1. Absolute Drawdown

Absolute drawdown is calculated from the initial starting balance of your trading account down to the maximum allowance below the initial starting balance of your trading account. This number is, in most cases, shown in a percentage of your trading account.

Example: Starting account balance of $10,000 with a 10% absolute drawdown rule

This means that you are allowed to lose $1,000 of the initial starting balance of your trading account. In addition, if you go below $9,000, you have violated the 10% absolute drawdown rule.

2. Relative Drawdown

Relative drawdown is calculated from the difference between the maximum value of equity in your trading account compared to the minimum value of equity in your trading account.

Example: Starting account balance of $10,000 with a 10% relative drawdown rule

This means that your starting relative drawdown limit is $1,000. If your first trade is negative and you lose 2% of your account, which is $200. Your relative drawdown limit stays at $1,000. However, your second trade is profitable, and it makes you a profit of $400, which is 4% of the initial starting balance of your trading account. Now your account balance is $10,200, and since your drawdown type is relative. The new relative drawdown limit sets higher at $9,200, which is $1,000 below the new account balance of $10,200. In addition, if you go below $9,200, you have violated the new value of the 10% relative drawdown rule.

3. Maximum Drawdown

Maximum drawdown is calculated from the highest value of balance on your trading account compared to the maximum allowance below the initial starting balance of your trading account.

Example: Starting account balance of $10,000 with a 10% maximum drawdown rule.

This means that you are allowed to lose $1,000 of the initial starting balance of your trading account. In addition, if you go below $9,000, you have violated the 10% absolute drawdown rule. However, if you make a profitable trade of 3%, which is $300. The new highest balance of your trading account is now $10,300. This means that your new maximum drawdown limit is $1,300 since you can now lose the previous $1,000 and the new $300 profit that you just made before you violate your 10% maximum drawdown rule.

4. Conclusion

In conclusion, we have mentioned that we have three different drawdown types in forex trading. Absolute, relative, and maximum drawdown types, of which we have examples above. That being said, it is essential to always familiarize yourself with the type of drawdown you are working with, so you can continuously calculate it to prevent chances of violating your trading account. Let us know in the comments which type of drawdown is your favorite to work with.

In addition, we would also advise you to check our in-depth proprietary trading firm reviews, as well as our Prop News section, where we release news articles about the proprietary trading firm industry.

The post Forex Trading Drawdown Types appeared first on Forex Prop Reviews.

The 90-90-90 rule

It is a rule that is quite well-known in the trading community, and it displays the following characteristics. 90% of forex traders lose 90% of their capital within 90 days of trading. Based on those numbers, traders are more and more likely choosing proprietary trading firm funding instead of depositing their hard-earned money onto brokers to trade their own capital. Despite the fact that they will be earning a profit split instead of keeping all the profits when trading with their own capital, they still choose the proprietary trading firm because of the limited risk. 

Let’s see the statistics from My Forex Funds about the process of individual traders becoming funded with them. The evaluation is made out of two phases before becoming funded. In phase one, the trader is required to reach a profit target of 8% without surpassing the 5% daily or 12% maximum drawdown limits. This has to be done with 5 minimum trading day requirements in a 30 calendar days period, where the trader is able to request a 14 calendar-day extension if certain factors are met. In addition, traders that have a profit on their account without actually reaching the profit target are eligible for unlimited free retries. However, in phase two, the trader is required to reach a profit target of 5% without surpassing the 5% daily or 12% maximum drawdown limits. This has to be done with 5 minimum trading day requirements in a 60 calendar days period. After passing both evaluation phases, you receive a funded account with which you can generate profits and start earning profit splits.

Now that we have gone through the structure of the evaluation phases, let’s see the number of successful traders who participate in this program. 14% of traders who participate manage to pass phase one, while only 27.5% of those 14% pass phase two. Based on those statistics, we can clearly see that not many traders pass the evaluation phases and reach funded status. However, when looking at the percentage of traders that actually reach their first payout, it is significantly lower. Only around 3.5% of the traders that reached funded status successfully received their first payment. Let’s look at those numbers for October 2021 and November 2021.

