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I know what I want and I want it now…
…is something Culture Beat sang in the 1990s about Mr Vain.
Today prop traders would probably say the same thing. But rather than singing along to camp 1990s Eurodance, they would be talking about instant funding.
Searches for ‘instant funding prop firms’ are peeking as you read these very words.
Interestingly, the main source of this seems to be countries in Africa. The trend is spreading.
One of the things I have found with prop trading so far is that there is a tendency to overcomplicate.
I am guilty of this. I often look at a specific topic and think, ‘there must be some clever solution or thing that Prop X is doing to facilitate this process’
Then you look into and go ‘oh yea, they just pay out from the challenge fees. That’s it.’
But I think props are also guilty of doing this too. We’ve looked previously at how a lot of challenges, for example, are set up to be weirdly complicated.
You look at the screen on your phone or desktop and there are 50 different prices for an account that has the same balance. There are weird rules for each. You can’t trade on Wednesday afternoon but then you can, assuming it’s going to be at least 25 degrees that day and you pay an extra $50 to increase your max drawdown limit by 1%. Random stuff like that.
Over the last week I saw a couple of prop people making a similar point.
Edoardo Dalla Torre, the CEO of Trade Tech Solutions, wrote earlier this week that that props end up focusing so much on marketing, they don’t devote the time to build a basic website, CRM, and other infrastructure to convert the leads they get. The result is they get a lot of leads and traffic but don’t convert them into paying clients.
Similarly, Brokeree posted this fun clip of Anton Sokolov talking about prop earlier this year. The basic argument that he was making is that firms obsess over tech but actually have all the tech they need. Instead they should devote more time to understanding their clients and creating a product that they want on the back of that.
What does this have to do with instant funding?
Although it’s definitely not true across the board, it’s interesting to note that a lot of props tweak their challenges and fee structures, when in reality, most people that do this are, like basically all humans today (and maybe ever?), impatient and just want cash fast.
TradeInformer understands from one technology provider that instant funding continues to be the most sought after product with the props they serve. A prop founder noted the same thing.
“I personally thought that making 3 phase challenges and offering higher account balances was what clients really looked for,” he said. “But in the last months we see client purchasing behaviour is moving towards no evaluation stages – [traders want] Instant Funded accounts.”
The result is that you’d expect instant funding to be the most pushed, simple to access product.
That is nearly never the case – why?
One is what we’ve just described. A lot of props focus on marketing and different ‘whistles and bells’ for their product. So they aren’t just doing something simple and/or product focused. I continue to think there is going to be a Plus500 equivalent that comes in, makes a super simple product, and cleans up.
Another is reputation. Let’s be real, prop is often not the best look. Instant funding is a bad look, within a bad look. Alpha Capital, FTMO, and FundedNext, for example, do not offer the product.
However, I think another ‘problem’ might be regulatory.
Let’s say you charge $500 for a $10,000 account, with leverage capped at 30:1 on FX and lower on other products. So you are paying $500 for a notional value of $300,000. Your drawdown is capped at $1,000.
This is obviously a lot of leverage but it’s not that different to what a lot of brokers are offering, particularly if you had a 100% deposit bonus. Just saying ‘nah bro, it’s a demo account’ could be a risky defence.
If you look back to the My Forex Funds debacle in 2023 and the court case against them, one of the main things the regulator went after them for was ‘instant’ accounts and the way they were structured.
If you read back through that case, the impression you get is that the Commodity Futures Trading Commission believed the ‘instant funding’ My Forex Funds offered was just a brokerage account. And if you look at the way My Forex Funds offered it, they were not really wrong!
And so right now if you are a prop you are in a dilemma. Your brand can be damaged by instant funding – it kind of goes against the prop concept that you are being evaluated.
You also have to worry about potential regulatory problems.
But then you have to think about what your clients want.
And brother, they want instant funding.
And they want it now.
