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Forex Prop Trading Firms Give You Risk Free Capital

Do you have enough buying power to make a living from daytrading?

While the cost benefit analysis of remote prop trading firms for futures and stocks showed that prop traders hardly get any tangible benefits over retail traders, the reality looks quite different when it comes to forex prop trading.

Available products when Trading Forex and CFDs

In general, you can trade spot forex pairs as well as commodity and index CFDs at forex prop firms. This means that  in addition to major currency pairs like EUR/USD and GBP/USD, you can also trade stock indices such as the Nasdaq 100 in the Asian overnight session, the German DAX in early European hours or Crude Oil and Gold around the clock.

 

Comparison of transaction costs and buying power

Fully embracing the opportunity of prop trading implies that you need to accept the drawback of the profit-split, which is okay if the potential benefits increase your odds of actually making a living with trading. Therefore, the main benefits we expect from a prop firm include significantly lower commissions – which lowers the break-even point of our strategies – and more trading capital compared to retail brokers measured as effective capital. Can forex prop firms deliver?

Round-trip transaction costs

Retail forex brokers that offer raw spreads usually charge a commissions around $7-8 per round-trip trade ($3.50-4.00 per side). As of August 2021, myforexfunds and FTMO offer $3 RT or $1.50 PS, which is more than 50% less than retail pricing.

However, since it is not clear to what extent orders are actually executed with a real counterparty at these firms, these published fees need to be taken with a grain of salt.

 

 

Profit split and scaling plan

 

Evaluation model

Both MFF and FTMO offer the classical evaluation model with refundable registration fees where you need to pass a trading challenge to qualify for a live account. FTMO has a scaling plan in place, which increases the trader’s buying power in a four-month cycle with a required minimum return of 10% and two out of four months being profitable.
 

The respective profit-splits here are 80-90% at FTMO and 75% at MFF reaching 85% going forward with the third profitable month.

NOTE: FTMO does not provide you with a real money account but reserves the right to copy your trades. Whether or not orders are executed in its master account at all is not clear.  MFF is unwilling to provide any proof for its claim of actual order execution or that real money is deposited in a trading account. 

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Instant funding model

In contrast to FTMO, MFF only offers a scaling-plan in its Accelerated program for full-time traders, which starts at a registration fee of $99. In return, you can earn real profits from day 1 and scale up quickly for every 10% in trading profit with a 50% profit split.
 
 

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Conclusion

FTMO is back in the mix as the top dog, due to its recent increase in the profit split up to 90% after the first successful scaling up of the account. Overall, forex prop forms actually deliver on the promise of offering real tangible benefits to professional full-time traders:

  • Cost savings through lower transaction costs
  • More buying power with potential of accelerated scaling up
  • Higher net profit potential

For traders with sufficient starting capital we suggest our preferred partner broker Global Prime with fully transparent order execution:

February 27, 2022
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Markus

MBA, former equities prop trader at Carlin Financial Group and WorldCo LLC. Now independent trader and mentor. Previously held FINRA Series 3, 7, 55, 63.

Website : https://www.ceedtrading.com

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