October 2021

• Passed phase one: 18%
• Passed phase two: 31% of the traders that successfully passed phase one
• Reached first profit split: 4% of traders that successfully passed phase two
• Number of new accounts: 3,544
• The total amount paid out: $1,482,627.31
• Most traded pair: XAU/USD
• Most profitable pair: GBP/AUD
• Least profitable pair: GBP/JPY

November 2021

• Passed phase one: 10%
• Passed phase two: 24% of the traders that successfully passed phase one
• Reached first profit split: 3% of traders that successfully passed phase two
• Number of new accounts: 5,718
• The total amount paid out: $2,848,357.40
• Most traded pair: XAU/USD
• Most profitable pair: XAU/USD
• Least profitable pair: GBP/JPY

Additional interesting statistics from My Forex Funds’ trading data:

• Over 60% of traders don’t use a stop-loss.
• The traders who have managed to get to their 4th payout cycle all have a risk management strategy of below 3% risk on any given day.
• Profitable traders are in the market less than 4 hours per day.
• The most profitable traders don’t hold trades overnight.
• Traders who hold trades over the weekend have a 60% higher chance of failing or losing their accounts.
• During higher market volatility, more traders fail because of a lack of risk management discipline.
• All traders who have received a record payout have lost their accounts within three weeks due to excessive risk.

My Forex Funds February 2022 statistics

My Forex Funds released an article about their statistics from February 2022, and the results were quite incredible. In that single month, they processed $6,202,217.52 in payouts, with the largest payout being $53,707.70. They also included the percentages of traders that passed phases one and two. 31% of traders passed phase one, while only 14% of traders passed phase two. As we know, My Forex Funds are funding traders worldwide, 34% of them being based in America, 23% from Europe, 22% from Africa, 18% from Asia, and 3% from Oceania. This was based on the total number of live-funded traders at the time, which was 7,018. This number included traders that were funded with all of the funding program types that they are offering. Traders found the most success by trading GBP/CAD and the least success when trading XAU/USD. Another interesting fact was that there were six traders who reached 8 or more payouts but lost their accounts in February 2022 due to the ‘’volatility bloodbath’’ that was going on in the market. During this month, My Forex Funds processed 2,708 payouts, meaning that the average payout was $2.290.33.

FTMO statistics for 2021

FTMO has previously released its statistics for 2021, where they mentioned a lot of interesting facts about the numbers that were processed during the year.

Throughout 2021, there were over 960,000 created trading accounts through their platform, which include FTMO challenges, verifications, funded accounts, and free trials. There were over 90,000,000 trades executed during 2021, which means almost 3 new trades each second for an entire year.

When looking at payouts that were distributed by FTMO during 2021, they managed to forward $29,000,000 in payouts to all of their traders. This was an incredible number. Especially if you take into consideration that they paid out traders from over 180 different nationalities worldwide. While trading, traders, on average, executed 117.9 trades during one trading period on their FTMO accounts while earning an average of $4,685.

When covering the account types that traders chose, 87% opted to go for the normal account type with classic trading conditions. In the middle of the year, when they started offering swing-type accounts, 11% of all of their clients chose to purchase that account type. And lastly, the remaining 2% of traders decided to choose the aggressive risk account type.

With FTMO, most traders decided to trade gold (XAU/USD), making it the most popular instrument of 2021. When looking at currencies, the leading one was EUR/USD, which was followed by GBP/USD, GBP/JPY, USD/CAD, and AUD/USD. And as expected, among indices, the most popular were US30 and US100.

And lastly, when looking at account currencies, 70% of FTMO’s traders opted to go for USD accounts. 15% of traders went for account funding in EUR and 13% for account funding in GBP. Despite the fact that they are a company based in the Czech Republic and are offering accounts in the CZK as well, those are only chosen on specific occasions. The same can be said for newly introduced currencies such as CAD, AUD, and CHF. In total, the following currencies that were lastly mentioned cover the remaining 2% of account funding and are slowly gaining in popularity month after month.

Fidelcrest statistics for February 2022

Fidelcrest has previously also made a news article about February 2022 trading data and has provided us with some interesting statistics and facts regarding their community of traders. These statistics are not based on the average payouts and trading instruments being traded but will instead cover other interesting factors that show us the habits of traders that are currently working with the firm.

Extra trading data of Fidelcrest traders:

• Over 35% of traders don’t have stop-losses during the challenge.
• Funded traders are, on average, in the markets less than 5 hours per day
• Consistently profitable traders have excellent risk management, not losing more than 2.6% daily.
• The most profitable traders don’t hold trades overnight and during the weekend.
• Traders that hold trades during the weekend fail their challenge 30% of the time.
• The lot size used is increased up to 400% during high-impact news releases.
• Most traders fail during phase two due to a lack of patience, even though the time limit is 60 calendar days.

The Funded Trader’s total payouts

The Funded Trader is a proprietary trading firm that was incorporated in May 2021 and is currently one of the industry-leading proprietary trading firms available for traders. They have been launched for 19 months now and have hit an incredible amount of 30 million in payouts that were distributed to their traders since their incorporation.

The Funded Trader 30 million payouts:

– 17 million of the payouts were distributed to their traders through Deel.

– 8 million of the payouts were distributed to their traders through cryptocurrencies.

– 5 million of the payouts were distributed to their traders through Wise.

Note that the period for them to reach 30 million in distributed payouts was from May 2021 to January 2023!

