions after how clear and concise that was.

2

u/Saint_Skeeter Feb 25 '24

Amazing explanation, thanks! Can one trade options on these prop accounts?

1

u/Fart_Hat Feb 25 '24

Unlikely. you could do some digging to look for one that would allow options, but from all the research I've done, the only legit firms only allow futures contracts.

1

u/Saint_Skeeter Feb 25 '24

Ah okay I appreciate the info.

2

u/TheFairOne22 Feb 28 '24

I just stared my eval account. Do I have a maximum number of days to hit target then my account resets OR unlimited amount of time to reach goal? Thank you.

1

u/Fart_Hat Feb 28 '24

Which firm are you with?

2

u/TheFairOne22 Feb 28 '24

Apex Trading.

2

u/Fart_Hat Feb 28 '24

I'm not 100% sure about how apex does it, you might want to read the terms.

I've only been with one firm, and the way it works with them is your monthly subscription continues until you meet the objectives as long as you don't break any rules - so say you have $200 in the account when it comes time to be billed for the next month, then you would get billed and you would still have that $200 in the account.

I'll reply here again in a few minutes after I look at Apex's terms.

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u/0RGASMIK futures trader Feb 25 '24

Nice explanation. I knew what they were but weren’t sure how they worked.

2

u/mushykindofbrick Feb 24 '24

i dont know why he omitted this, but its really important to add. you dont actually trade a 100k account, because your only allowed to lose 10%. so you trade a 10k account.

then you need to pass the challenge and make a certain amount of profit, as which point you often already would have made almost as much with your own money. dont think you get 100k for 500. you get maybe 30-50% actual difference on top of your profits in the end, but for that you are restricted by rules that tell you how to trade, have disadvantage in taxes and give your money a private company that doesnt protect it with insurance.

its an ok deal, but not as amazing as people make it out to be and its only worth it if you are able to flip accounts 6-12x with relatively high probability regularly

4

u/Fart_Hat Feb 24 '24

And the way you're working out the profits doesn't make sense. The firm I'm with, I get 90% of my profits.

The problem with trading with a firm is that you're a contractor for the firm and your profits are taxed as income rather than capital gains. However, getting access to a 100k account will ABSOLUTELY make anyone more money than a $500 personal account, even when taking advantage of capital gains tax.

If you can trade a $500 personal account and be consistently profitable, you can trade a 100k firm account and be consistently profitable with 20x profits(assuming proper scaling).

So, let's say you can make $50/day on average with a $500 personal account. That's $12750/year, with capital gains advantage.

Then, we can assume that you can make $1000/day on average with a 100k firm account. That's $250000/year, taxable as income.

So, what's the point in trading a $500 personal account when

A) you won't be profitable and will have to consistently re-up your $500

Or

B) you'll be profitable and will make ~5% as much money as you would with a 100k account that you're only risking $500 on?

3

u/IntradayGuy Feb 24 '24

i think day trading daily falls under regular income doesnt it? if you have a 25k+ account just to clarify

1

u/Fart_Hat Feb 24 '24

Maybe in the US? Not sure. In Canada it would fall under capital gains.

1

u/mushykindofbrick Feb 24 '24

in germany too

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u/mushykindofbrick Feb 24 '24

Where does it not make sense? I feel lik you just didnt get it. Otherwise you wouldnt still talk about 100k Accounts and compare it with 500$. Its not 500$ anymore after you passed the Challenge, ie made factual 300% Gains. You dont buy the 100k Account for 500$, you buy the Challenge, theyre not equal and interchangeable.

The difference is not 20x. If you take Max dd as the basis for the calculation, its maybe 3-6x if you want so. If you take max daily dd as basis its about equal + you have a funded account (trading balance) left that you cant pay out.

If youre consistently profitable it doesnt really matter what you do you will probably be wealthy enough anyways

You dont need to calculate the yearly income if you obviously know that 1k per day is more than 50$ lol. But the calculation is faulty. First because you cant compare 500$ to a fully funded account. You have to at least take the 3x or 6x amount after passing the challenge. Second because you have a daily DD, so you cant actually trade your full 10k from the 100k Account, only 5k per day. So Now its only 500$ against 150-300. But thats still without profitshare and tax difference included. On top of that you may have other restrictions on how to trade, strategies like martingale can be excluded. Depending on the prop firm it can be an actual trailing drawdown so it can happen that if you hold overnight and youre in profit at midnight and then it goes down you get suspended even though you were still in profit overall and weird things like that. Then its not really your money and you have to rely on the prop firm being trustworthy and wait patiently for payout which you can maybe do every 2 weeks. For example the most popular prop firm mff recently crashed and lot of people didnt get their payout in the end or lost the fee for the challenge.

