Welcome to another exciting episode of We Are Funded Trading Plus! This time, Jamie and Simon dive into some hot-button topics in the prop trading industry. From the value of competition to the importance of back testing, this episode offers plenty of insights for new and experienced traders alike. Let’s break it all down.
More Prop Firms Mean Better Options for Traders—Or Do They?
Does the increase in prop firms benefit traders?
Simon and Jamie agree: competition can drive innovation and better customer service, but only when high-quality firms enter the market. Unfortunately, the reality isn’t always rosy. The industry has seen a surge of “fly-by-night” operations that quickly fold, leaving traders out in the cold.
Their advice?
Do your research: Check reviews on platforms like Trustpilot.
Stick to proven players: Look for firms with a track record of reliability.
Be cautious: Avoid firms that overpromise and underdeliver.
As the market matures, they hope only ethical and sustainable firms will remain, ensuring traders benefit from meaningful competition.
Are Huge Discounts on Accounts a Good Thing?
While a tempting 80% discount might catch your eye, Simon warns that “too-good-to-be-true” promotions can be a red flag. Unsustainable discounts often indicate that a firm is in financial trouble, using these offers as a desperate attempt to boost cash flow.
That said, there’s a place for sensible promotions. Seasonal discounts or introductory offers can be great for traders when executed responsibly. The key is balance:
Look for promotions that align with the firm’s long-term sustainability.
Avoid extreme discounts, such as “buy-one-get-one-free” deals, which might suggest instability.
Is Back Testing Overrated?
This age-old debate in trading circles brought mixed opinions. For scalpers and discretionary traders, back testing might not add much value. Simon, a former scalper, shared that his success relied on staying present in the market rather than analysing past data.
However, for long-term and swing traders, back testing can provide critical insights—if done carefully. The biggest pitfall? Over-optimizing to fit historical data, also known as “curve-fitting.” This approach might look great on paper but fails to prepare traders for real-time unpredictability.
Key Takeaway:
Back testing isn’t for everyone, but when used judiciously, it can enhance your strategy. Just don’t rely on it exclusively.
Does Trading in Groups Lead to Better Results?
Trading can be an isolating journey, so having a group for accountability and support can be a game-changer. But it all depends on the group’s quality.
Simon and Jamie stress the importance of avoiding toxic environments filled with misinformation or egos. Instead, look for groups that foster:
Honest discussions.
Constructive feedback.
Realistic goal-setting.
A well-curated trading group can keep you motivated and offer fresh perspectives on your strategies.
Are Indicators Essential for Success?
The answer here was a resounding “no.” Indicators can be helpful, but they’re not mandatory for becoming a successful trader. Simon shared that his trading focused on price action, patterns like support and resistance, and simple open-high-low-close data.
The downside of indicators? They can lead to over-reliance and “analysis paralysis,” making it harder for traders to take decisive action.
Pro Tip:
Use indicators sparingly and ensure you can justify each one on your chart. If it doesn’t add tangible value, it’s better left out.
Conclusion: Smart Choices Lead to Success
This episode of We Are Funded Trading Plus offered valuable perspectives on navigating the prop trading landscape. The key takeaways?
Be selective about the firms you trust.
Evaluate discounts carefully—if it seems too good to be true, it probably is.
Use tools like back testing and indicators wisely, tailoring them to your trading style.
Surround yourself with the right group of traders who can push you toward realistic and sustainable goals.
The trading world is evolving rapidly, and staying informed can make all the difference in your journey.
FAQs:
What are the risks of working with new prop trading firms?
New firms often lack a proven track record and may not be financially stable, leading to potential risks for traders.
How can I identify a reliable prop trading firm?
Check reviews on platforms like Trustpilot, research their longevity, and look for transparency in their operations.
Are discounts on trading accounts always bad?
Not necessarily. Sensible, seasonal promotions can be beneficial, but extreme discounts may indicate instability.
Is back testing useful for all traders?
No. It’s more valuable for long-term and swing traders. Scalpers and discretionary traders may find it less relevant.
Can indicators improve my trading performance?
They can help, but they’re not essential. Focus on understanding price action and only use indicators that add clear value to your strategy.