Conclusion

In conclusion, we can see that there is a huge number of statistics types that proprietary trading firms can offer. It is not necessarily only the payout, profit, and trading instrument numbers. It is always interesting to hear about the payouts and how much traders receive. However, there are also other statistics, such as how many traders pass the evaluation and receive a profit split compared to how many traders actually fail and never get their first payout. That being said, be sure to work on your trading strategy and risk management strategy while also learning all of the terms and conditions of proprietary trading firms that you are interested in before joining them to maximize your chances of successfully becoming funded. And, of course, being able to be profitable after that to receive your profit splits for all of your hard work!

The post How Many Traders Pass The Evaluation Stages And Become Funded? appeared first on Forex Prop Reviews.

1. How does slippage work?

Slippage can be seen as a negative or positive movement since any difference between the expected price and the actual execution price is qualified as slippage. When we are executing an order, we are purchasing or selling at the most favorable price offered by the market at that specific time. The executed order can then be favorable, equal, or unfavorable in comparison to the expected price. In conclusion, the actual execution price can be executed with positive slippage, negative slippage, or no slippage.

The term slippage is used in most markets based on market prices changing quickly. These market conditions allow the slippage to occur during the delay between the trade order being executed and its actual completion. A good way to avoid negative slippage is to set a limit order. However, with a limit order, there is a risk that the trade doesn’t get executed if the price does not reach it. This risk is further increased during higher volatility market times and during session overlap times where market fluctuations occur faster.

2. Which currency pairs have the least slippage?

Under normal market conditions, the more liquid a currency pair is, the lower the chances for slippage to occur. For example, two such currency pairs are EUR/USD and USD/JPY. Keep in mind that during volatile market conditions during and around high-impact data releases, even these liquid currency pairs can encounter slippage. So whatever you do, don’t forget that important news releases and high-impact economic events can increase volatility drastically for the most volatile currency pairs as well as the most liquid currency pairs.

3. How to reduce the effects of slippage?

When trading, slippage is impossible to avoid completely. However, you can minimize it significantly by applying the following:

1. Changing the market orders: The main way to avoid slippage is to make use of limit orders instead of market execution. The reason behind this is since a limit orders only get filled at your desired price. With some brokers, limit orders get filled at set prices or better prices. This means that the risk of negative slippage is completely negated.
2. Not trading during and around high-impact economic events: Biggest slippage occurs during and around high-impact economic events, which means that it is important to monitor the economic calendar for news releases for the assets that you are trading. These news events can have a great effect on the direction in which the asset is moving. In addition, by not trading them, you can avoid highly volatile market times and the chance of high losses occurring.
3. Trade highly liquid markets: An individual can limit slippage by trading in highly liquid markets. A low volatility market means that you will encounter smooth price action without any increased price movements. In addition, highly liquid markets have active buyers and sellers, which increases your chances of an order being executed at your expected price.
4. Use a VPS: Traders can take advantage of VPS services to gain access to the best execution at all times. With a VPS server, you will also prevent technical issues such as internet connectivity problems, power cuts, and many other failures.

4. Slippage example

A common way for slippage to occur can be aggressive changes in the bid/ask price. As previously mentioned, a market order can be executed at a more or less favorable price compared to the expected price. Negative slippage means that the asking price increases when looking to execute a long trade or that the bidding price decreases when looking to execute a short trade. Positive slippage means the exact opposite, the asking price decreases when looking to execute a long trade, or the bidding price increases when looking to execute a short trade. A simple way to protect yourself from negative slippage is to avoid market orders and instead focus on setting limit orders.

Example 1:

XAU/USD price is $1791.44/$1791.67 on your trading platform.

A 100 contract size order is placed with the intention the order gets filled at $1791.67. Unfortunately, during the transaction, the bid/ask spread jumps to $1791.69/$1791.92. The order is filled at $1791.92, meaning that a negative slippage of $0.25 per contract or $25 per 100 contracts has occurred on the XAU/USD pair.

Example 2:

US30 price is $32866.20/$32867.70 on your trading platform.

A 10 contract size order is placed with the intention the order gets filled at $32867.70. Unfortunately, during the transaction, the bid/ask spread jumps to $32871.40/$32872.90. The order is filled at $32872.90, meaning that a negative slippage of $1.50 per contract or $15 per 10 contracts has occurred on the US30 index.

5. Conclusion

In conclusion, slippage in forex trading is the difference between the expected price of a trade and the price at which the trade is executed. We can encounter it mostly during times of higher volatility when market orders are used more frequently. Another thing to consider is that slippage can be positive or negative, meaning that it can benefit us or it goes against us. A great way to prevent negative slippage from occurring is to switch market execution orders for limit orders.

