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ARE YOU READY FOR A TRADING COACH OR A TRADING MENTOR?

By Your Trading Coach and Mentor,

Trading Angel

Investing in a trading coach or a trading mentor can be a great way to accelerate your trading and take your from a beginner trader to a part time or full time trader, or from a breakeven trader to a winning trader. In this blog post we will explore if you are ready for a trading coach or mentor by looking into what they are, what the difference is and who they are right for

WHAT IS A TRADING MENTOR FOR FOREX, COMMODITIES AND INDICES? 

A trading mentor for forex, commodities, or indices is an experienced and successful trader who provides guidance, support, and education to individuals who are looking to improve their trading skills in these financial markets. A trading mentor can offer personalised advice, strategies, and feedback based on their own trading experience, helping their mentees to develop a deeper understanding of the markets and improve their trading performance.

Some of the key roles and responsibilities of a trading mentor may include:

1. Teaching trading strategies: A mentor can help their mentees learn various trading strategies, techniques, and approaches that are effective in trading forex, commodities, or indices.

2. Providing feedback and analysis: A mentor can review their mentees’ trades, provide feedback on their performance, and offer insights and analysis to help them identify strengths and weaknesses in their trading.

3. Emotional support: Trading can be a challenging and emotional endeavour. A mentor can provide emotional support, encouragement, and guidance to help their mentees stay focused, disciplined, and resilient during both winning and losing periods.

4. Setting goals and accountability: A mentor can assist their mentees in setting realistic and achievable trading goals and holding them accountable for their progress and performance.

5. Sharing experiences: A mentor can share their own trading experiences, successes, failures, and lessons learned to help their mentees avoid common pitfalls and accelerate their learning curve in trading.

Having a trading mentor can be valuable for traders at all levels, from beginners looking to learn the basics of trading to experienced traders seeking to refine their skills and strategies. It is important to choose a mentor who aligns with your trading goals, style, and values to maximise the benefits of the mentorship relationship.

WHAT IS A TRADING COACH FOR FOREX, COMMODITIES OR INDICES? 

A trading coach for forex, commodities, or indices is a professional who helps traders improve their trading skills, mindset, and performance in the financial markets. While trading mentors and coaches share some similarities, there are some distinctions between the two roles.

A trading coach typically focuses on the psychological and emotional aspects of trading, helping traders develop the proper mindset and discipline needed to succeed in the markets. They work with traders to overcome psychological barriers, manage emotions such as fear and greed, and cultivate the right attitudes and habits for successful trading.

Some of the key roles and responsibilities of a trading coach may include:

1. Mindset and psychology: A trading coach helps traders develop a positive and disciplined mindset, manage emotions effectively, and overcome psychological barriers that can hinder trading performance.

2. Risk management: A coach assists traders in developing sound risk management practices, such as setting stop-loss orders, managing position sizes, and controlling risk exposure.

3. Trading plan development: A coach helps traders create and refine their trading plans, including entry and exit strategies, risk-reward ratios, and trade management rules.

4. Performance assessment: A coach evaluates traders’ performance, analyses their trading results, and provides feedback and guidance on areas for improvement.

5. Accountability and support: A coach holds traders accountable for their actions, helps them stay disciplined and focused on their trading goals, and provides ongoing support and encouragement.

While a trading mentor may focus more on teaching specific trading strategies and techniques, a trading coach emphasises the psychological and behavioural aspects of trading that are crucial for long-term success in the markets. Both mentors and coaches can play valuable roles in a trader’s development, and some individuals may benefit from working with both to enhance their trading skills comprehensively.

WHAT IS THE DIFFERENCE BETWEEN A TRADING COACH AND A TRADING MENTOR FOR FOREX COMMODITIES OR INDICES? 

The terms “trading coach” and “trading mentor” are sometimes used interchangeably, but there are subtle differences in their roles and approaches. Here are some key distinctions between a trading coach and a trading mentor in the context of forex, commodities, or indices trading:

1. Focus and expertise

   – A **trading coach** typically focuses on the psychological and emotional aspects of trading, helping traders develop the right mindset, manage emotions, and overcome psychological barriers that can impact trading performance. Coaches often specialise in areas like discipline, risk management, and trader psychology.

   – A **trading mentor**, on the other hand, may focus more on teaching specific trading strategies, techniques, and market knowledge. Mentors draw from their own trading experience to provide guidance, share insights, and help mentees improve their trading skills and performance.

