OK, let's try this one more time regarding scaling up. However much money you make, your so called "size" is determined by your "equity" just like at Amp Futures. So if you trade "size" in a live account and you lose 50k, that 50k is actually YOURS!!!!!! This is the easiest part of the debate. They are not going to let you lose 50k of "their"money. So scaling up is simply a function of how well you are doing building equity in your account just like at say, Amp. So again, it's NOT an advantage. You are losing YOUR money when you lose on size. What's stopping you from dropping size now? A fear of losing money right? Well, that same fear will still be there. For the life of me I can't figure out how I am failing to communicate this.
You are only communicating HALF of the equation. Of course, the trader is responsible for the LOSSES in his retail account and his funded account of whatever equity he has built up.
Take the example of the Series 56 prop equities trader vs. the retail pattern day trader ("PDT"). The prop trader puts up a minimum of 5k capital contribution and gets 100k of bp. The retail trader puts up 25k in his Schwab account and gets 100k of bp. The prop guy loses 1k, the retail guy loses 1k, so dollar wise, the losses are the SAME.
However, the prop guy only has 5k, whereas the retail guy has 25k. BOTH can "scale up" size, but the prop only has to put up ONE FIFTH as the PDT to trade the same "lot" size.
Now, take the same example to the futures markets. You have a retail AMP account, and you have a TST funded account. You want to eventually trade say 50 lots of ES. With the AMP account, you have to maintain a minimum amount of equity to use the margin required to trade 50 lots. Maybe to start, you put up 5k in the account, and build up the equity in order to trade size. With TST, you have to maintain a certain profit buffer to trade 50 lots. To gain an "edge" with the funding, you should be able to build up to 50 lots by having a LOWER equity buffer than the amount of equity you need at AMP. Once again, the LOSSES are the same. If you lose 1k in the TST account or the AMP account, your equity buffer is reduced by that 1k.
I've already posted this, so I'll post it again. To justify the haircut, there has to be an expectation in the funded account that you can trade MORE lots than you can trade with the same amount of equity in a retail account. Putting the psychological aspect of trading in a structured account aside, this is the ONLY other reason you will trade the funded account.
So to recap, yes, the losses are the same, but the equity required to trade size should be LESS in the funded account vs the retail futures account, just as it is LESS in the equity prop account vs a retail PDT account.