Have you ever been a victim of slippage in the past? Let us know in the comments below!

The post What is slippage in forex trading? appeared first on Forex Prop Reviews.

We are going to cover three different amounts of capital an individual works with and see how much would they be earning to determine if they could make a living out of being a full-time prop trader. Note that we will be calculating the earnings in all examples by using an 80% profit split on the earnings a trader makes.

Example number 1: Prop trader working with a $100k funded account

Prop trader with a funded account with a starting account balance of $100k, making a 2% monthly return.

$100k + 2% = $102k, profit of $2k

$2,000 profit x 80% profit split = $1,600 profit

$1,600 profit – 20% tax = $1,600 profit – $320 = monthly profit of $1,280

$1,280 x 12 months = yearly profit of $15,360

So after making the calculations, we can see that a prop trader with a balance of $100k that is making a 2% monthly return would earn $1,280 on a monthly basis and $15,360 per year after considering the 20% tax deduction.

Prop trader with a funded account with a starting account balance of $100k, making a 5% monthly return.

$100k + 5% = $105k, profit of $5k

$5,000 profit x 80% profit split = $4,000 profit

$4,000 profit – 20% tax = $4,000 profit – $800 = monthly profit of $3,200

$3,200 x 12 months = yearly profit of $38,400

So after making the calculations, we can see that a prop trader with a balance of $100k that is making a 5% monthly return would earn $3,200 on a monthly basis and $38,400 per year after considering the 20% tax deduction.

Example number 2: Prop trader working with a $400k funded account

Prop trader with a funded account with a starting account balance of $400k, making a 1% monthly return.

$400k + 1% = $404k, profit of $4k

$4,000 profit x 80% profit split = $3,200 profit

$4,000 profit – 20% tax = $4,000 profit – $800 = monthly profit of $3,200

$3,200 x 12 months = yearly profit of $38,400

So after making the calculations, we can see that a prop trader with a balance of $400k that is making a 1% monthly return would earn $3,200 on a monthly basis and $38,400 per year after considering the 20% tax deduction.

Prop trader with a funded account with a starting account balance of $400k, making a 3% monthly return.

$400k + 3% = $412k, profit of $12k

$12,000 profit x 80% profit split = $9,600 profit

$9,600 profit – 20% tax = $9,600 profit – $1,920 = monthly profit of $7,680

$7,680 x 12 months = yearly profit of $92,160

So after making the calculations, we can see that a prop trader with a balance of $400k that is making a 3% monthly return would earn $7,680 on a monthly basis and $92,160 per year after considering the 20% tax deduction.

Example number 3: Prop trader working with a $1M funded account

Prop trader with a funded account with a starting account balance of $1M, making a 1% monthly return.

$1M + 1% = $1,01M, profit of $10k

$10,000 profit x 80% profit split = $8,000 profit

$8,000 profit – 20% tax = $8,000 profit – $1,600 = monthly profit of $6,400

$6,400 x 12 months = yearly profit of $76,800

So after making the calculations, we can see that a prop trader with a balance of $1M that is making a 1% monthly return would earn $6,400 on a monthly basis and $76,800 per year after considering the 20% tax deduction.

Prop trader with a funded account with a starting account balance of $1M, making a 3% monthly return.

$1M + 3% = $1,03M, profit of $30k

$30,000 profit x 80% profit split = $24,000 profit

$24,000 profit – 20% tax = $24,000 profit – $4,800 = monthly profit of $19,200

$19,200 x 12 months = yearly profit of $230,400

So after making the calculations, we can see that a prop trader with a balance of $1M that is making a 3% monthly return would earn $19,200 on a monthly basis and $230,400 per year after considering the 20% tax deduction.

Now that we went through some of the examples, you can see that even with realistic earnings of just a couple of % of your initial capital, you can certainly live from being a full-time prop trader. This shows that the proprietary trading firm industry has incredible potential, not to mention that most proprietary trading firms also offer a scaling plan that allows you to increase your capital. In most cases, you are eligible for scaling when you reach a certain profit target or after being profitable for a certain number of months.

IMPORTANT NOTICE: No matter the fact what we just explained and went through, this doesn’t mean that you should leave your job and start trading full-time. If you are interested in trading, start slowly, learn, develop and backtest your trading strategy and start part-time while you maintain your job as your main income source. Gather the experience and acquire your first funded account to become comfortable with being part of the markets. From there on, the potential is unlimited. Just remember, discipline and proper risk management is the key to long-term success.

The post Can I reach financial freedom by being a prop trader? appeared first on Forex Prop Reviews.

