Prop-trading is a good opportunity for the talented beginner to learn how to trade in Forex. The essence of prop companies I described in the last article, but once again, just in case. There is the investor willing to provide money for stock trading. There is a trader, which has almost no money, but have knowledge. Prop trading in European countries: the prop company holds a contest, offering contestants in a fixed period make money on a demo account. Best become traders who the company trusts the money. But:
the trader trades only within the deposit (i.e. the money of prop firms have leverage, in the case of loss the deposit of the trader burns, the investor’s money will remain intact);
strategy of risk management, trading tips for traders are developed by analysts of a proprietary company.
The great idea. Independent trade on own deposit, and you will be taught for free… (profit of proprietary company — part of the profits for the use of money).
Alas, prop-trading in Russia has taken a slightly different form. If you decided to find a prop-company, now you have the difficult task to determine if it’s genuine.
Prop-trading in Russia
Affiliate programs don’t work, potential traders no longer react on such things as: “Replenish the account for 100.e. and we will give you free 100.e. of bonuses!” Then the managers “kitchen” (NOT to be CONFUSED with honest work of dealing centers and brokers!) decided to turn the bright idea of prop-trading in Russia in a way to attract customers.
“Hello, I represent a financial company XXX” — at these words, you are ready to stop the conversation, but here follows a cherished phrase: “We will give you capital to trade -“.
Rule 1. These companies are interested in professionals as professionals interested in additional capital. They will not call leaked telephone databases. Scammers adapts the prop-trading in Russia, will impose you their services — the first sign of problems.
The essence of a fraud is to promise a potential client the mountain top, in the hope that he would be offended by the fact that “it will fall from the sky for free.” If you are an active trader, you have probably faced a dozen calls from brokers trying to lure your deposit. But how will you feel if you say, “We will give you money in trust”?
And here works the psychology of greed. “Wow, I have 100500 million in control! The investor will do everything for me, no need to think about stop loss, the money is not mine!”
Rule 2: where did you see that someone gave anything absolutely for free? Trust management is based on mutual benefit, the investor 10 times will test the skills of the trader and his trading principle (will also ask for the statement from the terminal for over the past 1-2 years). So why someone will give something for nothing?
Theoretically, at this point the fraud could end. The client will offer to open an account in their company, asked to add funds to the deposit (in which he is dealing, as I wrote above) — and trade, until it is drained. And if in Europe, a trader manages real money, prop-trading in Russia is leverage.
But if the client agreed, then why not to impose more? Small costs of “proprietary” trading platform, fees for tips etc. start to appear.
Rule 3: have a good old proven platform. If you are offered (imposed) another terminal that doesn’t fit you, please ask the relevant question. Prop-companies need earnings no matter on which terminal it is received (with rare exceptions). There may be some limitations in the strategies and risk management, but it is all negotiated prior to the deposit. Otherwise, they could be called scammers.
It would seem that everything is simple, who gets in a fraud? Alas, psychologists in the company can speak convincingly, and the form of presentation is so neat that to get caught in the trap is quite simple.
Summary. You find the website of the broker or rebate or service, could it be a HYIP, that is a pyramid scheme? Easily. And if brokers have ratings, and reviews, about prop companies there is a little information. Prop-trading in Russia is the risk of running into another HYIP that in Europe it would seem inconceivable, but the harsh reality of our country, alas, is as follows. How to distinguish hype from a normal project, I’ll tell you later. And before you read a future article, just note the fact: in our country, all that in Europe is considered to be an adequate way of earnings, can be used as a fraud.
Be vigilant, but not mindlessly put in the labels of “Scam”, try to understand the essence of ideas and to cut off the Scam.