BAD News for Prop Firm Traders
Summary
TLDRThis video discusses the evolving landscape of proprietary trading firms (prop firms) and their challenges. Initially, prop firms had a rigorous selection process, which has since become easier, attracting more traders but potentially weakening the business model. The presenter argues that the recent trend of increasing difficulty is positive for the industry, ensuring only competent traders get funded. They highlight the importance of a stable business model and mention their own EA, 'Titanex', which adapts to changing prop firm rules, helping traders get funded despite the challenges.
Takeaways
- 😀 The script discusses the changing landscape of prop firms and how they are getting harder to pass, which the speaker believes is a good thing for the industry.
- 📉 The industry initially had a harder challenge for traders, which then became easier as prop firms competed for traders by lowering barriers and making the challenges less stringent.
- 📈 However, making it too easy for traders to pass the challenges has led to a breakdown in the business model of some prop firms, causing them to struggle financially and even disappear.
- 💰 Prop firms generate capital by charging traders for the challenges, and the business model relies on a balance between the capital generated and the payouts to successful traders.
- 🏆 Long-standing prop firms like Fiverr and FTMO have maintained high ratings on platforms like Trustpilot, likely due to their consistent business model and less drastic changes.
- 🔄 FTMO, one of the first prop firms, initially had strict rules with time limits and minimum trading days, which made it difficult for traders to pass but has since adapted to become more attractive without breaking the business model.
- 🆚 Increased competition among prop firms led to a race to the bottom in terms of challenge difficulty, which was unsustainable and resulted in some firms failing to meet payout obligations.
- 🛑 Some prop firms, like My Forex Funds, had to shut down due to not being able to sustain the business model under the new, easier challenge conditions.
- 🤖 The speaker mentions an EA (Expert Advisor) called Titanex that helps traders get funded by adapting to the changing rules and conditions of prop firm challenges.
- 📊 The Titanex system uses a leaderboard to showcase effective trading strategies that can pass current prop firm challenges, indicating a high success rate among its users.
- 🔗 The script concludes by encouraging traders who find the prop firm challenges too difficult to consider using the Titanex system, which has helped over 900 community members get funded.
Q & A
Why are prop firms getting harder to pass?
-Prop firms are getting harder to pass because they have been adjusting their rules to make the challenges easier in the past to attract traders, which has led to a breakdown in their business model due to increased payouts and reduced capital from challenge fees.
What was the initial state of prop firms before they started changing their rules?
-Initially, prop firms had a more challenging environment with strict rules, such as time limits for traders to prove their profitability, which made it harder for traders to pass and get funded.
What is the business model of a prop firm?
-The business model of a prop firm involves traders paying for challenges to get funded. The capital generated from these challenge fees is used to pay out successful traders, creating a cycle of capital accumulation and distribution.
Why did prop firms start changing their rules to make it easier for traders?
-Prop firms started changing their rules to make it easier for traders in response to increased competition as more prop firms entered the market, aiming to attract traders by offering more lenient terms.
What are the consequences of making prop firm challenges too easy?
-Making challenges too easy can lead to a decrease in capital accumulation due to lower challenge fees and an increase in payouts as more traders get funded, which can strain the prop firm's financial sustainability.
Why did some prop firms disappear or change their models?
-Some prop firms disappeared or changed their models because the changes they made to attract traders, such as reducing fees and making challenges easier, led to financial instability and an inability to maintain the business model.
How have successful prop firms like FTMO maintained their business model?
-Successful prop firms like FTMO have maintained their business model by making minimal changes to their core rules and understanding the importance of a balanced approach that does not compromise the financial sustainability of the firm.
What is the significance of trust pilot ratings for prop firms?
-Trust pilot ratings are significant for prop firms as they provide a public measure of customer satisfaction and can influence the reputation and attractiveness of a prop firm to potential traders.
How has the prop firm industry evolved over time according to the script?