Let’s start with general trading strategies and rules that proprietary trading firms prohibit:

• High-frequency trading
• Ultra-fast scalping
• Latency arbitrage trading
• Any tick scalping strategies
• Any reverse arbitrage trading
• Any hedge arbitrage trading
• Hedging between different accounts

Now that we have gone through the general trading strategies and rules that proprietary trading firms prohibit let’s go through some of the other rules that are most often not displayed and are sometimes breached without even knowing they exist.

1. Maximum lot size limit

A maximum lot size limit means that you have a limitation based on your trading balance, or based on specific trading instruments.

2. Risk per position rule

The risk per position rule shows us the specified percentage we can risk for a given trading instrument.

3. Mandatory stop-loss rule

The mandatory stop-loss rule means that we need to set a stop-loss on every position or buy/sell limit before opening it.

4. Consistency rule

Consistency rule in general means that you are expected to trade based on your trading style with similar risk and lot sizes.

5. Maximum number of positions open at the same time

The maximum number of positions open at the same time tells us how many positions we can have open in general or for each trading instrument.

6. Minimum open trade time

Minimum open trade time tells us how long should our open position be open before being able to close them to not breach the rule. This time can vary from a couple of seconds and upward.

7. Consistent trading during the minimum trading days period

Consistent trading during the minimum trading days period means that if you have a 10 minimum trading days requirement and reach your required profit target in 7 days, you are expected to stick with your original trading strategy. This means that despite hitting the profit target, you are not allowed to reduce risk (for example open positions with 0.01 lot sizes in the remaining 3 days).

8. Risk desk team

If a proprietary trading firm has a risk desk team, this means that when you successfully finish your evaluation challenge, they analyze your progress to determine if your trading style/strategy is compatible with the firm’s beliefs of trading. If they decide that your trading is not fitting for their trading firm, you will receive a refund based on the evaluation challenges that you purchased.

9. No gambling mentality allowed

No gambling mentality allowed actually means that you are expected to trade without overexposing your account to complete the challenge as quickly as possible, but to remain disciplined and by following your trading strategy to reach your required profit targets.

10. Martingale

The Martingale trading strategy is doubling up on losing positions and reducing winning bets by half. It is a strategy that promotes a loss-preventing mentality that tries to improve the odds of breaking even but in cases of more losses occurring they are severely higher than normal since more positions go in the opposite direction. Based on the explained principle many prop firms don’t allow the martingale strategy, or they somewhat limit it.

11. Grid systems

Grid systems in forex are one of the automated methods of trading, which essentially remove the stress of manually opening and closing trades. It means that placing several buys and sell stop orders with previously calculated intervals above or below the current market price is not allowed.

12. Hedging

Hedging is a trading strategy that places two trades at the same time in the opposite direction to reduce the risk of any adverse price movements. However, it is not allowed due to overexposure that comes from higher spreads and market gaps.

13. EAs

EAs are automated robots that trade instead of the trader. Despite the fact most proprietary trading firms allow them, they often don’t tell us that they are only allowed if you are the author of the EA itself. You are not allowed to buy EAs that were made by other people since it could result in more people using them and making higher amounts of the proprietary trading firm capital exposed.

14. Trade copiers

Trade copiers are EAs that allow you to copy trades from one master account to more copy accounts. Most proprietary trading firms allowed them, but only if you copy trades from your other master account and not from other signal providers. The reasoning is similar to the EAs one since it could result in more people using them and making higher amounts of the proprietary trading firm capital exposed.

How about you? Have you ever failed an evaluation or lost your account due to a breach of a rule that was hidden deep in the proprietary trading firms’ terms & conditions? If so leave a comment regarding what exactly was your unfortunate breach caused by.

The post Proprietary trading firm hidden rules appeared first on Forex Prop Reviews.

Let’s jump right in and start off the rankings:

1. George Soros

George Soros is the co-founder of the Quantum Fund and is also known as the man who broke the Bank of England. He is mostly remembered for his short position against the British Pound in 1992 on September 16th which resulted in an estimated profit of over £1 billion. He went against the crowd and made this huge profit from one trade. His action proved to millions of traders that the saying ”quality is more significant than quantity” is true.

There is also a quote from George Soros that displays his discipline and willingness to realize errors while adjusting to changing market conditions. It goes like this ”I am only rich because I know when I am wrong”. The quote sends a very powerful message since trading has many important factors, one of them being that an individual can recognize and accept his mistakes while also learning from them.

2. Stanley Druckenmiller

Stanley Druckenmiller worked with Soros at the Quantum Fund, joining the massive short position against the British Pound in 1992. After that, he ventured out with the foundation of Duquesne Capital. His patience and risk management contributed to his success in becoming one of the best forex traders with consistent double-digit annual returns.

We would advise you to keep in mind that one of the greatest traders in the world was achieving double-digit profits annually. So next time you see any marketing campaign claiming unrealistic results, be aware.