2. Approach

   – A **trading coach** often takes a structured and goal-oriented approach to coaching, helping traders set specific goals, develop trading plans, and work on improving their mindset and discipline. Coaches may use tools like visualisation, goal-setting techniques, and performance tracking to help traders achieve their objectives.

   – A **trading mentor** may take a more informal and personalised approach to mentorship, sharing their experiences, offering advice, and providing feedback based on their own trading journey. Mentors may focus on building a relationship with their mentees and tailoring their guidance to meet the individual needs and goals of each trader.

3. Duration and engagement

   – **Trading coaching** relationships are often more structured and may involve a set timeframe or number of sessions during which the coach works with the trader to achieve specific goals or address particular challenges.

   – **Trading mentorship** is often a more ongoing and informal relationship, where the mentor provides long-term guidance, support, and advice to help the mentee develop as a trader over time.

Both trading coaches and trading mentors can play valuable roles in a trader’s development and success. The choice between working with a coach or a mentor may depend on the trader’s specific needs, goals, and preferences in terms of the type of support and guidance they are seeking.

WHO IS TRADING COACHING AND MENTORING RIGHT FOR?

Trading coaching and mentoring for forex, commodities, or indices can be beneficial for a wide range of traders at different stages of their trading journey. Here are some situations in which trading coaching and mentoring may be particularly helpful:

1. **Beginner traders**: Novice traders who are new to the world of forex, commodities, or indices trading can benefit from coaching and mentoring to learn the basics of trading, understand market dynamics, develop essential skills, and build a strong foundation for successful trading.

2. **Struggling traders**: Traders who have been struggling with consistency, discipline, risk management, or emotional control in their trading may benefit from coaching or mentoring to identify and address areas for improvement, develop effective trading strategies, and build the right mindset for success.

3. **Intermediate traders**: Traders with some experience in the markets who are looking to take their trading to the next level can benefit from coaching and mentoring to refine their skills, expand their knowledge, explore advanced trading strategies, and enhance their overall trading performance.

4. **Experienced traders**: Even experienced traders can benefit from coaching or mentoring to gain fresh perspectives, overcome plateaus, fine-tune their strategies, stay accountable to their goals, and continue to grow and evolve as traders.

5. **Traders seeking consistency**: Traders who struggle with consistency in their trading results or who face challenges in maintaining discipline and focus can benefit from coaching or mentoring to develop routines, habits, and practices that promote consistent performance in the markets.

6. **Traders looking for a different perspective**: Sometimes traders can get stuck in their ways or experience blind spots in their trading approach. Coaching or mentoring can provide a fresh perspective, new insights, and alternative strategies to help traders break through barriers and achieve their trading goals.

7. **Traders seeking emotional support**: Trading can be a psychologically demanding endeavour, and traders may face emotions like fear, greed, and frustration. Coaching or mentoring can provide emotional support, guidance, and tools to help traders manage their emotions effectively and navigate the ups and downs of trading.

Overall, trading coaching and mentoring can be valuable for traders who are committed to improving their skills, enhancing their performance, and achieving long-term success in the forex, commodities, or indices markets. Whether you are a beginner looking to learn the ropes or an experienced trader seeking to refine your strategies, working with a coach or mentor can provide you with the guidance, support, and tools you need to reach your trading goals.

HOW DO I KNOW IF IM READY FOR A TRADING COACH OR MENTOR? 

Knowing when you are ready for a trading coach or mentor in forex, commodities, or indices involves self-assessment of your trading experience, goals, challenges, and mindset. Here are some indicators that may suggest you are ready to seek guidance from a coach or mentor:

1. **Consistent interest in trading**: If you have a genuine interest in trading and are committed to improving your skills and knowledge in the financial markets, you may be ready for a coach or mentor to help you accelerate your learning and development.

2. **Experience in trading**: Whether you are a beginner or have some experience in trading, if you feel that you have reached a point where you are seeking guidance to take your trading to the next level, working with a coach or mentor can be beneficial.

3. **Desire for improvement**: If you are motivated to improve your trading performance, overcome challenges, and achieve your trading goals, you may be ready for the guidance and support that a coach or mentor can provide.

4. **Facing consistent challenges**: If you are facing consistent challenges in your trading, such as struggling with discipline, emotional control, risk management, or consistent profitability, a coach or mentor can help you identify and address these issues.