-The prop firm industry has evolved from a challenging environment to an easier one, and now it is trending towards becoming more difficult again. This evolution is tied to changes in business models and the competitive landscape.
What is the role of the community in the success of the EA mentioned in the script?
-The community plays a crucial role in the success of the EA by having full access to it, tweaking settings, backtesting strategies, and contributing to a leaderboard that helps identify effective trading strategies despite the changing rules of prop firm challenges.
How does the EA mentioned in the script adapt to the changing rules of prop firm challenges?
-The EA adapts to changing rules by allowing traders to test various settings and strategies through a backtesting system. Successful strategies are then ranked on a leaderboard, ensuring that the EA remains effective regardless of the difficulty of prop firm challenges.
Outlines
📉 The Evolution of Prop Firms' Challenges
The speaker begins by addressing the increasing difficulty of prop firm challenges, suggesting that this is a result of the industry's evolution. Initially, prop firms had a more stringent selection process, which has since seen fluctuations in difficulty. The speaker proposes that the current trend of increasing difficulty is positive for the industry. They also hint at discussing why prop firms have come and gone, attributing this to changes in the industry that made it easier for traders, which paradoxically led to some firms' downfall. The speaker uses Prop firm match.com as a reference, noting the emergence of new prop firms and the disappearance of others, and highlights the importance of understanding the business model behind prop firms.
💹 The Business Model Behind Prop Firms
This paragraph delves into the business model of prop firms, explaining that they thrive on traders paying for challenges to get funded. The capital generated from these fees is used to pay successful traders. The speaker discusses how increased competition led to prop firms easing their rules to attract traders, which initially seemed beneficial but ultimately weakened the business model. As challenges became too easy, more traders qualified for funding, straining the capital pool. This led to some firms denying payouts or altering conditions to cope with the financial pressure. The speaker contrasts this with firms like FTMO that maintained their core business model, resulting in their sustained success and high ratings.
🛠️ Adapting to the Changing Landscape of Prop Firms
The speaker concludes by reflecting on the industry's shift from difficult to easy and now back to more challenging conditions. They argue that this is beneficial as it ensures only competent traders receive funding, preserving the capital for those who truly excel. The speaker also introduces an EA called Titanex, which has helped many traders navigate these challenges successfully. They emphasize that despite the increasing difficulty, their community's funded rate has remained stable or even improved due to the adaptability of their EA. The speaker invites interested viewers to explore their platform, suggesting it as a solution for those finding the current challenges too difficult. The video ends with a call to subscribe for more content and a farewell, promising future videos on relevant topics.
Mindmap
Keywords
💡Prop firms
💡Challenges
💡Traders
💡Business model
💡Capital
💡Funded account
💡Payouts
💡Competition
💡EA (Expert Advisor)
💡Community
Highlights
Prop firms are experiencing increased difficulty, which is a result of changes in the industry.
The video discusses the historical difficulty of prop firms and how they initially faced even greater challenges.
There was a period where prop firms made the process easier for traders, which is now changing again.
The presenter argues that the increased difficulty is a positive development for the industry.
An analysis of the prop firm match.com and the current state of prop firms in the market.
Many new prop firms are emerging, but some have disappeared due to changes in the industry.
The video explains why prop firms that have not changed their business model significantly are still successful.
Firms like FTMO and 5ive have maintained high trust pilot ratings due to their consistent business approach.
The presenter shares personal experience with FTMO and how the rules have changed over time.
The business model of prop firms is based on traders paying for challenges and potentially receiving funding.
As competition increased, prop firms started to lower their fees to attract traders, which weakened the business model.
Some prop firms began to deny payouts or fiddle with fees due to the strain on their capital.
The presenter suggests that the current increase in difficulty is beneficial as it ensures only good traders get funded.
The video discusses the Blue community's EA, Titanex, which helps traders get funded despite the changing rules.
The presenter claims that Titanex adapts to the challenges and maintains a high funded rate for the community.
The video concludes by emphasizing the positive impact of the increased difficulty on the prop firm industry.