3. Bill Lipschutz

Bill Lipschutz, also known as the Sultan of Currencies earned hundreds of millions of dollars in profit at Salomon Brothers in the 1980s without previously having experience with the forex market. This example shows us that knowledge is essential to succeed and that nothing can replace it.

His recognition of the fact that only between 20% to 30% of traders are profitable and the stressed importance of managing a successful portfolio despite facing more losses than profits was another confirmation that quality beats quantity in financial markets.

4. Andrew Krieger

Andrew Krieger worked briefly at Salomon Brothers, like Bill Lipschutz, before continuing his career at Bankers Trust in 1986. He is known for his famous $200 million profit in a matter of hours on a short position in the New Zealand Dollar with maximum leverage of 1:400 in the aftermath of Black Monday, the market crash of October the 19th, 1987. He is another individual that joined George Soros at his Quantum Fund soon after leaving Salomon Brothers.

5. Paul Tudor Jones

Paul Tudor Jones is a former chairman of the New York Stock Exchange. He founded Tudor Investment Corporation between 1992 and 1995 after gaining experience as a commodities trader. He managed to realize a profit of 62% in short positions and earned over $100 million while doing so during the previously mentioned Black Monday. To this day, he remains one of the best-known traders today and an extraordinary example of what courage looks like in the financial markets.

6. Michael Marcus

Michael Marcus is a founding member of the Commodities Corporation while also being known as one of the biggest traders in German Marks in the mid-1980s. He turned his initial $30,000 into over $80 million in two decades and later rivaled global banks with his almost $300 million in holding. He is another individual that shows us the importance of discipline and patience.

7. Bruce Kovner

Bruce Kovner has turned his $3,000 from his credit card into $23,000 and went on to work at the Commodities Corporation, where he had been mentored by Michael Marcus. Later on, he founded Caxton Corporation, where he earned over $14 billion at its peak.

8. Urs Schwarzenbach

Urs Schwarzenbach is a former employee of the Swiss Bank Corporation who was sent to London where he turned CHF 100,000 into CHF 1,000,000 while trading the forex market on the side. After earning a couple million more, he founded Interexchange and now owns properties and assets across the world.

9. Joe Lewis

Joe Lewis quit school when he was only 15 to help in the family business. He then used the money and moved to the Bahamas where he traded in a tax-friendly jurisdiction. He is known for his massive short position in the Mexican Peso in the 1990s, but it is unknown how much the made from the trade. However, it is well known that his forex career expanded from the trade onward.

10. Michael Steinhardt

Michael Steinhardt had an average annual return in excess of 24% over 28 years. This provides us with evidence that consistency is essential to the success of any individual in the forex industry. During the 1994 bond market crisis he lost over 33% of his portfolio and closed his fund in 1995. Later on, he returned to the financial markets in 2004 as the head of WisdomTree Investments with nearly $43 billion in assets under management.

Have you heard about any of the above-mentioned forex traders and their forex trading journeys before? And do you agree with them that discipline, risk management, and patience are key components to being successful in the forex industry? Comment below!

The post The world’s best Forex Traders appeared first on Forex Prop Reviews.

1. Develop a trading strategy and stick to it

A must-have is a trading strategy that you are required to stick to consistently. For the trading strategy, you should consider the pairs you will trade, the amount of risk you will use, and the amount of time you are going to spend in front of the charts. You should be disciplined and stick to the trading strategy, no matter the overall win or loss. Be sure to backtest and analyze your results to be able to improve your performance based on your previous results.

2. Set stop losses for all trades up to a certain percentage

Your trading strategy should also have a percentage of capital you can lose on any given day. For example, if you decide you can lose 1% on a daily basis, you set your stop losses on those limits and if you reach them, you stop trading for the day. While managing your account, you should also consider being consistent with your lot sizes, only increasing them based on your account growth. By taking all of that into consideration, you will be prepared for losing streaks as they will happen from time to time.

3. Do not revenge trade

It can be painful when losing out on a certain trade, however, stay disciplined and close the charts for the day. Do not engage in revenge trading, as this most likely resolves in even higher losses which can considerably damage your account capital. The best option after losing out on a trade is to stay away from the charts for the day, collect your thoughts and feeling, analyze what went wrong, and return the following day.

4. Prioritize quality over quantity

When trading you should always prioritize quality over quantity. This is a general rule since a consistent trading strategy with monthly returns is better than getting lucky a few times, and after that blowing your account. The more trades you place and the better your expected value is over a larger number of trades will increase your confidence and ability to successfully execute trades in difficult market conditions.

5. Test your trading strategies before going live with them

You should always test your trading strategy before going live with it and using them in the live market conditions. This is due to the fact that experience is one of the main components of forex trading, and taking the time to test something as important as your trading strategy is a significant factor to achieve success.

