Trading isn’t gambling

Written by Simon, CEO FT+

I’ve always tried my best to be open and honest with the traders we work with. This was true back in 2013 when I ran one of the world’s longest-running live trade rooms, and is the same today with FT+.

The industry is changing

We saw a race to the bottom with prop firms offering unrealistic parameters and rules and unsustainable discounts which is resulting in firms going bust.

Thankfully we’re as strong as we’ve ever been, but like other prop firms, we need to change and adapt as the industry matures.

There has been a large shift in trader behaviour. The whole industry has seen a gradual increase in the risk traders are willing to take. Funded accounts have gone from lasting weeks and months to only lasting days and hours as traders take on ever-larger risk.

This could take the form of risking their whole accounts over news trading, or using most of their margin on one position / collective positions in the same market.

The industry needs these traders to de-risk and change their behaviour.

This greater risk taking was also accompanied by a large increase in cheating and abuse, with individuals and organised groups trying everything from arbitrage to reverse hedging / trading across accounts and firms.

The FT+ approach

We’re going to be upfront with our traders as we want to prevent them from falling foul of our risk rules. This is why this blog, as well as our Risk Review Policy, is being published.

https://help.fundedtradingplus.com/risk-review-policy/

We do not want to ban news trading. We do not want to introduce a minimum number of trades. We want our traders to simply demonstrate professional risk-management and aim to retain their accounts for the long-term.

Strategy vs risk

We approached the creation of FT+ from a trader’s point of view when designing our programs. I’ve always been proud of removing the unnecessary restrictions and rules which were featured with other firms back in 2021.

I’m proud of being:

Pioneers in removing all time limits to pass a challenge, setting the industry standard
The first firm to offer day 1 payouts
Never having consistency rules such as minimum trading days
Never having a minimum number of trades
Allowing news trading

I wanted traders to be free to ‘express’ their trading strategies and styles and not be boxed in or have to compromise their strategies and style. However, this freedom always came with an implied understanding that traders would manage their risk like traders, and not act as gamblers.

Data for research and development

We gather trader data as part of our research and development to develop and utilise proprietary trading strategies in the live markets. The most valuable data are, unsurprisingly, from traders who are consistently profitable, manage their risk and maintain their funded trading account for longer periods of time.

Naturally, the less valuable data for us are high risk traders who boom and bust. These individuals retain their funded accounts for days, and sometimes just hours.

Toxic behaviours

The following behaviors are what we are looking to eliminate. We’re aiming to encourage traders to focus on long-term consistency and not focus on high-risk, low-probability short-term gains.

Overleveraging

The evidence is clear that the more leverage traders are given, the worse the outcomes they are likely to receive. Leverage across the EU and UK was limited to a maximum of up to 30/1. This is a measure I agreed with, and with prop accounts being high notional values I felt up to 30/1 was a good balance between enough buying power to open and trade a range positions at the same time, without being excessive and encouraging over-leveraging.

The shift we’ve seen is from traders spreading out their risk across multiple instruments in a diverse and professional way, to using up a significant amount or all of their available leverage / margin on one or few positions (see ‘one-sided bets’. This usually results in them losing their accounts very quickly.

News punting

News can be a great opportunity to take trades, which is why we’ve never restricted anyone trading news. It also appeals to those who seek to take advantage of more fundamental elements of trading (as opposed to technical).

Unfortunately, we’ve seen a large shift from people taking sensible positions on higher time frames to many taking the largest possible single position 30 seconds before a news event, This usually blows their entire account in the hopes of making a large profit in seconds.

One-sided bets / too much margin

Large long / or short positions on the same markets / correlated markets (e.g. the US30 and SPX500) isn’t demonstrating sound risk-management. If one move can take out your account or a significant amount of your account, then it isn’t sound risk-management.

Practical advice

There are so many variables with trading, it’s not possible to define what may not break these rules. We don’t want to get into the realm of ‘only risk 1% per trade’.

The advice I give traders to retain their trading account for longer is usually the following:

Treat your funded account as if it were a personal account.
Treat the account as if you’re going to keep it for weeks and months, not hours and days.
Remember, risk and strategies are different. We don’t ever want to impinge on how you trade, we just want you to consider what you’re risking.

You’ll likely find much more consistency and longevity with this approach.

Here is our Risk Review Policy:
https://help.fundedtradingplus.com/risk-review-policy/