How can I effectively evaluate the credibility and safety of a proprietary trading firm before deciding to invest or trade with them? Only FIRNA?There are loads of "prop firms" propping up everywhere at the moment due to the boom. Be careful of the distinction between the funded firms where the model is based on a monthly fee and the older prop firms. The main difference is that your money and account will NOT be safe ate the newer firms and they are NOT overseen by any regulatory body such as FINRA. If they fold you will lose any money you have invested or made.
The older prop firms and most brokers are overseen by FINRA and therefore less chance of going bust.
Look up Tuco Trading, FTX, MyForxFunds to understand the reasons why they were bankrupt and all will become clear..
Finra (or FCA in the UK) registration implies that in addition to following other rules and regulations, the firms have to segregate your cash in special accounts. That is why your cash will be safer.
In addition, particularly for security trading, if the firm is also registered with SIPC in the US and FCA in the UK and has your cash, the cash will generally be protected (upto a certain amount).
MFF should not be taken as attractive or working prop firm as long as the CFTC investigation is not closed.The modern prop firms such as FTMO, MFF, TFT, Alphacapitalgroup etc. do not hold client money as clients trade simulated accounts. The only personal money at risk is what you have paid to take the initial challenge to become "funded". This is usually refunded with your first payout. Others charge a monthly fee instead, as pointed out by iq200. This type of prop firm does not need to be regulated - indeed cannot be under current rules - as they are not holding your money and using it to place real trades in a live market.
As we have seen, there is of course the possibility that they will not be able to pay you (and some of them do all they can to make conditions as unfair as possible too) nevertheless the risk to capital is minimal.
If you accept their trading conditions and rules such as max daily / total drawdown etc. and pick an honest firm they can be an attractive option, especially for those with limited capital. But research is needed as a lot of them are run by inexperienced chancers who only seek your failed challenge fees and do not want a long term partnership. If you pass a challenge and become funded I'd advise making withdrawals as frequently as they allow, usually every two weeks or so, to guard against this.
Thank you for the advice. I have a question about whether this prop firm is suitable for beginners. Some firms claim to have good training and support, and they also offer consultations with their specialistsThe modern prop firms such as FTMO, MFF, TFT, Alphacapitalgroup etc. do not hold client money as clients trade simulated accounts. The only personal money at risk is what you have paid to take the initial challenge to become "funded". This is usually refunded with your first payout. Others charge a monthly fee instead, as pointed out by iq200. This type of prop firm does not need to be regulated (in the UK at least; US is more stringent) - indeed cannot be under current rules - as they are not holding your money and using it to place real trades in a live market.
As we have seen, there is of course the possibility that they will not be able to pay you (and some of them do all they can to make conditions as unfair as possible too) nevertheless the risk to capital is minimal.
If you accept their trading conditions and rules such as max daily / total drawdown etc. and pick an honest firm they can be an attractive option, especially for those with limited capital. But research is needed as a lot of them are run by inexperienced chancers who only seek your failed challenge fees and do not want a long term partnership. If you pass a challenge and become funded I'd advise making withdrawals as frequently as they allow, usually every two weeks or so, to guard against this.
The only prop firm suitable for beginners is FTMO.Thank you for the advice. I have a question about whether this prop firm is suitable for beginners. Some firms claim to have good training and support, and they also offer consultations with their specialists
You're right, ACG also offers a free trial.FWIW Alphacapital (ACG) also offer 30 day free trials (as many as you want) and the trading conditions are exactly the same as those on challenge and funded accounts (same server, same LP price feed). The rules are also the same across all accounts except max lot size which only applies to funded accounts.
There isn't any training as such, but they do offer free 1-1 risk reviews with Gerry their head of trading education if you fail 2+ challenges. Their support is excellent and the owners very visible, accessible and active on their Discord.
I think ACG and FTMO are the clear leaders at the moment and both are suitable for beginners. Why not get a demo from each and see which you prefer, MattK? Their rules are slightly different and you may find one suits you better. Please ensure you read the rules very thoroughly before buying a challenge. Amazing how many people don't and then complain when they fail because they break one.
Not wishing to push ACG too hard, but they are doing 40% off till 31 Dec, discount code is XMAS40 (or XMAS4 if that doesn't work). A 50k account for approx £140 is a bargain in my view.
Yeah ACG are strict about EAs. I admit that is a significant disadvantage if they're your thing. You can use lot size calculators, trade management utilities etc. no problem, but not commercial or publically available trading robots as they break their group trading rule. But you can develop your own bot and use it if you provide them with the original mql code.You're right, ACG also offers a free trial.
It looks like they also started allowing EAs after their approval (to avoid martingale strategies) and the main difference to FTMO seems to be that they only offer MT5 while FTMO offers additional MT4 without visible restrictions on the EA. ACG keeps the spread at 1:100 but restricts the trading volume directly while FTMO does this by reducing the spread to 1:30 on swing accounts.
I didn't read the T&C of ACG but I know that FTMOP has a diffuse clause in their T&C that they can suspend a trading account when it beleaguers the server significantly. FTMO also has a limit on the number of open positions at 200 and I don't know this from ACG (I should run a test EA on their free trial to find it out).