6. Do not force trades

Follow your trading strategy and analysis. Always wait for your entry points or simply do not enter the market. Forcing trades is a bad thing if the market goes in your direction as well as if it goes against you. This is because if it goes in your direction, your profits will be smaller, and if it goes against you it will significantly increase your losses. Knowing why you entered a specific trade is an important factor, you shouldn’t trade solely because you think you should or just to have a position open.

7. Find a proprietary trading firm that suits your trading strategy

With so many proprietary trading firms in the industry, there are many differences between their rules and guidelines. That being said, it can be a challenging task to find one that suits you the most based on your trading style. Each firm has its positive and negative features which you have to consider before joining. That being said I would suggest you check our article about the best proprietary trading firms in the industry.

The post How to be successful as a prop trader? appeared first on Forex Prop Reviews.

How many traders are there?

Starting the year 2022 there are over 14 million active online traders, this is according to The Modern Trader study and research documents. Based on the research, you can calculate that there is approximately one trader in every 561 people in the world.

These numbers have started increasing immensely after 1970. The average daily trading volumes increased from approximately 1.2 trillion in 1995 to 5.1 trillion in 2016, which makes it the most significant financial market in the world. However, we must consider that banks and large financial organizations contributed a huge part to the trading volumes. Nowadays the online trading platforms developed by forex brokers are made with such simplicity that anyone can opt to use them since it is easily accessible and easy to use.

How many traders are there per continent?

How many traders are there in the EU?

Based on numbers from 2021, there are between 1.5 million and 2 million online traders in Europe with a ratio of traders to internet users of 1:434.

Locations of online traders

Forex trading has become a global business since brokers have received permission from regulators in numerous countries, making them able to promote their services outside of their home country. Based on research one-third of forex traders are based in the Middle East and Asia combined. For Europe and North America, on the other hand, this number exceeds more than one million. Despite the fact that London, in the UK, and New York in the USA are the major forex trading locations, forex traders can be found all over the world.

At present, now that technology has evolved immensely anyone with an internet connection can become a forex trader. Most platforms are free and designed for mobile phone access, making it easier to manage than before when you needed a computer to access the market. There are around 3.8 billion who use the internet worldwide on a daily basis with 1 in 396 being an online trader.

The United Kingdom traders

Statistics indicate that the UK has 46 million people with access to the internet with a number of online traders exceeding 280,000 which makes a user ratio of 1:164. This makes Britain a country with the highest number of traders in Europe. A reason behind a small reduction of traders was regulatory changes in Europe regarding leveraged products. Other countries that don’t allow leveraged products are France and Holland. In addition, Cyprus regulators have restricted leverage to certain customers and Belgium has applied a ban on any type of leverage for forex.

In the UK there were considerations from the Financial Conduct Authority to control the leverage, but in the end, no changes were implemented. This resulted in UK traders being allowed to trade on margins and trading with small deposits, which is a significant positive since the salary of more than 50% of the UK online traders is less than £35,000. The German regulator Bafin, on the other hand, has implemented changes to protect users from acquiring negative balances. This made German forex trading volumes remain quite low, making them slightly more than half of the UK trading volume.

How about you? Are you also a forex trader? If so leave a comment from which location in the world are you trading from.

The post How many forex traders are there worldwide? appeared first on Forex Prop Reviews.

1. What is a prop firm?
2. What is prop trading?
3. Can anyone work for a prop firm?
4. What are the positive and negative features of prop firms?
5. List of top Forex prop firms
6. The legal structures of prop trading firms
7. Differences between working for a prop firm and being a day trader
8. Conclusion

What is a prop firm?

A prop firm, originally a proprietary firm, is a trading company representing an organization, usually a bank or another firm that invests its capital in making profits. Rather than traditionally using their clients’ money, hedge funds or investment banks would. 

As a prop trader, you can take part in the firm’s profit without risking your capital. You do so by using the firm’s money to buy and sell assets, and since they fund you, you as a trader get paid based on a profit split commission plan that the firm has set. The most common profit splits range from 50-90% to the trader.

What is prop trading?

Prop trading is short for proprietary trading, and it implies financial assets trading such as forex pairs, commodities, bonds, indices, cryptocurrencies, stocks, etc., with the prop trading firm’s capital.

By that being said, a prop trading firm earns money from their client’s trading and not by their clients’ thin-margin commissions.

A prop trading firm has a built structure in which traders use the firms’ capital to get part of the traders’ profits. The main advantage is that traders gain access to higher leverage without risking their capital. Prop firms have different criteria for their clients’ funding, and some offer direct funding for a one-time fee. Some offer financing after successfully passing one of their evaluation processes with specific rules. After being a funded trader at a prop firm, you have to follow that same firm’s trading rules, so you are allowed to keep the funded account. Usually, after regulating any of the rules, the account is taken from you, and you have to start all over again.

