BEWARE OF SCAM!
Hi Traders! 👋
Great to see you exploring prop-trading world. Great choice! It’s an awesome way to practice trading, manage risk, and leverage a prop-firm’s capital to boost your gains. But with so many prop firms on the street, how do you know which ones are legit and which ones are scams?Â
Don’t worry; we’ve got you covered. Let’s break down some key points to help you spot a genuine prop-trading firm:
1) Beware of Cheap Challenges
Ever seen those ultra-cheap trading challenges that seem too good to be true? They often are. Here’s the deal: some prop firms offer unreasonably low-cost challenges that are almost impossible to pass. They set the bar unrealistically high, making it a trap for traders who end up losing their fees without ever getting funded.
What to do: Look for firms with reasonable challenge fees and realistic profit targets. If it feels like a stretch but achievable with effort and skill, that’s a good sign.
2) Transparency in Trade Execution
A genuine prop-trading firm will always disclose how trades are executed and which brokers they use. If a firm is secretive about this, it’s a big red flag. Why? Because they might be trading against you. It’s called B-Book trading and such firms profit from traders’ losses instead of their gains, meaning they benefit when you lose. Not cool, right?
What to do: Ask the firm about their trade execution and brokers. If they provide clear, transparent answers, you’re on the right track. If they dodge the question or give vague responses, walk away.
3) Active Social Networks
In today’s world, an active presence on social media is crucial for any business. Prop trading firms are no exception. If a firm doesn’t have active social networks, it’s a bad sign. Genuine firms will have a vibrant community, regular updates, and positive interactions with their traders.
What to do: Check their social media profiles. Look for regular posts, engagement with followers, and positive feedback from traders. If you find inactive or non-existent social media profiles, think twice before joining.
4) Read Reviews and Testimonials
Another great way to spot a genuine prop-trading firm is by reading reviews and testimonials. Real traders sharing their experiences can give you valuable insights into what you can expect. Look for detailed reviews that mention both the pros and cons.
What to do: Visit forums, review sites, and social media platforms to see what other traders are saying. If a firm has a consistent track record of positive reviews, it’s a good sign they’re legit.
5) Customer Support and Trade Mentoring
A reputable prop-trading firm will eagerly support and engage in social networks. They should be easy to contact, responsive, and helpful. If you struggle to get in touch with them or receive poor support, it’s a major red flag. Prop Firms are often run by experienced traders that are ready to share and spread the knowledge as well as help you navigate in the world of trading
What to do: Test their customer support before committing. Visit webinars or other events and speak with prop-firm representatives.
Why Prop Trading is Worth It !
Despite the scams out there, prop trading is still a fantastic way to practice trading without risking your own capital. It’s an opportunity to manage risk, improve your skills, and benefit from the firm’s capital. With the right prop-trading firm, you can focus on trading, not fundraising.
Want to know more? Check out our article on Why Prop Trading? Focus on Trading, Not Fundraising.