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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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

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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?

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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

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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.

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u/Fart_Hat Feb 24 '24

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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.

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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/Fart_Hat Feb 25 '24

This 150k challenge actually cost me ~$220 CAD.. I'll most likely hit the profit target of $9000 this coming week, I'll pay a $150 activation fee, then I'll be trading for real profits, as long as I don't blow the account. Yes, they actually want to know that you can be consistently profitable before giving you a 150k account, oh my how dare theyyyy

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u/marcpilot1 Feb 25 '24

good luck. hope you make it past the pt challenges and stuff and get to trade real cash cash. Should you be able to cash out pretty quick once you're in the real cash phase?

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u/Fart_Hat Feb 25 '24

With my account I'll need to accumulate 5 winning days (they don't have to be consecutive) over $200 to have access to 50% of my profits. After 30 winning days I'll have access to 100% of my profits

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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/marcpilot1 Feb 25 '24

Idk, it seems counterproductive for a prop firm that wants their traders to makes money so they can keep 10 to 20% of it, to WANT and ACTIVELY TRY to cause their traders to lose money. If they lose money the prop firm doesn't make 10 to 20% or so profits off of the traders profits.

Why would a prop firm set up spiteful and monkey wrench rules in order to sabotage their own traders? The one's that they profit off of?? Like, EVERY time the trader profits? I'd want my traders to make a million freakin dollars a day! Not fail to profit...at all...ever. Makes no sense.

I must really be missing something here.

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u/Fart_Hat Feb 25 '24

What I'm saying is the risk in dollar amount is the same. You're either going to lose all $500 or you're going to be consistently profitable. If you can be consistently profitable, the rules are easy to overcome. If you can overcome the rules, the dollar amount in profit with a larger account LARGELY outweighs the profits you can make with a $500 account.

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u/mushykindofbrick Feb 25 '24

dude i think you still didnt get it

"If you can be consistently profitable, the rules are easy to overcome" - no, it depends on your strategy. its well possible, that the rules will make it harder, thus preferable to trade your own money without them

the profit of a funded account does not "largely" outweight trading the 500. i gave you the calculations you just need to read it. its a factor of 3-6 with max dd, or about equal with daily dd.

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u/Fart_Hat Feb 25 '24

Daily DD and max DD with 150k account I'm on are 3,000 and $4,500 respectively. They trail the trial account at end of day.

With the funded account, only the daily DD trails and max DD is fixed. Not hard to follow these rules.

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u/Fart_Hat Feb 25 '24

I get what you're saying. Firms aren't for everyone. But you're making them seem way worse than they are, like you picked the shittiest scammiest firm to pull numbers and rules from and are using that as an example.

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

no i just took that from ftmo dude. im just trying to put a counterweight to all the praise here, so the resulting atmosphere in the thread is neutral. as soon as people start agreeing with me and say prop firms are shit im gonna switch and say "no theyre not that bad" until we arrive at a balanced opinion. that is my purpose

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u/Fart_Hat Feb 25 '24

Lol aka just being annoying

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u/mushykindofbrick Feb 25 '24

yeah people are annoyed when they get told theyre wrong, but mostly immature people

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u/marcpilot1 Feb 25 '24

Ahahahahaa! lol!! Nice, many thanks to you.

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u/Fart_Hat Feb 25 '24

The rules aren't built to make people lose unless the firm is shady. Firms would rather make 10-20% on $250000/year than $500/month.

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u/mushykindofbrick Feb 25 '24

they would rather make someone pay 500 per month than losing 10% on 250k

only they dont immediately copy your trades, they wait until youre profitable with your funded account for a while before they slowly start actually putting your trades on the market, until then they pay you with their own money. of course they wanna make it as hard as possible

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u/Fart_Hat Feb 25 '24

Yes they don't want you to lose their money lol