5. **Goal setting**: If you have clear trading goals and objectives that you are working towards, a coach or mentor can help you create a roadmap, develop strategies, and hold you accountable for your progress.

6. **Openness to feedback**: If you are open to receiving feedback, guidance, and constructive criticism on your trading performance and are willing to implement changes based on this feedback, you may benefit from working with a coach or mentor.

7. **Seeking a different perspective**: If you feel that you have reached a plateau in your trading progress, or if you are looking for a fresh perspective, new insights, and alternative strategies to enhance your trading, a coach or mentor can provide valuable perspectives and guidance.

8. **Financial commitment**: Be prepared to invest both time and money in working with a coach or mentor. If you are willing and able to make this commitment to your trading education and development, you may be ready to seek out a coach or mentor.

Ultimately, the decision to work with a trading coach or mentor is a personal one, and it’s important to assess your readiness, goals, and expectations before embarking on a coaching or mentoring relationship. If you feel that you are motivated, open to learning, and committed to improving your trading skills, seeking guidance from a coach or mentor can be a valuable step in your trading journey.

WHAT ARE THE ADVANTAGES OF HIRING A TRADING COACH OR MENTOR OVER SELF TEACHING?  

Hiring a trading coach or mentor in forex, commodities, or indices can offer several advantages over self-teaching and learning through trial and error. Here are some key benefits of working with a coach or mentor:

1. **Personalised guidance**: A trading coach or mentor can provide personalised guidance tailored to your specific needs, trading style, goals, and challenges. They can offer customised advice, strategies, and feedback based on your individual strengths and weaknesses.

2. **Accelerated learning curve**: Working with a coach or mentor can help you accelerate your learning curve by gaining insights, knowledge, and experience from someone who has already achieved success in the markets. This can help you avoid common pitfalls and mistakes that could slow down your progress.

3. **Accountability**: A coach or mentor can help you stay accountable to your trading goals, objectives, and commitments. They can provide structure, support, and motivation to help you stay on track and make consistent progress in your trading journey.

4. **Objective feedback**: A coach or mentor can offer objective feedback on your trading performance, decisions, and strategies. They can help you identify areas for improvement, correct mistakes, and make adjustments to enhance your trading skills and results.

5. **Emotional support**: Trading can be a psychologically challenging endeavour, and a coach or mentor can provide emotional support, guidance, and tools to help you manage your emotions, deal with stress, and stay focused and disciplined during both winning and losing periods.

6. **Expert insights and strategies**: A coach or mentor can share their expertise, insights, and proven strategies that have worked for them in the markets. They can provide you with valuable perspectives, techniques, and approaches that you may not have considered on your own.

7. **Risk management**: A coach or mentor can help you develop sound risk management practices, such as setting stop-loss orders, managing position sizes, and controlling risk exposure. They can help you protect your capital and minimise losses in your trading.

8. **Building confidence**: Working with a coach or mentor can help you build confidence in your trading abilities, decisions, and strategies. Their support and encouragement can help you develop the self-assurance and belief needed to trade effectively and decisively.

While self-teaching can be a viable approach for some traders, working with a coach or mentor can provide you with a structured, supportive, and guided learning experience that can significantly enhance your trading skills, knowledge, and performance in the financial markets. The personalised guidance, accountability, feedback, and support offered by a coach or mentor can help you achieve your trading goals more efficiently and effectively than if you were to learn on your own through trial and error.

Happy Trading!

Love From Your Trading Coach and Mentor,

Trading Angel x

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THE PRO’S AND CONS TO TRADING WITH A PROP FIRM 

AND HOW TO PICK THE RIGHT ONE FOR YOU

By Your Trading Mentor 

Trading Angel 

Those of you who have been following my trading journey for a while will know that I have recently started trading with a prop firm after years of resistance.  The reason for my initial resistance was the fact that I had heard about the strict rules and regulations which prop firms imposed such as minimum trading days and I felt like this was too restrictive for my style of trading at the time. I also had a small amount of money which I was happy and comfortable trading with and didn’t necessarily want to put any unnecessary stress on myself during my trading but worrying about trading someones else’s money. However recently (after several years of trading forex and working as a forex trading mentor) I decided for several reasons that having prop firm trading experience was the right move for me and my mentees. 

First of all, the traders who I mentor often come to me with the aspiration of trading with a prop firm and need coaching as to how to pass their funded trader program or how to hit the 10% target each month in order to withdraw their funds. So I felt that as my job as a trading mentor it was part of my duty to have first hand experience in this myself in order for me to appropriately coach my mentees in this form of trading. 

