The Only Way To Pass Funded Trading Accounts by ICT | FTMO-APEXTrader - MyforexFunds - TopStep

Summary

This transcript delves into the pitfalls of trading with funded accounts, emphasizing the dangers of impulsive behavior, over-leveraging, and ignoring sound risk management. The speaker highlights how these accounts often encourage traders to take excessive risks, promising high returns with low initial investment. However, the reality is that most traders fail due to emotional decision-making and a lack of proper strategy. The speaker warns against the lure of trading large contracts without understanding the risks, stressing the importance of patience, discipline, and consistency for long-term success in trading.

Takeaways

• 😀 Avoid impulsive trading: The script emphasizes the dangers of impulsive decisions in trading, especially when under pressure to 'recover' losses by increasing contracts.
• 😀 Funded accounts may not be as advantageous: Funded trading companies often set up conditions that are statistically likely to lead to failure, preying on impulsive traders who don’t manage risks properly.
• 😀 Risk management is crucial: The importance of sound risk management is highlighted, stressing that traders should never risk more than they can afford to lose in a single trade.
• 😀 One contract is enough: The script advocates for a conservative approach where trading just one contract is recommended, regardless of what the funded account offers as maximum leverage.
• 😀 Small losses are acceptable: A single loss or a small drawdown of around 5% should not be seen as a failure but as part of the broader trading process.
• 😀 Funded accounts can cause psychological pressure: The script compares trading with funded accounts to being trapped in a small room, leading to stress and poor decision-making.
• 😀 Companies bait traders with high leverage: Funded companies lure traders by offering the option to trade up to 15 contracts, but this often leads to poor outcomes for those who don’t follow sound strategies.
• 😀 Success requires discipline: The key to trading success lies in sticking to a disciplined approach, rather than chasing quick fixes or attempting to make up for losses by increasing trade size.
• 😀 Realistic expectations are needed: A profitable trader doesn’t need a $150,000 account to succeed; a smaller account is often sufficient if managed correctly.
• 😀 The cost of impulsive behavior: Continually paying for resets and reattempts in funded accounts creates a cycle of failure, encouraging traders to act impulsively rather than strategically.
• 😀 Learning from personal experiences: The script acknowledges that even those closest to the speaker (like their children) have faced similar challenges, suggesting that these struggles are common and part of the learning process.

Q & A

Why does the speaker believe trading with funded accounts can be problematic?

The speaker believes that trading with funded accounts can lead to failure due to the high risk and impulsive behavior they encourage. Funded account programs often offer leverage and the option to trade multiple contracts, which can tempt traders to overreach and make poor decisions, ultimately leading to financial loss.

What is the primary risk when using high leverage in funded accounts?

The primary risk is that traders may take on more contracts than they can manage, leading to significant losses. The funded account companies know this and rely on impulsive decisions and traders' emotional reactions, such as trying to 'recoup' losses quickly, which can be detrimental in the long term.

How does the speaker suggest traders should approach risk management in funded accounts?

The speaker suggests that traders should focus on managing risk by sticking to smaller, more manageable positions—specifically, one contract at a time—and limiting risk to a reasonable percentage (around 5%). This approach helps prevent over-leveraging and reduces the likelihood of impulsive decisions.

What does the speaker mean by the term 'trap' in relation to funded accounts?

The 'trap' refers to the way funded account companies design their programs to encourage traders to take on excessive risk. By offering the ability to trade more contracts, these companies capitalize on traders' impulsiveness, knowing that most will fail and thus continue to pay for new account resets and fees.

Why does the speaker think that trading with only one contract can lead to more success?

Trading with one contract allows traders to focus on proper risk management, avoid emotional decisions, and limit exposure to large losses. The speaker believes that smaller, more disciplined trades are essential for long-term success, especially for beginners or those struggling with impulsiveness.

How does the speaker compare the mental state of traders in funded accounts to that of his son?

The speaker compares traders in funded accounts to his son, who feels trapped in a small room with no room to move. This is a metaphor for the pressure traders face when using high leverage or multiple contracts, which can lead to frustration and poor decision-making due to the stress of managing large positions.

What is the main warning the speaker gives to traders using funded accounts?

The main warning is that traders should resist the urge to take high-risk positions in an attempt to recover losses quickly. Over-leveraging, trading multiple contracts, or rushing to make up for past mistakes will likely lead to failure and more financial loss.

What does the speaker think about the value of large-funded accounts (e.g., $150,000 accounts)?

The speaker believes that large-funded accounts are not necessarily advantageous. They suggest that traders can achieve success with a smaller, more manageable account size (e.g., $50,000) if they follow proper risk management practices. Large accounts often encourage traders to take unnecessary risks, which is counterproductive.

How does the speaker view the business model of funded account companies?

The speaker views the business model of funded account companies as exploitative. These companies encourage traders to fail by offering high leverage and the ability to trade many contracts, knowing that most will lose and pay repeated fees to reset their accounts.

What lesson does the speaker want traders to take away from the transcript?

The speaker wants traders to understand that patience, discipline, and sound risk management are key to success in trading. Avoiding impulsive decisions and over-leveraging is critical, and traders should focus on steady, manageable growth rather than trying to 'get rich quick' through risky trades.