How Do I Know My Prop Trading Firm Will Stay in Business?
The prop trading firm industry has been shaken by a series of failures, including some of the significant players. The recent collapse of Surgetrader, which was seen as one of the leading prop firms, has further hit confidence . It has made it even more crucial to do your due diligence when deciding with which prop firm to take an evaluation test.
It is hard enough to pass a prop evaluation test and then get a funded account that you should not have to worry that the firm will still be in existence when you wake up in the morning.
I spoke recently with a trader who had passed an evaluation test, got funded, worked slowly to build up profits in his funded account only to see it all disappear when the firm he was working with suddenly closed its doors. Not only did he lose his evaluation fee but the profits he had built in his funded account,
How do I know whether a prop firm is solid?
The answer is in a non-regulated industry, there is no way to know. Any prop firm could put up a fancy website, look solid and wind up being one of those that could collapse at any time.
So, the answer is to try and dig deeper. Some firms are run better than others with proper risk management guidelines designed to limit risk and keep them in business, but as we saw with Surgetrader, there are no guarantees.
One way is to look for a prop firm either run by or having a close association with a forex broker. In this way, hopefully you will be with a firm where all you need to worry about is how to pass an evaluation to test and then build a funded account.
Although the industry has taken a hit there is still demand for prop accounts so we have done our due diligence looking for firms we feel meet our criteria. So far, we have found one, FXIFY (click below), and as its banner says, powered by a forex broker. We will continue to search for firms to add to the list.
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