TIMESTAMPS
00:01 – INTRO
01:55 – UTILITY
What is a prop firm?
How do they work and what are the requirements?
Fee structure.
ATAS/Brokers/Data feeds.
A proprietary firm or “prop firm” is a business that allows traders with the right skill set to access more capital than they have or want to risk.
Evaluation Phase vs. Funded Phase. These vary between prop firms.
Trading Regulations.
Profit Sharing.
Restricted freedoms.
Evaluation Phase: interested parties who wish to be funded by the firm of their choice are obligated to follow a strict rule set to “pass” the evaluation phase. This is usually done on a simulated account.
The set of rules vary between firms, so do you own research and always protect yourself!
Funded Phase: if a trader successfully passes the evaluation phase, they are granted access to a funded account. Some firms are considered “A” book, some are considered “B” book, and others are hybrid.
“A” booked firms place their trades directly into the liquidity pool broker and “B” booked firms place them in house.
13:33 – IMPLEMENTATION
Fee structures and profits sharing agreements are dependent on the firm.
There is a clear distinction between forex prop firms and Futures prop firms.
Crypto can be traded on prop firms, but it is not recommended as crypto trades off the forex pairs and futures are connected with the CME futures pair.
Status / EOD drawdown.
Trailing drawdown.
News/high volatility trading.
Trading consistency rules.
In the course of one day, the maximum daily drawdown on the account (which consists of the account’s current results of opened positions and the result of positions closed on the given day) must not exceed 5% of the initial balance of the account. Please note this includes commission.
🔎 23:21 Daily drawdown example visual aid.
🔎 25:17 Example 1: No drawdown Add-On.
🔎 25:56 Example 2: With drawdown Add-On.
🔎 26:29 Example 3: No drawdown Add-On.
🔎 27:16 Example 4: Trailing drawdown.
Funded PA accounts work differently as the drawdown stops trailing at $100 after the starting balance, i.e., $56,000 account balance / max threshold is $50,100.
Rithmic vs CQG data connection. The data feed gives you the live data.
More info available here: https://theforexgeek.com/rithmic-vs-cqg/
ATAS/NinjaTrader/Quant-Tower/etc.
TradingView/Tradovate.
🔎 36:13 ATAS connection demonstration for live data feeds.
37:59 – TIPS & TRICKS
★ Prop forms are a very big risk. Remember, they are businesses at the end of the day and they provide a service. If that business goes under, so does your hard-earned work.
★ Firm capital provides you with purchasing power, but your actual risk of losing the account will always be the drawdown, regardless of the amount of capital.
40:58 – FINAL THOUGHTS