Transcripts
so as I'm sure a lot of you have seen
prop firms are definitely getting harder
again and why is that why are we getting
harder challenges and why are they
making it harder to pass well in this
video we're going to be talking about
that in particular how it actually was
initially even harder than it is now
even though it is getting harder but
then we went through this kind of valley
of very easy everything changing to make
it easier for us the Traders so we're
going to be talking about that why is
that and then we're also going to be
talking about this change of the
challenge is getting a little bit harder
is it a good thing is it a bad thing I
think it's a good thing I think it is
definitely a good thing you might be
thinking what the hell it shouldn't it
be a good thing if it's getting easier
well if you stick around I'm going to be
telling you exactly why I think it is a
better thing and why it's good for the
whole industry so make sure you watch
till then let's just start with this
guys I'm here on Prop firmm match.com
I'm just going to go Forex we're not
looking at the futures for now Forex 100
and twostep right and then I'm going to
search and there we go so the reason I'm
looking at this is there are so many new
prop firms prop firms are popping up all
the time now we've seen a lot of prop
firms disappear as well which is also
going to be talked about in this video
why have they vanished why have they
gone away well it's because of the
change because of them getting easier
because of them changing everything to
make it easier for us this in turn
actually is a bad thing for them so
we're going to be talking about the
whole kind of timeline of how it was
harder it got easier now it's getting
harder again and why that is let's look
at the reason behind all of this so one
thing I do want to point out over here
is I'm actually going to take all of
these and I'm going to go to I'm going
to just do it by trust pilot rating okay
so we won highest first and there we go
what a surprise we actually have the
fivers and ftmo up there at 4.8 now
that's interesting because the fivers
and ftmo are two of the companies I'm
actually going to be talking about today
as well as others but these guys have
probably the ones that have been well
ftmo in particular they have been around
the longest for sure but they're still
up there how are they still maintaining
a 4.8 after all this time they were set
up when is it back in January 2015 FS
was 2016 so two of the longest standing
companies when it comes to these prop
firms are the ones that are at the top
of the list why is that because they
haven't fiddled around too much they
haven't changed too much yes they have
changed small things but their their
model their business model has stayed
the same and they understand the
business model I'm going to be talking
about this because it's very important I
I just want to use this as kind of my
starting point when I first started
trading prop firms ftmo was the first
account I ever took and even back then I
remember hearing about the 5centers but
you know for one reason or another I
chose to go ftmo and it was a lot harder
then than it is now for example let's go
over to the ftmo website over here now
one thing I do want to actually just
show you guys on this prop firm
match.com if we go to favorite firms
let's have a look at what the favorite
rated firms based on this there we go in
the top three we've got ftmo and we've
got fivs the two I was talking about so
not only based on trust pilot reviews
but based on this website which is
constantly getting all the data and
these guys do a fantastic job at
comparing firms and they also have a
rating system themselves so these guys
know what they're talking about and
there's a reason these companies are
there so let's have a quick look at ftmo
cuz I want to I want to talk about when
I first started when I first started
trading I basically started with ftmo
and I think there's only two of the main
rules these rules that you see when you
first come up to the website and the
ones that attract us or maybe get us you
know push us away these rules are the
ones I'm talking about cuz I'm sure
there's very small rules in the
background that have changed here and
there just based on what's happened in
the prop film industry over the last
couple years they're probably they
haven't for example they they no longer
allow Traders from the US so you know
things like that obviously have changed
but I'm talking about these rules for
today because that's the whole point of
this video when I first signed up step
one phase one we had 30 days you had 30
days to get your 10% right and then uh
step two you had 60 days to get your 5%
so there was a time limit and that I
tell you that really did make it a lot
harder a lot harder I remember that I
often was quite close but i' I'd not get
there because of the time con trained
then the only other thing that I think
has changed is this the minimum trading
days which is now 4 when it used to be
10 now the reason they changed that okay
because these guys were in the the
industry they were the first one of the
first ones there and it started becoming
very popular now you had a lot of people
coming in thinking okay he has a
