“Verification” Is Longer Than You Think

This post contains links to trading tools for which I am an affiliate.

Lately, there have been some big changes in the world of forex prop trading. 

Funding Talent Failed Its Traders

The company, Funding Talent, recently closed all of their challenge accounts and cut off profitable, rule-abiding traders from their contracts and equity. 

It seems this company is now positioning itself as offering a trading simulation game from which a trader can use their skills to win money matching simulated profit amounts, which confirms some of the fears many traders have about taking on prop challenges in the first place – that is, whether prop firms are actually linked back to managed capital and aren’t a sophisticated game meant to trip you up in your trading so that you’ll be stuck in a cycle of chasing prop challenges.

There are firms that definitely do this. 

However, I also think there are firms that are genuinely looking to fund traders. 

Trust is Key

Trust is the ultimate type of currency prop traders and prop firms are seeking from one another.

Traders want to trust that we will receive honest tools for trading, that there are no hidden rules beyond what’s advertised, and that we can depend on the firm to support us and pay us as agreed upon in the contract. True prop firms are looking for traders who are trustworthy as displayed in their consistency and profitability. 

 

I think the key to differentiating between firms that fund and firms that fraud is to find out how simple or complex the challenge rules are. 

 

More complexity means that there are more possibilities to make an error, screw up, so that they don’t have to worry about paying you anything. 

Firms that give you more freedom to trade your own strategies without complicated, hidden rules, are more likely to be valid and trustworthy in their search for skilled traders. 

I think this act of horrendous business fraud reminds us that we need to be extra careful about reading and understanding the rules and stipulations that come with signing up for any prop trading challenge. 

Furthermore, I believe it’s helpful to have multiple funded accounts and to make a goal of eventually setting aside enough money to fund your own personal account so that you don’t have to rely on prop firms indefinitely. 

Does Verification End Once You Pass Your Prop Trading Challenge?

So one of the most trustworthy firms currently out there is FTMO. 

They recently changed their monthly payout to a biweekly one and they are increasing their percent payout to up to 90% of profit. 

I still think FTMO is one of the better choices for your prop firm portfolio. 

However, while I believe they lay out plenty of information on their FAQ page, I want to challenge the perception that the process of verification ends after you are given a funded account. 

Yes, the verification stage moves into funded once you hit your 5% target, so long as you follow all of their other standard rules around loss. 

So what do I mean by saying that the process of verification doesn’t end once you are funded? 

I want to draw attention to the claim that traders receive their refundable fee back once they pass the challenge and that it is returned to you with your first profit split. 

Here are the key two words in that sentence: PROFIT SPLIT.

So if you pass your challenge but don’t make a profit during your first month of trading a funded account with FTMO, you DO NOT receive your refundable fee back. 

So not only do you not profit, you also don’t get your money back. 

While I think it’s fair for FTMO to cancel accounts that break trading rules, I don’t think they’re being clear enough about this refundable fee rule. (Note: I chose to discuss FTMO for this topic but many other firms use this refund process, as well – be sure you understand the stipulations before you sign up!)

They won’t let you retry for free, either. 

So, this leads me to feel like the process of verifying you as a trustworthy trader lasts much longer than the verification stage.

You need to be aware that this refundable fee only goes to traders that profit through the challenge stage, verification stage, AND the first month of trading. 

I’m not sure if it’s a little different now that they’re offering biweekly profit splits, maybe you only need to hold out for the first two weeks, but do keep this in mind as you’re making decisions about what size account you can afford to take a challenge with. 

As the saying goes, trade, or in this case, deposit, only what you can afford to lose. 

Read next: What to do when you fail your prop trading challenge?

I hope this post provided you with a little bit more food for thought as you navigate your prop trading journey. 

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I wish nothing but success for you all and I wish you the best of strength and luck. I’ll see you in the markets, take care!