Dissecting My Forex Funds' Model: How Did the Prop Trading Firm Generate $310M? (2024)

FAQs

Dissecting My Forex Funds' Model: How Did the Prop Trading Firm Generate $310M? ›

It ran extensive social media campaigns that bombarded potential customers with advertisem*nts, especially on YouTube. Prop trading firms target retail traders, evaluate their trading skills, and hand out the company's money to them for trading. The platforms then split the profits, if there are any.

Most revenues generated by a prop firm come from the profits generated by the prop traders. Firms have a profit-sharing arrangement in place with their traders.

Forecasting Monthly Prop Firm Payouts

Because payouts depend on a number of factors (mentioned above), it's difficult to forecast monthly payouts for traders. Based on our experience, you can expect to make at least 5% per month from trading. So, if you start with $10,000, you can expect to make around $500 per month.

Traders Global, through its My Forex Funds website, was one of a number of internet-based foreign exchange proprietary trading firms. It charged customers introductory account fees in the hundreds of dollars for what it said was a chance to trade the firm's money in the currency and commodities markets.

Agreements typically range from 50/50 to a more favorable 80/20 split after certain thresholds, with some firms offering as much as 90% to the trader.

A prop trading firm looks to recruit talented traders and fund them with the company's capital. The funds that a trader makes, is then split between the trader and the company. The profit share is between 50 – 95%, with the trader taking the lion's share.

Commission: Prop firms may charge a commission on each trade made by their traders. Profit Split: In some cases, prop firms may take a percentage of the profits earned by their traders as a form of compensation. Training Fees: Some prop firms offer training programs for new traders, which may come at a cost.

Prop trading can be lucrative, with earnings tied to a profit-sharing ratio. Unlike traditional brokers relying on commissions, prop traders' income directly links to generated profits. Ratios vary, often ranging from 75/100 to 90/100, offering flexibility based on experience and strategy.

Prop firms are an excellent source of accessing further capital to increase profit potential. Passing a prop firm's evaluation means reaching a profit target while staying within its risk management rules. Prop firms require traders to use their brokers, which can be positive or negative depending on the broker.

What is the number one mistake forex traders make? ›

The Bottom Line

Averaging down, reactive trading to market news and volatility, having exceedingly high expectations, and risking too much capital are common mistakes.

According to research, the consensus in the forex market is that around 70% to 80% of all beginner forex traders lose money, get disappointed, and quit.

#1 – Funder Trading

Funder Trading stands first in our list of the top prop trading firms in 2024 due to multiple reasons but notably it is the only prop trading firm that offers options funding and includes coaching for every trader signed up.

It takes no additional effort to replicate your trades to multiple prop firm funded accounts. In fact, most traders that do this use a trade copier system to replicate their trades automatically. This allows you to increase your profits with the exact same amount of work.

Funding Pips and Maven lead the rankings with the most frequent pay-outs, offering transactions every 5 days. Close behind, Traddoo and Funded Trading Plus offer weekly pay-outs. Smart Prop Trader, with its 12-day pay-out cycle, caters to those with a trading style that can accommodate less frequent access to funds.

There is nothing inherently scammy about the business model of prop firms. But how do they make money then? For starters, prop firms, of course, do not give money to just anyone who asks. Typically, they have a multi-stage evaluation process to make sure the traders they employ know what they are doing.

Hedge funds invest in the financial markets using their clients' money. They are paid to generate gains on these investments. Proprietary traders use their firm's own money to invest in the financial markets, and they retain 100% of the returns generated.

Senior Traders often earn between $500K and $1 million, and Partners can earn over $1 million per year. Base salaries do not necessarily change that much as you move up, so most of these gains come from increased bonuses.

Prop firms are an excellent source of accessing further capital to increase profit potential. Passing a prop firm's evaluation means reaching a profit target while staying within its risk management rules. Prop firms require traders to use their brokers, which can be positive or negative depending on the broker.