But also for myself and for my own personal trading journey I felt it was important tops myself out of my comfort zone and to gain that experience as well as to give myself the opportunity to scale up. 

So I have now taken on the challenge and signed up to the prop firm FTUK, I went with this prop firm because one of my mentees trades with them and thought they were pretty good and they also offer instant funding. However the right prop firm for you is a very personal choice so first of all I’m going to have a quick look at how to pick the right prop firm for you to trade with and then I will go into the pro’s and con’s of trading with a prop firm verses trading with your own money. 

If you’d like to sign up to FTUK you can use this link here:

http://ftuk.com/?ref=25988

Alternatively, Audacity Capital is also a popular prop firm, you can sign up to their programme here:

Funded Trader Program

WHAT IS A PROP FIRM?

A prop firm, short for proprietary trading firm, is an organisation that trades financial instruments with its own capital. Unlike traditional financial institutions, which trade on behalf of clients, prop firms use their own funds to speculate on various assets such as stocks, options, and futures.

Proprietary trading firms typically hire traders who have a proven track record of success in trading and provide them with access to the firm’s proprietary trading strategies, tools, and technology. Traders are given a share of the profits they generate, and the firm retains a portion of the profits as well.

One significant advantage of working for a prop firm is that traders can leverage the firm’s capital to magnify their profits. This increased buying power allows traders to take larger positions in the market, potentially leading to higher profits. Prop firms also provide traders with a supportive community of like-minded individuals who can share insights, strategies, and feedback.

However, prop firm trading is not without its risks. Traders must adhere to strict risk management protocols to avoid catastrophic losses that could harm the firm’s bottom line. Additionally, traders must be comfortable with the pressure of performing consistently to maintain their position within the firm.

In conclusion, prop trading firms offer traders an opportunity to trade with significant capital and access to advanced tools and strategies. However, traders must be prepared to manage risk and maintain consistent performance to succeed in this competitive and challenging field.

CHOOSING THE RIGHT PROP FIRM FOR YOU

Choosing the right prop trading firm is a critical step for traders looking to succeed in the industry. Here are some key factors to consider when picking a prop firm:

Firstly, consider the firm’s trading style and strategy. Some firms specialise in specific assets, such as stocks, options, or futures. Others may have a particular approach to trading, such as high-frequency trading or quantitative analysis. Look for a firm whose trading style aligns with your skills, experience, and preferences.

Secondly, assess the firm’s risk management protocols. Prop firms typically have strict risk management guidelines to protect their capital, which can limit a trader’s ability to take on large positions or engage in high-risk strategies. However, some firms may have more flexible risk management policies that allow traders to take on more risk. Make sure you understand the firm’s risk management procedures and ensure that they align with your risk tolerance.

Thirdly, evaluate the firm’s fees and commission structure. Prop firms typically take a share of the profits generated by traders as compensation. However, the percentage of profits taken by the firm can vary significantly between firms. Look for a firm with a fair and transparent fee structure that allows you to keep a significant portion of your profits.

Fourthly, consider the firm’s training and support resources. Prop firms typically provide traders with access to advanced trading tools, technology, and training programs. Look for a firm that offers comprehensive training and ongoing support to help you improve your trading skills and stay up-to-date with market developments.

Finally, evaluate the firm’s culture and community. Prop trading can be a high-pressure environment, and it’s important to find a firm with a supportive, collaborative culture. Look for a firm that values teamwork, encourages knowledge-sharing, and fosters a positive and inclusive community.

In conclusion, picking the right prop trading firm requires careful consideration of a range of factors, including the firm’s trading style and strategy, risk management protocols, fees and commission structure, training and support resources, and culture and community. By doing your research and evaluating these factors, you can find a prop firm that aligns with your trading goals, personality, and values, and increase your chances of success in the industry.

ADVANTAGES TO TRADING WITH A PROP FIRM

Trading with a prop firm, or proprietary trading firm, offers several advantages over trading independently.

Firstly, prop firms typically provide traders with access to significant capital, which can be used to take larger positions in the market and potentially generate higher profits. This increased buying power can also provide traders with greater flexibility in their trading strategies.

Secondly, prop firms offer traders access to advanced trading tools and technology. This includes sophisticated algorithms, real-time market data, and high-speed trading platforms. These resources can help traders make more informed trading decisions and execute trades more quickly and efficiently.

