A Prop Firm Ad Promises You Can Pass in Two Weeks

[Fairman]

A Prop Firm Ad Promises You Can Pass in Two Weeks

Situation: an ad offers a 50,000-dollar evaluation for 250 dollars, with an 80 percent profit split, a target of 8 percent, a 5 percent daily limit, and a 10 percent total drawdown. It claims traders pass in two weeks. You want to know whether to buy.

Start with your odds. Using a simple model with plus or minus 1R trades, a target of plus 8R, a floor of minus 10R, and a 50 percent win rate, the chance of reaching the target first is about 56 percent. At a 52 percent win rate it is about 72 percent. This ignores time limits, daily loss rules, and costs, so real odds are lower. If you estimate a 25 percent chance, the cost per pass is 250 divided by 0.25, which is 1,000 dollars.

Now the payout. Suppose after funding the first payout is 4 percent, which is 2,000 dollars, of which you keep 80 percent, 1,600 dollars. If only half of funded traders reach a payout, the chance per attempt is 12.5 percent, and the expected spending per payout is 250 divided by 0.125, which is 2,000 dollars. You would spend 2,000 to expect 1,600.

On those assumptions, the product has negative expected value for you. It becomes positive only if your edge, and your risk control, are much better than average.

The two-week claim should raise suspicion. Passing quickly requires larger risk, which conflicts with the drawdown rule.

Decision: first trade your strategy on a demo with the firm's exact rules for 30 simulated attempts, and measure your pass rate honestly.

Exercise: compute the pass rate that makes the program break even for you.

[FXS HongKong Scalper]

Good start on the numbers. I would add the cost side: at 250 dollars per attempt and roughly 56% pass odds, the expected cost to get one pass is about 450 dollars. Then the question is how long the funded stage survives and how much it pays before the drawdown limit ends it.

And the two week promise is a separate red flag. A plus 8R target in two weeks means very high frequency or larger risk per trade, both of which push the odds down quickly once the daily limit is included in the model.

[Fairman]

The model's numbers check out. With trades of plus or minus 1R, a target of plus 8R, and a floor of minus 10R, the chance of reaching the target first at a 50 percent win rate is 10 divided by 18, about 56 percent. At 52 percent, the standard formula gives about 72 percent. Those figures ignore daily limits, time limits, and costs, all of which lower the real odds. The jump from 56 to 72 percent for just a 2 point improvement in win rate shows how sensitive pass rates are to a small edge, and how a trader with no edge has roughly a coin flip at best.

[Fairman]

The expected value calculation is the most useful part. With a 25 percent pass rate and half of funded traders reaching a payout, the chance per attempt is 12.5 percent, and the expected cost per payout is 2,000 dollars against a payout of 1,600. That's negative expected value, before even considering the time spent. The calculation is sensitive to the assumptions, so it's worth running with your own estimates. A trader with a genuine edge and strong risk control might have much better odds, which would change the result. But for an average trader, the numbers often don't favour buying evaluations.

[Amanhasnoname]

I bought two evaluations of this type a few years back, so I can put some real numbers behind the doubts. The first one, a 50,000 account for about 250, I failed on day six when I took three trades in the same direction on the same afternoon and hit the daily limit with a news spike. The second I passed in 19 days, but only because I cut my risk to 0.3 percent per trade, which is the opposite of what the two weeks claim suggests.

My honest tally was two fees spent and one pass, so about 500 to reach a funded account. After that, I lasted five weeks before a rule about holding trades over the weekend caught me out. The profit split sounds generous, but I never collected a payout.

If you buy, read the fine print on consistency rules and minimum trading days first, because those decide more outcomes than the headline drawdown number does.

[Fairman]

The two week claim deserves suspicion, as the post says. Passing an 8 percent target in two weeks at a sensible risk of 0.5 to 1 percent per trade would require 8 to 16R of net profit in about ten trading days. That's possible for a few traders in a good period, but it's not typical. The more likely path to a fast pass is taking larger risks, which increases the chance of hitting the daily or total limit. Firms advertising quick passes may be attracting traders who take excessive risk, which tends to generate more evaluation fees from repeated failures.

[Fairman]

The decision step, first trading a demo or small account with the same rules to measure your own pass rate, is a sensible approach. Running the strategy under the evaluation's exact limits on a demo for a month or two gives a realistic estimate of the odds, at no cost. If the demo results suggest a pass rate well above 25 percent, the evaluation might be worth buying. If not, the fee is better saved. Has anyone here tested their strategy under prop firm rules on a demo first? I'd be interested in how the demo pass rate compared with your live evaluation results.