Trading isn’t gambling

Written by Vikus george, CEO FC

I’ve always strived to be open and honest with the traders we work with. This was true back in 2013 when I ran one of the world’s longest-running live trade rooms, and it remains true today with FC.

The industry is changing

We’ve observed a race to the bottom with prop firms offering unrealistic parameters and unsustainable discounts, causing some firms to go bust.

Thankfully, we’re as strong as ever, but like other prop firms, we need to adapt as the industry matures.

There has been a significant shift in trader behavior. The entire industry has seen an increase in the risk traders are willing to take. Funded accounts, which used to last weeks or months, now often last only days or hours as traders take on larger risks.

This might involve risking entire accounts on news trading or using most of their margin on one position or collective positions in the same market.

The industry needs these traders to de-risk and change their behavior.

This increased risk-taking has been accompanied by a rise in cheating and abuse, with individuals and organized groups attempting everything from arbitrage to reverse hedging and trading across multiple accounts and firms.

The FC approach

We aim to be upfront with our traders to help them avoid breaching our risk rules. This is why this blog and our Risk Review Policy are being published. Risk Review Policy

We do not want to ban news trading or introduce a minimum number of trades. We want our traders to demonstrate professional risk management and aim to retain their accounts long-term.

Strategy vs. risk

When designing our programs, we approached the creation of FC from a trader’s perspective. I’ve always been proud of removing unnecessary restrictions and rules that other firms had back in 2021.

I’m proud of being:

Pioneers in removing all time limits to pass a challenge, setting the industry standard.
The first firm to offer day 1 payouts.
Never having consistency rules such as minimum trading days.
Never having a minimum number of trades.
Allowing news trading.
I wanted traders to be free to express their trading strategies and styles without being boxed in or having to compromise. However, this freedom came with an implicit understanding that traders would manage their risk professionally, not gamble.

Data for research and development

We collect trader data as part of our research and development to develop and utilize proprietary trading strategies in the live markets. The most valuable data comes from traders who are consistently profitable, manage their risk, and maintain their funded trading accounts for extended periods.

Conversely, the less valuable data comes from high-risk traders who boom and bust, retaining their funded accounts for only days or hours.

Toxic behaviors

We aim to eliminate the following toxic behaviors to encourage traders to focus on long-term consistency rather than high-risk, low-probability short-term gains:

Overleveraging

The evidence is clear: the more leverage traders are given, the worse the outcomes. Leverage across the EU and UK is limited to a maximum of 30:1, a measure I agree with. With prop accounts having high notional values, 30:1 is a good balance between providing enough buying power and avoiding excessive over-leveraging.

The shift we’ve seen involves traders using most or all of their available leverage on one or few positions (see ‘one-sided bets’), which usually results in quick account losses.

News punting

News can present great trading opportunities, which is why we’ve never restricted news trading. It appeals to those who focus on fundamental trading elements rather than technical ones.

Unfortunately, we’ve seen a shift from sensible positions on higher time frames to many traders taking the largest possible single position 30 seconds before a news event, often blowing their entire account in hopes of making a large profit quickly.

One-sided bets / too much margin

Large long or short positions on the same or correlated markets (e.g., US30 and SPX500) do not demonstrate sound risk management. If one move can significantly impact or take out your account, it isn’t sound risk management.

Practical advice

There are many trading variables, making it impossible to define all rules. We don’t want to mandate a specific risk percentage per trade.

The advice I give traders to retain their accounts longer includes:

Treat your funded account as if it were a personal account.
Approach the account as if you’re going to keep it for weeks and months, not hours and days.
Remember, risk and strategies are different. We don’t want to restrict your trading methods, but we want you to consider your risk.
You’ll likely find much more consistency and longevity with this approach.