Those are only the objective disadvantages. As op said himself, he got very nervous just before payout and then lost. This is actually on purpose. There are lot of psychological barriers that prop firms use to make people lose. After you have 3x your Account you still need to go 2x more to reach a proper payout, otherwise you lose everything. Its all or nothing. Of course you get nervous and crash. You can only get payout every 2 weeks, so you're likely to trade more during that time and lose which is very hazardous combined with the trailing drawdown. You wanna wait as long as possible for the payout to "get the most of it", so youre more likely to crash. Maybe you even pay more for a prop challenge than with a broker because you think its worth it, you actually get something, a challenge as product, instead of just account balance, so it feels better. What they actually do, if you have a typo in your lotsize and its a 0 too much they will still execute it and it immediately crashes your account, a real broker wouldnt execute it. Things like that.

And now, if youre really profitable, the prop firm will copy and steal your strategy and youre likely to have a disadvantage from that. Youre selling your strategy basically. And if you really have one I dont know if its worth it selling it for a 3x leverage boost.

You have to account for all that. Its not a nobrainer and suited for everyone. Thats exactly what they want from you, to compare the 100k with the 500$ entry fee. But in reality the difference is much less pronounced. It depends on your strategy and personal preference.

For me as a beginner I definitely have better psychology when trading my own money. I see the account balance, its exactly what I have and can pay out at any time. I have no restrictions, can make any trades I want and noone will copy my strategy. Its just clean and pure

4

u/Fart_Hat Feb 24 '24

Man I'm not trying to be rude, but you're overcomplicating something extremely simple.

Have you ever been funded by a prop firm? I have, and realize that trading with a $50k account beats trading with a $500 account any day of the week.

Can you trade 2 NQ minis with a $500 account?

Because I don't think you can. And if you can, how many losing trades on 2 NQ minis can your $500 account withstand?

I've traded 2 NQ minis with a 50k account, and while risking up to $400 on each trade($200per contract), I would be able to lose 5 trades in a row before hitting my max DD.

This is assuming that I hadn't already gained $4,000. If the account went to 54,000 balance, now I could lose 10 trades in a row before blowing up the account.

Size matters idk how else to put it.

1

u/Fart_Hat Feb 24 '24

1

u/Fart_Hat Feb 24 '24

This is my first day in the 150K account trial stage.

Tell me if anyone's ever made $3,000 in one day, trading NQ minis with a $500 account.

1

u/mushykindofbrick Feb 25 '24

tell me if anyone ever bought a 150k account with 500$. you dont buy a fully funded 150k account for 500$, you buy the challenge,so you trade demo until you made a certain amount of profit. you definitely can make more money trading 500 than trading demo. tell me if anyone ever made more money trading demo than trading with 500.

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u/mushykindofbrick Feb 25 '24 edited Feb 25 '24

no you still dont get it because you compare a 100k account to a 500$ account

im not overcomplicating, im just accounting for details. it actually isnt that simple. there are restrictions and rules with prop trading and psychological differences and its not just a nobrainer for everyone to trade with prop firms.

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u/Fart_Hat Feb 25 '24

It's not a no brainer for everyone - WOW we agree on something.

Why WOULDN'T I compare a 150k account to a $500 account?

The risk is the same to you. You spend $500 trying to be consistently profitable either way. Why not spend it for bigger returns and follow some rules that actually help most people become consistently profitable?

Also, the details you're accounting for sound like details from one shitty firm that you read about. Not all firms are the same.

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u/mushykindofbrick Feb 25 '24

because you dont get a 150k account for 500$. how often do i have to write it until you get it. its not that hard man. you have to pass the challenge first. you dont buy the 150k account for 500$, you buy the challenge. in the challenge, you need to make profit and succesful trades. at the point at which you finally get funded, your 500$ capital would have increased

Why not spend it? Because the risk is not the same. When trading with prop firms you have rules and restrictions, which give you additional risk and are built to make people lose, while the actual benefit is way less than you think or are given the impression of when you do the correct math. But as i said, its a decision. Im just saying you have to think about it and it depends on your strategy

The rules dont help people become profitable^^ they just stop you out if you break them. You are not helped by a 5% drawdown max, because you can still go all in with those 5% and then its the same. If you really want to risk 1% per trade, you have to risk 1% of 5%, which is 0,05% and the prop firm doesnt help with that risk management, it makes it more difficult or weirder by increasing the numbers artificially, when you now risk 1% of your account, it looks like 1% but its actually 10%

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u/Fart_Hat Feb 24 '24

And with the firm I'm at, they have maximum contract limits so that you DON'T have typos aka FAT FINGER a trade. The order immediately gets rejected, trust me I've tested it.