brilliant business model I can make a
lot of money these prop firms were like
damn we can make some serious money here
let's jump on board you know so they all
of a sudden was a big pool of prop firms
and these guys are all competing with
each other right these guys are all in
the same business it's a business at the
end of the day and they have to get
customers because let's talk about the
business model the business model with a
prop firm is at its core we as Traders
want to get funded they are offering us
the funding but we have to pay we have
to put money down we have to for example
100K count we have to put $500 down to
basically even take the challenge that's
not a guaranteed $500 there we go
there's your account no we have to take
the challenge right we have to go
through the challenge and we have to get
funded so these guys are making Capital
by us paying for these challenges that's
how they are are building up capital and
eventually when the few traders that get
through the net and actually get to a
funded account and then also get to a
payout one two or three however many it
is that point they are basically digging
into the the funds that they've
generated from us the Traders paying the
challenge fee that challenge fee is what
has created the the capital right so
that's what they're paying us from so
that's the business model guys we all
know that and if you don't know that
where have you been you know that's how
I would say probably 95% of these prop
firms work you know there's a few others
that you know do slightly different
things some of them that talk about a
booking but we're specifically going to
be talking about this business model so
obviously as more companies come in and
there's more competition for these guys
what did they do they need to attract us
they need to grab us the Traders
attention so what did they do they start
changing the rules to make it a more
attractive uh worm on the hook for us
the Traders right so these guys are just
casting the the rod casting in but they
need to be attractive so what do they do
they make it easier and that is not a
bad idea right but the problem is once
you get to a point when you've made it
too easy you're kind of breaking the
foundation of how this business model
works because what ends up happening
you're making the challenges way too
easy you're dropping the prices way too
much so all of a sudden this Capital
that they were building up is getting
smaller because the the buyin fees are
smaller so that's getting smaller while
in the meantime more fun more Traders
are getting funded because it's easier
more Traders are getting through the net
suddenly the net is a little bit he's
got more holes in let's let's just say
he's got more holes more of us are
getting through and more of us are
requesting payouts so now not only is
this Capital smaller but more of us are
asking for it grabbing into it and that
you know starts really breaking down the
Foundation of this whole business model
and that's what we saw happening we saw
companies like my Forex funds true Forex
funds all these companies starting to
really change their models dropping
their fees you know all this going on
and then you know what starts kind of
happening is these guys all of a sudden
realize oh no we're paying too many of
our Traders too many of our Traders have
have got through the net and now they're
asking us for money and we don't have
the money so what do we do we start
denying payouts we start looking for
reasons to not pay them we start
fiddling with the feed we start doing
things that we shouldn't be doing
because we're in a situation that we've
got ourselves into and we're kind of
like oh no what do we do and that's what
happens with my Forex funds they have
the bodies looking into them saying that
you guys have been fiddling you guys
have been doing stuff you shouldn't and
why is that because all of a sudden more
Traders are requesting cash and the
model is breaking down now ftmo are one
of the few companies that did not change
too much like I said they changed two
things but interestingly they were one
of the first to change this the trading
period to unlimited now obviously these
guys were the top of the game and all of
a sudden players like my Forex funds
start trying to rip them off their top
spot so they have to do something right
but they were very smart because it was
like what can we do to make it more
attractive but it's not going to break
the foundation it's not going to change
these guys understand the business model
and how it needs to work in order for
for the whole ecosystem to stay strong
so these guys changed that which was
their enough to keep Traders interested
right all of a sudden hold on ftmo is
still a viable option because now it's
unlimited that used to be one of the
hardest things was the the time then
they also go into the minimum trading
days which used to be 10 which used to
suck you know you had to trade for 10
days before you could actually go on to
the next then they dropped that and that
that's about it you know they they still
one of the the the highest costs but
even with all of this they are still top
of the pile they're still up there guys
so you know this this this is the
problem and and that's why as things got
