Amateur Traders Chase Elusive Profits in Simulated Markets
Customers complain about high fees and the slim chance of payouts. Companies say they offer valuable experience.
A simulated trading expo at the Grand Connaught Rooms during the London Prop Trading Expo in September.
Photographer: Julian Stewart/FaceUpTV
The pitch is enticing: Learn to trade like a real Wall Street master of the universe. Pay a fee—typically starting below $100—and manage thousands in fictional funds in a simulated market of stocks, currencies or commodities. If you stick to the strict rules, and meet the profit target, you can become a “funded” trader for the firm. That means you could receive payouts of as much as 90% of the ersatz profits you make. If you fail, you can keep trying, by paying the fee again.
More than 400 companies offer forms of these challenges, up from 10 only five years ago, according to FPFX Technologies LLC, a Florida-based software provider for the industry. Three of the biggest are FTMO Group, FundingPips Corp. and Alpha Capital Group. They have about 6 million customers collectively, according to their websites.
While disclosing that the trading is simulated, the companies describe what they offer as proprietary, or prop, trading, a finance industry term for managing a firm’s own capital. “Enhance your skills with modern prop trading firm,” FTMO’s website says. “Manage a trading account of significant size without risking your hard-earned money,” FundingPips says. “A global leader in proprietary trading,” Alpha Capital says.