Thirdly, traders who work for prop firms are often part of a supportive community of like-minded individuals. This can provide traders with access to mentorship, feedback, and networking opportunities that can help them improve their trading skills and advance their careers.

Finally, working for a prop firm can be a lucrative career path for successful traders. Prop firms typically offer traders a share of the profits they generate, which can be significantly higher than what traders would earn on their own. Additionally, many prop firms offer performance-based bonuses and other incentives to reward their top traders.

In conclusion, trading with a prop firm offers several advantages over trading independently. Traders have access to significant capital, advanced trading tools and technology, a supportive community, and the potential for high earnings. However, traders should carefully evaluate any prop firm they are considering to ensure that it aligns with their goals, trading style, and risk tolerance.

DISADVANTAGES OF TRADING WITH A PROP FIRM

While prop trading firms offer many advantages over trading independently, there are also several disadvantages to consider.

Firstly, prop firms typically have strict risk management protocols in place to protect their capital. This means that traders may be limited in their ability to take on larger positions or engage in riskier trading strategies. While this can reduce the chances of significant losses, it can also limit the potential for high profits.

Secondly, prop firms often take a portion of the profits generated by traders. While this is a common practice in the industry, it can reduce the amount of money that traders ultimately earn. Additionally, some firms may have high fees or commissions that further reduce a trader’s profitability.

Thirdly, working for a prop firm can be a high-pressure environment. Traders are expected to perform consistently and meet profit targets to maintain their position within the firm. This can be stressful and may lead to burnout or a lack of work-life balance.

Finally, prop trading firms may have strict rules and regulations that limit a trader’s flexibility. For example, some firms may prohibit traders from trading certain assets or using particular strategies. This can limit a trader’s ability to pursue their preferred trading approach.

In conclusion, while prop trading firms offer many benefits, traders should consider the potential drawbacks before committing to this career path. Traders should carefully evaluate the fees, risk management protocols, and culture of any firm they are considering to ensure that it aligns with their goals and trading style.

HOW MY FIRST WEEK OF TRADING WITH A PROP FIRM WENT 

After all the time taken to make the decision to finally trade with a prop firm it was somewhat anti-climatical as the leverage was so much lower then I was used to and it meant the trade trades on the same lots sizes which I had previously been using were so small and worth hardly anything. What this made me realise is that once you sign up to prop firm it still takes a bit of time to get used the the new rules and regulations and also the different leverage. I spent a lot of time writing out a detailed trading plan for a new SMC trading strategy which I had been working on which focuses on the London and New York session open breakouts. The strategy works so well but in order to actually hit the 10% profit target which is required to [progress to the next stage of the prop firm challenge, I realise I’m going to have to put in a lot of time getting used to the appropriate lot sizes for the leverage and also so that I don’t go over the maximum draw down of 6%. So while I’m really excited about the time when I finally figure out the right lot sizes for the account and the leverage, I’m not quite there yet. The strategy work beautifully though its just a shame that every time I place a trade it only make me a few pounds. So this is a final note that I will add if you are thinking of trading with a prop firm, you will definitely want to have a really detailed trading plan which also looks at risk management and the Toal amount you are willing to risk per trade. At the moment my trading plan allow my to take on a maximum of 0.5% per trade.

If you’d like to see a full breakdown of how my first week of trading with a prop firm went as well as the details fo the trading strategy that I have been using then you can watch it here at Trading Angel’s YouTube channel. This video also shows you the exact amount which I made per trade 

Let me know if you have any experience on trading with a prop firm and feel free to share any prop firm tips and tricks. 

Until next time, Happy Trading

Love From Your Trading Mentor,

Trading Angel x 

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THE DISADVANTAGES TO A FUNDED TRADER PROGRAMME WHICH TRADING COACHES DON’T TALK ABOUT

By Your Trading Coach,

Trading Angel

As a trading coach I’m always talking to new or aspiring traders who’s goal in life is to be funded by a prop firm, and while this is a great goal to have and is the right path for many forex traders, there are some disadvantages which I’m not really hearing many other trading coaches talking about. When I signed up to trading coaching I was asked if I was there because I needed help passing a prop firm challenge to which I honestly answered no, I was just looking to become a better trader.

So let’s start at the very beginning, what is prop firm and a funded trader programme and who are they great for? And after we have established why they are great and the obvious reasons why traders want to be part of one, then we can move onto the small print which many trading mentors aren’t talking about.

