Dissecting My Forex Funds' Model: How Did the Prop Trading Firm Generate $310M? (2024)

FAQs

Dissecting My Forex Funds' Model: How Did the Prop Trading Firm Generate $310M? ›

It ran extensive social media campaigns that bombarded potential customers with advertisem*nts, especially on YouTube. Prop trading firms target retail traders, evaluate their trading skills, and hand out the company's money to them for trading. The platforms then split the profits, if there are any.

Most revenues generated by a prop firm come from the profits generated by the prop traders. Firms have a profit-sharing arrangement in place with their traders.

Statistics on Average Trader Payouts

Profit Split: The average prop firm will offer a 80-20 profit split once you become a funded trader. TFT, on the other hand, gives up to a 90% split, — even as high as 95% in some promotions — the highest in the industry.

Traders Global, through its My Forex Funds website, was one of a number of internet-based foreign exchange proprietary trading firms. It charged customers introductory account fees in the hundreds of dollars for what it said was a chance to trade the firm's money in the currency and commodities markets.

Why was My Forex Funds shut down? The CFTC closed MFF's accounts due to their allegation that MFF was defrauding its clients by actively trying to prevent them from becoming funded traders, while promising the opposite.

Commission: Prop firms may charge a commission on each trade made by their traders. Profit Split: In some cases, prop firms may take a percentage of the profits earned by their traders as a form of compensation. Training Fees: Some prop firms offer training programs for new traders, which may come at a cost.

Some prop firms, particularly the smaller ones, may earn revenue by providing education, granting access to their capital allocation programme, or utilising their office space and/or technology. However, this is usually only a minor fraction of the revenue generated.

The percentage of profits that a prop firm takes can vary, but it is usually somewhere between 10-50%. So, for example, if a trader makes $10,000 in profits, the prop firm might take a 30% cut, leaving the trader with $7,000.

Profit share: Frequently ranges from 50% to 90%, depending on the firm's policy. Trading capital: Can scale up based on the trader's performance. Trading guidelines: Including restrictions on instruments, maximum positions, and strategies.

Prop traders can operate under their own rules-based system using the fund's capital, not money from outside investors. Prop traders also get to keep a large portion of their profits, which brings up the next primary perk: compensation. Prop traders often get a base salary, a cut of the profits and performance bonuses.

What is the number one mistake forex traders make? ›

One of the worst mistakes new traders make is averaging down: investing more money in a losing trade in the hope of a turnaround. More often than not this amounts to throwing good money after bad and can exacerbate your losses.

On a funded account, losing a large amount of money does not mean much. Even if it results in losing your funded account, you can still try to pass the evaluation at the same firm again or just join another one. Ultimately, you do not risk much and do not lose much.

Prop trading firms have been shutting down or suspending their services, particularly to U.S.-based clients, because of a crackdown from MetaQuotes, the company behind the popular MetaTrader trading platforms.

{quote} FTMO (unless you are a US citizen), The5ers, and City Traders Imperium are the three oldest prop firms, and probably the only ones with 5+yrs reputable history of reliable payouts. I'd start with those three.

FTMO Alternatives Frequently Asked Questions (FAQs):

Yes, there are many sites offering similar services to FTMO. These include FunderPro, the5ers and many more. If you are looking for an alternative to FTMO, FunderPro is currently rank as the number one on the list of top Forex Prop Firms.

In conclusion, the income of prop firm traders can vary greatly depending on several factors such as experience, performance, and the size of the firm. On average, a junior prop trader can expect to earn anywhere between $50,000 to $100,000 per year, while a senior trader can make upwards of $500,000 annually.

Profit potential: If successful, prop traders for the best prop trading firms can make a significant profit without making much of an upfront investment.

Sure, the firm may replicate successful trades of the funded traders on the firm's real account. But, again, those are trades made by the firm itself with its own capital. And in general, prop firms insist that they are not financial institutions and do not provide financial services.