Hi Nicholas,
I wanted to respond to your statement “Thus the reason why I turned to prop firms. Many warned me it is a scam mostly to get the “challenge fee” and then make it almost impossible to pass and easy to fail.”
It is a well established risk management rule that successful traders use that when a trade losses 2% in one day that the trade is closed out. Also, if an account losses 6% all trades are closed and the trader takes a break from trading for a period of time, normally one month. This is done with the hope the markets will change back in favor of the traders strategy.
So in comparison, FTMO does not close out your account until you lose 5% in one day instead of the established risk management rule of successful traders which is 2%. Also, FTMO does not close out and account until the drawdown reaches 10% versus the established management rule of successful traders which is 6%.
So, in contrast between the established risk management rule of successful traders and the risk management rule of FTMO, FTMO’s risk management is quite relaxed to give beginning traders a more opportunity to be successful while at the same time protecting their account from unnecessary risk.
So, its not about scamming, its about risk management!
The one thing FTMO does that other prop firms don’t is they provide a free demo account for traders to use until they feel confident in their strategy before committing to the fee of a Challenge. So again, in my opinion, FTMO is trying to help the trader to become successful. Having success full traders trading their account helps FTMO spread their risk as the various traders trade different strategies.
Alan,