A proprietary firm, otherwise known as a prop firm, is  company which will fund a trader so that the trader can trade with money which isn’t their own. There is then an agreed upon split of profits usually around 50/50. This can be mutually beneficial if a trader knows how to trade but doesn’t have enough of their own money to make their profits worth while, whereas the prop firm may have the capital available to be invested and are happy to delegate the workload to the trader.

So clearly, for those who have no money or access to money this is a great way to sill utilise their skills as a trader, it allows traders to trade large lot sizes without putting their capital at risk and practice trading at size.

But let’s look as a few negatives which you don’t have when you trade your own money.

There is usually a sign up fee or administration fee so you do still have to pay some money.

There is usually a challenge which you have to pass to get the funding, so for those who don’t perform well under pressure or don’t like ‘exam’ type situations this can be very stressful.

You aren’t given a huge lump sum at first, you have to build up to this and it can take quite a lot of time to make this worthwhile. For example if you start off with £10,000 in funding and you need to make 10% before you get a pay out then you’ll need to make £1,000 before you get paid and you’ll have to pay the prop firm £500 of this, which means you only made £500 that month even though making 10% a month is very difficult and would make you a very skilled trader. You are then often able to unlock more money but say if it’s then double (obviously each prop firm will have different levels and different rules) You would then have £20,000 to trade and if you were able to make 10% which is £2,000 that month you are then able to keep £1,000 – which is still much less then minimum wage for a whole months work in the UK, 3 months in a row making 10% would make you an exceptional trader and a lot actually buckle under the pressure of having to be so consistent for such  long period of time. If you trade your own money you don’t have to wait until you hit 10% to withdraw your money and you don’t have to split the money with anyone else.

Prop firms also often have very strict risk management rules which is completely understandable and fair enough but it can be quite restricting and mean that you have to adjust the way that you trade and your trading strategy. You are usually only allowed to lose 5-10% before you are cut off and lose access to the funds. I understand this is  good thing and very good discipline training for a trader but it does mean that often traders ill need to be extra careful with their lot sizes and stop losses so they don’t lose access to the money. I have heard of many traders who made a silly mistake and then lost access and had to start all over again which they found time consuming and tedious.

There are often restrictions as well as to the amount of days you can trade before you are able to get a pay out, often traders are told that they have to trade a minimum of 10 days in a month to  qualify for a pay out. If your normal strategy involves trading less frequently or jut looking for high probability trades and opting for quality over quantity, you might find this an unnecessary restriction which might actually cause you to over trade and lose money rather than making it.

Another disadvantage to prop firm trading is that the market available are often very restricted so you might be told you can only trade forex markets which would be frustrating if you liked to also trade commodities stocks or indices. 

Having said all of this what are my personal views on prop firm trading for myself? Well I’ve always been a little bit sceptical for all of the reasons listed above. I’ve heard many horror stories from traders who had bad experiences and had their funding cut off because of a small mistake or traders who worked hard all month to make 9% profits and therefore weren’t able to unlock their profits. I also didn’t like the fact that I might be restricted to the markets I could trade. I like to trade forex, gold and the indices so I wanted to make sure there was a prop firm where I could trade all of these and not have to pick just one.

But I’ve recently decided that I am actually going to go for it and apply for funding. I’ve picked a prop firm which allows me to trade all the markets I trade  and I’ve come up with a strategy which has  high risk to reward ratio and will allow me to start small and build up margin before I go for bigger lot sizes to unlock that 10%. I have accepted that I’ll be taking somewhat of  a pay cut for a few months as I get used to the various nuances of prop firm trading and have accepted that it will take time to scale up to the big bucks. So I’m excited about this new chapter in my life despite the fact that I’ve been relatively negative about prop firms in this blog post. I do think they are great for traders but I felt like it was worth giving both sides of the story and being honest about some of the negatives which I’m not hearing many trading mentors talking about.

I will keep you updated on my prop firm journey

Until then,

Happy Trading!

Love From, Your Trading Coach x

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THE DISADVANTAGES TO A FUNDED TRADER PROGRAMME WHICH TRADING MENTORS DON’T TALK ABOUT

By Your Trading Mentor,

Trading Angel

As a trading mentor I’m always talking to new or aspiring traders who’s goal in life is to be funded by a prop firm, and while this is a great goal to have and is the right path for many forex traders, there are some disadvantages which I’m not really hearing many other trading mentors talking about. When I signed up to trading mentorship I was asked if I was there because I needed help passing a prop firm challenge to which I honestly answered no, I was just looking to become a better trader.

