True Forex Funds vs FTMO - The Forex Geek (2024)

Author: The Forex Geek | Published: April 6, 2024

Forex trading has gained immense popularity in recent years, attracting traders from all walks of life. As traders seek opportunities to grow their capital, the concept of managed funds and proprietary trading firms has emerged as a means to participate in the forex market without having to trade on their own. Among such options, True Forex Funds and FTMO are two prominent choices that have garnered attention from traders. In this article, we will conduct a thorough comparison between True Forex Funds and FTMO, analyzing their key features, benefits, drawbacks, and overall suitability for aspiring traders.

Understanding True Forex Funds

True Forex Funds is a prop trading firm that provides capital to skilled forex traders who want to trade with their own strategies. The company has a team of professional traders who monitor and evaluate the performance of the funded traders. Investors can choose from different levels of funding and pay a monthly subscription fee. True Forex Funds allows traders to keep a large share of the profits they make. The company operates online and accepts traders from all over the world. True Forex Funds has a transparent and supportive community of traders.

Introducing FTMO

FTMO is a prop trading firm that has a unique way of selecting traders. Traders have to go through a two-step evaluation course, where they have to show their trading skills on two demo accounts. The first step is called the FTMO Challenge, and the second step is called the Verification. If traders pass both steps, they get a funded trading account from FTMO. The company gives traders capital to trade, and shares the profits with them according to a set of rules. FTMO does not require traders to put up their own money, which makes it appealing for those who have limited funds for trading. FTMO has a website where you can learn more about them.

Key Features and Benefits

Capital Requirement

True Forex Funds claims to offer different levels of funding to investors, but they also demand a large amount of capital from them. This can be a barrier for many retail traders who want to access professional trading services. FTMO, however, does not require traders to invest their own money, but provides them with capital to trade. This makes FTMO more affordable and attractive to traders with limited funds.

Risk and Diversification

True Forex Funds promises to let investors spread their funds across different traders or strategies, hoping to reduce their risk. This can help them avoid losing too much money if one trader or strategy does badly. FTMO gives traders the option to trade on more than one account, but with a limit of $400k (or $200k for Aggressive accounts) as the total initial capital they can use. This means that traders can trade with different methods or markets on separate accounts, but they have to pass the Challenge and pay the fee for each new account they want. However, FTMO also has strict rules and limits for their trading accounts, such as the 5% Max Daily Loss and the 10% Max Loss, which could affect how much money the traders can make or lose. You can learn more about FTMO’s multiple accounts on their website or watch this video interview with a trader who has three FTMO accounts.

Profit Sharing and Payouts

True Forex Funds and FTMO both share profits with their funded traders, but they have different percentages and schedules. In True Forex Funds, traders get 80% of their profits and the company gets 20%. They pay traders every two weeks, and they can choose to receive their money in USDT ERC20 or other methods. In FTMO, traders get 70% of their profits and the firm gets 30%. They pay traders every month, and they can choose to receive their money in wire transfer, PayPal, Skrill, or Neteller. You can learn more about True Forex Funds’ profit split on their website or about FTMO’s profit split on their website.

Skill Evaluation

True Forex Funds and FTMO both have a two-phase evaluation process that traders have to pass before getting funded accounts. This evaluation process helps them check the traders’ skills and risk management, and to reduce the chance of losing money for both sides. In True Forex Funds, traders have to make 8% profit in phase one and 5% profit in phase two, while keeping their losses below 5% per day and 10% overall. In FTMO, traders have to make 10% profit in both phases, while keeping their losses below 5% per day and 10% overall. You can learn more about True Forex Funds’ evaluation process on their website or read this review.

Drawbacks and Limitations

True Forex Funds

• Lack of Control: Investors entrust their capital to fund managers, which means they have no direct control over individual trades made on their behalf.
• Potential Risk of Fraud: Unregulated or improperly managed forex funds may expose investors to the risk of fraud or mismanagement of funds.

FTMO

• Limited Risk Management Flexibility: Traders at FTMO must adhere to strict risk management rules imposed by the firm. While this helps protect the firm’s capital, it may limit the trader’s ability to adjust their risk exposure according to their trading style.
• Evaluation Process: The challenge process at FTMO may require traders to demonstrate consistent profitability over a defined period, which might not accurately reflect their long-term trading capabilities.
• Profit Sharing: FTMO’s predefined profit-sharing structure might not always be favorable to traders, as they receive only a portion of the profits they make.

Suitability for Different Traders

True Forex Funds

True Forex Funds are more suitable for investors who:

• Have significant capital to invest.
• Prefer to delegate the trading decisions to experienced fund managers.
• Seek professional diversification by allocating their funds across multiple traders or strategies.
• Value transparency and regulation in their investment choices.

FTMO

FTMO is more suitable for traders who:

• Lack sufficient capital to trade with their own funds.
• Can adhere to predefined risk management rules and parameters.
• Are confident in their trading skills and can successfully pass the evaluation process.
• Are comfortable with profit-sharing arrangements.

Conclusion

In conclusion, both True Forex Funds and FTMO offer distinct advantages and cater to different types of investors and traders. True Forex Funds provide investors with access to professional traders and diversification opportunities, making it suitable for those with significant capital and seeking a hands-off approach to forex trading.

On the other hand, FTMO offers an avenue for traders with limited capital to trade the firm’s money, provided they pass a rigorous evaluation process. It is particularly appealing to skilled traders who are confident in their abilities and can adhere to strict risk management rules.

As with any financial decision, it’s essential for investors and traders to conduct thorough research of both forex prop firms, consider their financial situation, risk tolerance, and investment goals before choosing between True Forex Funds and FTMO. Whichever option they choose, it’s crucial to exercise due diligence and select reputable and transparent providers to ensure a successful and rewarding trading experience.