Can anyone work for a prop firm?

Anyone of legal age in their representative country can be a client of a prop firm. Remember that you work as a contractor, not a full-time employee, which means that you get no hourly wages, salary, or other benefits that the firm offers. The only payment you are eligible for is the percentage of the profit you make, depending on the profit split of each firm. That being said, you can start working as their client with their capital with no experience, or if you are a professional.

You have to consider their rules, though, meaning that most firms usually have evaluation processes that many beginners with low amounts of experience will have a hard time passing. On the other hand, other firms that offer direct funding usually require you to show some kind of previous proof of your success before trusting you with their capital, so keep that in mind when looking for a prop firm that will suit you best. As a beginner, a good choice for a prop firm would be its educational program, so you have experienced people helping you achieve your dream. And who else is better to help than the people who deal with their rule systems daily and who know them by heart.

What are the positive and negative features of prop firms?

Positive features of prop firms:

• Chance to trade with a massive amount of capital,
• Working with the firm’s money (no risk of losing your capital),
• Offers low funding options for newer traders; some firms even have trial accounts to get used to their platform and dashboard,
• Lower trading commissions compared to retail day traders,
• Chance of getting feedback from professional traders,
• The opportunity to participate in educational programs taught by professionals (usually cost a specific fee).

Negative features of prop firms:

• Usually online, meaning that you aren’t in contact with experienced day traders,
• Competition in this field is contested, which you will sooner or later have to face,
• Great retail traders are every prop traders competition because of the access to a different variety of trading tools and high internet speed,
• Prop firms often charge different fees such as (desk fee, starting fee, monthly fees for their tools, etc.), and considering the profit split, combining them costs a lot.

List of top Forex prop firms

1. FTMO

• Account balance up to $200,000
• Free trial
• 2 step evaluation process
• Free evaluation process upon not reaching the profit target (only if balance is positive)
• Allowed news trading on swing accounts
• Allowed overnight trading
• Leverage 100:1
• Profit split up to 90%

2. My Forex Funds

• Instant funded real accounts
• Traders receive account fees back (+12% on the first payout)
• Low fees
• Leverage 50:1 up to 500:1
• Profit split up to 85%

3. DT4X Trader

• Direct funded accounts
• Scaling up to $1,240,000
• Low fees
• No maximum or minimum time requirement
• No lot size restrictions
• Withdrawal growth function
• Leverage 10:1 up to 50:1
• Profit split 60%

4. Lux Trading Firm

• Free trial
• Scaling up to $10,000,000+
• No time limit on profit target
• Allowed weekend holding
• 1 Phase evaluation
• Leverage 10:1, 5:1 & 1:1
• Profit split 65%

5. The5%ers

• Instant funding real accounts
• Funding doubled at every profit target hit
• Allowed weekend and overnight holding
• Leverage 30:1 & 3:1
• Profit split 50%

6. Surge Trader

• Up to $1,000,000 capital
• Free trial upon request
• $1,000,000 challenge account
• News trading is allowed
• No minimal trading days
• 1 step evaluation process
• Leverage 10:1, 5:1 & 2:1
• Profit split 75%

The legal structures of prop trading firms

You can sort prop trading firms by the following two major types:

• No profit-sharing, and
• Profit-sharing.

No profit-sharing structure means that the trader keeps 90-100% of their profits. This is only possible since the trader owns the money and not the prop firm itself. Most traders, especially beginners, don’t have the capital to choose this option, so they decide for the second one where they get leveraged capital from the prop firm, which allows them to trade higher amounts than ordinarily possible.

On the other hand, the profit-sharing structure takes a part of the profit made by the trader since they are allowing the trader to avoid putting in his capital. The only costs that the trader has to pay are the one-time fee/monthly fee for the account, and in some cases, for their training courses. Prop firms earning profit split means lower commission charges, allowing traders to make more money.

Diference between working for a prop firm and being a day trader

Working for a prop firm means that you can purchase an account type that they provide, for most of the time, a one-time fee to acquire a set balance, so you don’t need to manage your own money. The prop firm also provides leverage meaning that you can trade larger lot sizes than at other times. On the other hand, you should be careful because every prop firm has its own trading rules that you must follow, mainly to maintain relatively low-risk management for their capital. Refusing to follow the specified rules can mean termination of your contract agreement, which can, in some cases, result in you losing your trading account.

Being a day trader is quite different since you work 100% with your capital, which means that fundamental discipline is essential. As an individual, you have a chance to negotiate for lower commissions with your broker. The fact that you are working with your own money is dangerous but at the same time a good motivator, which means that it will make you more careful with things like overall discipline for things like managing risk with stop losses and similar.

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