So let’s start at the very beginning, what is prop firm and a funded trader programme and who are they great for? And after we have established why they are great and the obvious reasons why traders want to be part of one, then we can move onto the small print which many trading mentors aren’t talking about.

A proprietary firm, otherwise known as a prop firm, is  company which will fund a trader so that the trader can trade with money which isn’t their own. There is then an agreed upon split of profits usually around 50/50. This can be mutually beneficial if a trader knows how to trade but doesn’t have enough of their own money to make their profits worth while, whereas the prop firm may have the capital available to be invested and are happy to delegate the workload to the trader.

So clearly, for those who have no money or access to money this is a great way to sill utilise their skills as a trader, it allows traders to trade large lot sizes without putting their capital at risk and practice trading at size.

But let’s look as a few negatives which you don’t have when you trade your own money.

There is usually a sign up fee or administration fee so you do still have to pay some money.

There is usually a challenge which you have to pass to get the funding, so for those who don’t perform well under pressure or don’t like ‘exam’ type situations this can be very stressful.

You aren’t given a huge lump sum at first, you have to build up to this and it can take quite a lot of time to make this worthwhile. For example if you start off with £10,000 in funding and you need to make 10% before you get a pay out then you’ll need to make £1,000 before you get paid and you’ll have to pay the prop firm £500 of this, which means you only made £500 that month even though making 10% a month is very difficult and would make you a very skilled trader. You are then often able to unlock more money but say if it’s then double (obviously each prop firm will have different levels and different rules) You would then have £20,000 to trade and if you were able to make 10% which is £2,000 that month you are then able to keep £1,000 – which is still much less then minimum wage for a whole months work in the UK, 3 months in a row making 10% would make you an exceptional trader and a lot actually buckle under the pressure of having to be so consistent for such  long period of time. If you trade your own money you don’t have to wait until you hit 10% to withdraw your money and you don’t have to split the money with anyone else.

Prop firms also often have very strict risk management rules which is completely understandable and fair enough but it can be quite restricting and mean that you have to adjust the way that you trade and your trading strategy. You are usually only allowed to lose 5-10% before you are cut off and lose access to the funds. I understand this is  good thing and very good discipline training for a trader but it does mean that often traders ill need to be extra careful with their lot sizes and stop losses so they don’t lose access to the money. I have heard of many traders who made a silly mistake and then lost access and had to start all over again which they found time consuming and tedious.

There are often restrictions as well as to the amount of days you can trade before you are able to get a pay out, often traders are told that they have to trade a minimum of 10 days in a month to  qualify for a pay out. If your normal strategy involves trading less frequently or jut looking for high probability trades and opting for quality over quantity, you might find this an unnecessary restriction which might actually cause you to over trade and lose money rather than making it.

Another disadvantage to prop firm trading is that the market available are often very restricted so you might be told you can only trade forex markets which would be frustrating if you liked to also trade commodities stocks or indices. 

Having said all of this what are my personal views on prop firm trading for myself? Well I’ve always been a little bit sceptical for all of the reasons listed above. I’ve heard many horror stories from traders who had bad experiences and had their funding cut off because of a small mistake or traders who worked hard all month to make 9% profits and therefore weren’t able to unlock their profits. I also didn’t like the fact that I might be restricted to the markets I could trade. I like to trade forex, gold and the indices so I wanted to make sure there was a prop firm where I could trade all of these and not have to pick just one.

But I’ve recently decided that I am actually going to go for it and apply for funding. I’ve picked a prop firm which allows me to trade all the markets I trade  and I’ve come up with a strategy which has  high risk to reward ratio and will allow me to start small and build up margin before I go for bigger lot sizes to unlock that 10%. I have accepted that I’ll be taking somewhat of  a pay cut for a few months as I get used to the various nuances of prop firm trading and have accepted that it will take time to scale up to the big bucks. So I’m excited about this new chapter in my life despite the fact that I’ve been relatively negative about prop firms in this blog post. I do think they are great for traders but I felt like it was worth giving both sides of the story and being honest about some of the negatives which I’m not hearing many trading mentors talking about.

I will keep you updated on my prop firm journey

Until then,

Happy Trading!

Love From, Your Trading Mentor x

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