In case you are taking prop buying and selling challenges, you aren’t solely buying and selling the market. You might be additionally buying and selling the prop agency’s guidelines, expertise, and assist high quality.
Two recent examples present why this issues:
If you’d like the unique reporting, listed below are the 2 Finance Magnates articles:
Beneath is a newbie-friendly information to guard your self from the two greatest non-market dangers in prop buying and selling: platform failures and rule surprises.
First, a fast glossary (so the remainder is smart)
-
Problem / analysis: The paid section the place you have to hit revenue targets whereas obeying threat guidelines.
-
Funded account: The section after passing the analysis (some companies name it funded, some name it “efficiency” or “professional”).
-
Revenue break up: How a lot of your earnings you retain (instance: 80% to dealer, 20% to agency).
-
Drawdown: The max loss allowed. That is often what fails accounts, not the revenue goal.
-
Scalping: Very short-term buying and selling aiming for small strikes, usually held seconds to minutes.
-
Minimal maintain time: A rule that forces you to maintain trades open at the least X time (instance: one minute). This immediately impacts scalpers.
The two hidden dangers that may blow a problem (even when your technique is nice)
Danger 1: Platform outages and execution issues
If a platform freezes, rejects orders, or disconnects on the mistaken time, it might do actual injury:
Finance Magnates reported that merchants complained about being unable to open or shut positions throughout outages on Topstep’s solely platform, TopstepX, and a few merchants claimed accounts had been blown on account of these points.
Vital element for novices: you possibly can have the very best setup on the earth, however should you can’t execute, your edge doesn’t matter.
What to search for earlier than shopping for a problem:
-
Does the agency depend on a single platform solely?
-
Have they got a public observe report of incidents and the way they deal with them?
-
When incidents occur, do they acknowledge shortly and clearly?
-
Have they got a constant coverage for disputes tied to outages?
Within the Topstep story, Finance Magnates famous that Trustpilot scores fell and that the corporate responded to solely a small portion of destructive evaluations, which issues as a result of it’s one proxy for the way critically a agency treats assist and repute.
Danger 2: Rule adjustments, particularly retroactive ones
Guidelines can change in any enterprise. The important thing query is how they modify, and whether or not they apply to accounts that had been opened underneath earlier phrases.
Finance Magnates reported that FundingTicks confronted backlash after reportedly altering guidelines retroactively, together with a minimal one-minute maintain time and a discount in revenue break up.
Why this can be a huge deal:
-
If guidelines are utilized retroactively, trades that had been legitimate yesterday may be punished right now.
-
Your previous buying and selling may be re-judged underneath new constraints.
-
Your anticipated payouts can change even should you did nothing “mistaken” underneath the foundations you agreed to.
In that very same report, Finance Magnates described merchants claiming that accounts had been breached or earnings diminished if trades violated the present guidelines, even when these trades occurred earlier than the change.
For newbies, the straightforward takeaway is that this:
A easy “Prop Agency Due Diligence Guidelines” for problem takers
Use this earlier than you pay for any analysis.
A) Know-how and uptime checks
-
Do they provide a couple of buying and selling platform, or is it a single level of failure?
-
Do they publish incident updates (Discord, standing web page, e-mail updates)?
-
Do merchants report frequent order points, disconnects, or slippage spikes?
-
Have they got a transparent dispute course of when platform points happen?
Finance Magnates reported dealer complaints of not having the ability to open or shut positions throughout outages within the Topstep scenario.
B) Rule stability checks
-
Do they clearly state when new guidelines take impact?
-
Do they explicitly say whether or not guidelines apply to current accounts?
-
Do they modify core guidelines usually (maintain occasions, payout guidelines, revenue break up, withdrawal caps)?
-
Do they supply a change log or versioning, or do you need to “uncover” adjustments?
Within the FundingTicks case, the report listed a number of rule adjustments together with the one-minute minimal maintain interval and a change in revenue break up in contrast with earlier phrases.
C) Incentives examine (this issues greater than most individuals assume)
Prop companies earn cash in several methods. Some earn principally from:
-
problem charges
-
resets and retries
-
information, partnerships, and platform economics
-
profitable merchants who scale
Right here is my private be aware on how I take a look at it:
I pay shut consideration to which companies really present an actual path to buying and selling on dwell accounts, or at the least use some type of threat mirroring (the place trades could also be replicated or risk-managed past a purely simulated setting), versus companies that seem to maintain merchants in simulated environments indefinitely. I additionally watch which companies appear genuinely keen on growing actual merchants, not simply amassing reset revenues.
This doesn’t require you to “know the within story.” You may usually infer quite a bit from:
-
how clear they’re about account development
-
how constant payouts are dealt with
-
how they deal with merchants throughout issues
-
how usually guidelines shift in ways in which cut back payouts
What to do if a platform outage occurs throughout your problem
That is sensible and vital.
-
Screenshot and display report
-
embody timestamps
-
seize the error, rejected orders, disconnect messages, and your open positions
-
Export your commerce logs
-
Save the agency’s bulletins
-
Contact assist instantly
Within the Topstep report, Finance Magnates famous claims that the agency didn’t at all times acknowledge outages, which is strictly why documentation issues.
What to do if guidelines change mid-challenge
-
Cease buying and selling and reread the foundations
That is boring however sensible. Most problem failures come from breaking a rule by chance. -
Ask one direct query
“Do the brand new guidelines apply to my current account, together with previous trades?” -
Get the reply in writing
Ticket response, e-mail, or a saved official message. -
Determine whether or not to proceed
If the rule change destroys your fashion (instance: a one-minute maintain time once you scalp), it may be cheaper to pause than to combat the foundations.
Finance Magnates reported that the FundingTicks adjustments included a minimal one-minute maintain time for scalpers, which might immediately influence short-term buying and selling types.
A pleasant invitation if you would like commerce concepts and prop-friendly setups
If you’d like a spot to comply with periodic commerce concepts (together with scalp-style concepts that may match prop buying and selling guidelines relying on the agency), you might be welcome to hitch the @investingLiveStocks Telegram channel right here:
https://t.me/investingLiveStocks
It’s a good approach to keep within the loop and examine how totally different companies’ guidelines have an effect on real-world execution.
Ultimate reminder for newbies (hold this mindset)
Prop challenges usually are not solely about being proper on course.
They’re about surviving a ruleset persistently.
Your objective is to decide on a agency the place:
-
the platform is dependable sufficient that you may handle threat
-
the foundations are secure sufficient that you may construct a repeatable course of
-
the enterprise mannequin aligns with retaining good merchants buying and selling
And when drama hits the business, deal with it as a studying second, not leisure.