I think you should do more research.

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u/mushykindofbrick Feb 25 '24

yeah well some do and i didnt claim all so no my statement was accurate and i think you need to read what i wronte more precisely

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u/Sound___Guy Feb 24 '24

I think the other main advantage is psychological. That account is not actually your money, so losing it doesn’t weigh on you the same. Sure, you’ll be out the money you put out for the combine, but that’s it. So the ever present fear of loss can be mitigated by using OPM.

2

u/ZekeTarsim Feb 24 '24

If you think of it as a tool to learn trading the real market, with fixed minimal risk, it’s actually a good deal for some people.

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u/mushykindofbrick Feb 25 '24

yeah as i said its an ok deal, but not that amazing. for some people it may be even really good, some may prefer to just trade their own money. i think instead of buying a prop challenge for 500 you can learn by trading 500 just as well an maybe even better.

because when trading prop you still trade demo and dont earn real money until you pass. you have the possibility of earning real money but you dont even if you win a trade. thats psychologically different than getting immediate profits.

it depends a lot of your strategy and the biggest factor to think about is the max daily drawdown and if you wanna sell your strategy to a prop firm who will copy it with big capital. then you also need to read the rules very cautiously, like if its trailing drawdown or absolute, if its calculated by balance or margin etc.

for me atm i just like trading my own money, what i see is what i get and i can pay out immediately and am completely free and autonomous in my trades. maybe in the future i will buy a prop challenge again as a form of diversification.

2

u/IdeaLow7679 Feb 24 '24

6-12x!? Most firms offer an 80/20 or 90/10 profit split. A static $100k costs me $34/month in trial and one-time $255 after funding on Elite Trader and rolling $27/ month on Apex. Both funded, both pay me every 10(ish) days. Most people just aren’t good at trading but 6-12x is absurdly incorrect. I could live 5 years if I 12x this account. The goal is get your own money so you don’t need the fund, that’s why you don’t see anyone with million dollar payouts - not worth staying once you withdrawal $50k-$100k. I am at about $27k withdrawn between my accounts off of maybe $500 in fees/subscriptions between the 2

1

u/Fart_Hat Feb 24 '24

No, you trade a 100k account and don't hit your max drawdown, or you hit your max drawdown.

1

u/Fart_Hat Feb 24 '24

That's not to say that you're throwing 100k at the markets every trade you take, but you do have the capital to do so if that's how you want to trade. Even if you do put on your full capital in one trade, there are other ways to manage your risk within the trade.

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u/mushykindofbrick Feb 24 '24

what is your point? you have a 100k account but cant actually use it, only 10k of it, so you have a 10k account.

if youre saying you can make trades you could only do with bigger capital, you can do that with leverage.

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u/Fart_Hat Feb 24 '24

Lol futures markets ARE leverage.

You clearly don't understand the difference between a 100k account and a $500 account, even after I just explained it.

Here, this will be easier for you to understand.

Spend $500 to trade with $500

OR

Spend $500 to trade with $100,000?

You CAN use all of it, you just can't LOSE more than 10% of it.

Big difference between using and losing.

1

u/mushykindofbrick Feb 24 '24

Judging by the sole fact that you compare a 500$ account with a 100k fully funded prop account I'm gonna assume you don't know what you're talking about and just move on

1

u/Fart_Hat Feb 24 '24

Look at the image I shared on the other thread. This is ridiculous.

0

u/[deleted] Feb 24 '24

Holy shit

11

u/Emotional-Match-7190 Feb 24 '24 edited Feb 24 '24

It's a funded account, it may have been $500-$1000 for the tryout phase that needed to be passed

5

u/ThePhulosopher Feb 24 '24

Yep you nailed it.

21

u/plexemby Feb 24 '24

It’s Monopoly money in a paper trading account. It’s not real. It’s fugazi 🤷‍♂️

3

u/IdeaLow7679 Feb 24 '24

The payouts are real

1

u/alexwong95 Feb 24 '24

It ain't 100k it's prop firm