A follow-up regarding my attack on the “we-fund-you” prop industry

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The industry has a legitimate role to play — it is just not playing this role with integrity

I have very directly confronted the “we-fund-you” prop trading industry. For more background, see this blog post. https://www.peterlbrandt.com/the-we-fund-you-prop-trading-industry-should-be-immediately-shut-down/

The problem is not the concept of customers paying a small monthly fee to paper trade with the hope of being in a super minority qualifying for a big payout by beating the game according to the of trading the price change of futures contracts as set by the prop firms.

For many under-capitalized wannabe traders this should be an alternative.

Rather, my problem is the slime attached to the industry, such as:

  • Trading rules optimized for clients to lose money
  • Constantly changing rules for payouts
  • Lack of registration — IMO these are gaming companies and need to register with state gaming commissions in addition to registration with the CFTC. Why the CFTC? Because customers lose or make money by placing bets on the price changes of regulated futures contracts.
  • Lack of transparency
  • Lack of honesty in advertising and promotional messages. For example, most of the U.S. based firms hype the possibility of successful paper trading clients becoming eligible to trade real money in real markets. But this is basically a fraudulent idea (with perhaps one exception).
  • The Prop firm affiliate programs and accompanied You Tube hype of social influencers/clients claiming huge trading profits when in fact, there is no actual trading taking place

Let the industry clean up its act and be subject to registration and regulation.

End