alot of youtubers using prop firm accounts for futures these days.

[Actuarial_Fun]

If you no longer have enough intraday margin you will automatically be liquidated and I assume charged a fee in almost every broker. There is a high probability of this happening if you have little margin. If you have 50K in intraday positions and only 53K for example in your account, if something goes against you, you will have this triggered quite fast. So it's likely, not unlikely.
Also, you can be locked limit, in which you could owe more than your account worth.
Trading futures has the risk of total loss plus some. The disclosure you sign is real.

 

[SimpleMeLike]

does it insulate you from losing more than you have in your account? i heard with futures, you can lose more money than you have in the account...

Hello rbigsby,

The Youtubers are doing this prop firm to gain audience and followers to sell eventually sell trading course and trading products to the audience and followers.

It is a great business model.

 

[SunTrader]

.....
That reminds me of this trader who set up a backup internet service in case one goes down! He must have had a bad experience that prompted that!

That is what all serious traders do, pretenders aka most YouTubers don't.

 

[traider]

That’s incorrect because auto-liquidate assumes liquidity to liquidate your position.

If you’re trading on intraday margin you absolutely can go negative in your account during a news shock.

The probability is low, but definitely possible.

Do you have to payback the deficit? Will you become bankrupt in a black swan

 

[Laissez Faire]

Do you have to payback the deficit? Will you become bankrupt in a black swan

Yes.

Bankruptcy depends on how deep your pockets are, but you can obviously go substantially in the red if you're trading with very high leverage and a black swan hits where liquidity disappears.

Mark D.Cook (featured in Market Wizards) went $350K (!) in debit selling naked OTM calls on a stock that went through the roof (takeover bid).

This is a standard risk disclosure for futures.

 

[Concinnity]

Are some of you guys even serious. If you think you cannot lose more in your account than is in there trading futures, what does one even say to that? You're just wrong. Sure it's low probability, but certainly possible.

 

[rbigsby]

Hello rbigsby,

Hello!

The Youtubers are doing this prop firm to gain audience and followers to sell eventually sell trading course and trading products to the audience and followers.

It is a great business model.

What I've noticed is some of these youtubers really push these prop firms HARD. They must have some type of special relationship over and above a standard affiliate relationship. Maybe the prop firm even gives them some free accounts to trade with (and withdraw profits).

Whether those type of accounts are really real funded account or just a sim, I have no idea. What is a prop firm "funded account" anyway? Do they deposit $150,000 into a broker and put your name on the account? I doubt it. So it really isn't yours if that's the case so I don't see how they could sue you for going negative. Who would take that seriously?! A prop firm suing a customer for losses that happened on an account that they don't even really own. Just get to trade on. And the plug gets pulled anyway if you hit some max loss size...you don't own the account if that's the case.

 

[rbigsby]

Are some of you guys even serious. If you think you cannot lose more in your account than is in there trading futures, what does one even say to that? You're just wrong. Sure it's low probability, but certainly possible.

The losses from trading a real futures account are theoretically UNLIMITED if you're seling something like a gold or oil contract. They are not unlimited if you're buying but they are still theoretically very substantial. Similar to shorting and buying stocks on margin.

But that's if it's a real broker and you own the account, it has your name on it and you have complete control over all the money in it. These prop firm accounts, I think they might be different. Even if they are "funded accounts", the company owns the money, not the trader because the trader can't just withdraw all the money out of the account for example.

I thought that's why people used prop firms for trading futures is to be insulated from this unlimited risk and have it capped at just "losing" their funded account and having to go through the combine again or pay some type of re-activation fee. That's just a slap on the wrist compared to what can happen in the real live futures market I guess!

 

[SimpleMeLike]

Hello!



What I've noticed is some of these youtubers really push these prop firms HARD. They must have some type of special relationship over and above a standard affiliate relationship. Maybe the prop firm even gives them some free accounts to trade with (and withdraw profits).

Whether those type of accounts are really real funded account or just a sim, I have no idea. What is a prop firm "funded account" anyway? Do they deposit $150,000 into a broker and put your name on the account? I doubt it. So it really isn't yours if that's the case so I don't see how they could sue you for going negative. Who would take that seriously?! A prop firm suing a customer for losses that happened on an account that they don't even really own. Just get to trade on. And the plug gets pulled anyway if you hit some max loss size...you don't own the account if that's the case.

Hello rbigsby,

All Youtubers trying to get paid.
Traders trying to get paid.

Everybody trying to get paid in this trading game. People are hungry man and need to eat. They have bills to pay and need to make money trading.

So , it is what it is.

 

[rbigsby]

Hello rbigsby,

All Youtubers trying to get paid.
Traders trying to get paid.

Everybody trying to get paid in this trading game. People are hungry man and need to eat. They have bills to pay and need to make money trading.

So are they insulated from going negative in their "funded account" or not?

So , it is what it is.

I'm talking about traders trading prop firm "funded accounts". Who is accepting the unlimited risk because it doesnt seem like it is the traders they dont seem worried at all