easier as these companies undercut each
other and really kind of started
competing to a point that it was
breaking the model down we started
seeing companies shut one after the
other we've seen a lot of companies shut
down true Forex funds is another one you
know they basically did try come back
and because they had been closed for so
long they kind of I think they were
forced to a certain degree to to try and
make it more attractive but they could
never really claw back because they they
owed too many Traders money too many
traders that got through the net too
many Traders were requesting payouts and
they just could not maintain then
eventually they had to shut down we saw
um we've seen a lot of other companies
also go down some of them were also down
to bad management let's be honest where
you know a lot of the money that was
should have been there for the capital
to pay the Traders were going elsewhere
to pay for some nice big houses and cars
and stuff like that for some people that
it probably shouldn't have been so you
know there was also bad management but
this this is the reason I I actually say
that now that we've got the rules kind
of getting a little bit harder I don't
think it's necessarily a bad thing
because now what's happening is it's
getting a bit harder less people are
getting funded as a result which yeah
you know us as the trader maybe we look
at that as a bad thing but it's not a
bad thing because if you are a good
Trader you're still going to get through
to the the funded account cuz let's be
honest you don't want everyone getting a
portion of that because you know it's
the good traders that kind of get
through the traders that are have
systems that work that are getting
through let them get paid and the less
that is in that pool of people the
better it runs for the whole the whole
company you know they they can maintain
this Capital they can continue paying
they don't have to start you know
looking for reasons to not pay people so
all around I think the challenge is
getting a little bit harder again is a
good thing for the industry is a good
thing for everyone because it it just
works it that's how the business model
thrives so I think we've got to run with
that we've got to accept that and we've
just got to trade better with that being
said here at Blue we have an EA called
titanex that basically gets people
funded and we have a lot of people I'm
sure I have a lot of people asking
unless I actually say this so then you
know why is it still difficult for you
guys are you guys finding less people
getting funded because it's getting
harder actually know we are maintaining
our funded rate if not it's got better
even though these challenges are getting
uh more difficult and the reason being
is we have a whole community that has
full access to our EA and all the
settings and we give them the full
freedom to basically try any variation
of those settings that they want put it
through a back testing system and then
it goes on to a leaderboard and once
it's on a leaderboard it's it means if
it's made it to the top of the
leaderboard it means that not only is it
good for current market conditions but
it's also working for the current uh
challenges the challenges no matter the
rules no matter what the rules are if
it's on that board currently it means
that based on the the the more difficult
rules it's still getting past you know
it's still getting through so it's a
phenomenal system that just really works
and we've got thousands of set files on
on this leaderboard so you know there's
so much to choose from our customers
constantly make their own uh can tweak
it to to basically come up with their
own their own strategies and then we
have obviously we have a lot of our guys
working in the background that are also
putting up strategies so the system just
works really well I mean we are
currently it keeps changing but I think
the last number we had was just slightly
over 900 of our Community have currently
been funded with with using this so it's
not changed for us they can make it as
hard as they want they can change the
rules as much as they want but our EA
just keeps adapting to whatever it's
whatever's thrown at it so if you guys
are interested in this if you find that
it is getting a bit too difficult for
you and you want a little bit bit of
help go to www.pr forming.com have a
look at the demo video there you know
fill in the form sign up because I
promise you you won't be disappointed
this this thing just works so with that
being said guys that's that's the video
very basic one it's it's a great topic
and it's one that I think you know I I
really wanted to talk about the the the
flow of how it went from very hard to
easy to now getting a little bit more
difficult and and I think it's a good
thing so I'm glad you guys joined thank
you very much for joining and if you
haven't already please subscribe to the
channel we'd love to have you around for
the next video the one after that and
all the videos in the future make sure
you're here because we've got some great
content coming and with that being said
guys I'm going to leave it there thank
you very much for watching and we will
see you in the next video bye-bye
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