Prop Firm Trading
The Prop Firm Trading has skyrocketed in the last few years. Where is it going?
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FTMO closes the doors to US Traders
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FTMO closes the doors to US Traders
Today FTMO one of the longest established Prop Firms has closed the doors to US Citizens/Residents. This probably wont be the last as the CFTC or SEC put pressure on Prop Firms to not allow US Traders to enter the Prop Trading space. The reasoning behind this is that in the US the SEC and CFTC do not allow CFD trading for US Citizens or residents. This stems from the DODD Frank Act. However the regulators are there to provide protection to the general public and protect the public from potential scams where they can loses their money. Whilst other countries allow trading CFD’s the US regulators consider CFD’s (derivatives of assets) Over-The-Counter, to be highly risky and volatile (like Cryptos in a way).
However in the case of taking an assessment (demo accounts) and also trading live accounts for the Prop Firm they are not risking their own money or even make a deposit. The money that they pay is a ‘service fee’ for the challenge/assessment which is carried out on a demo account, to see if they can pass the challenge to be able to move onto a live account (normally under contract as a freelancer). They are still not risking their own money.
Overall it is the responsibility of the Prop Firm not to mislead the consumer and make all the rules that are in place that could lead to failure of the assessment to be very clear before the trader signs up.
We will have to see where the regulators are going with this.
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