In forex prop trading, traders continually seek metrics to evaluate performance and risk. One such pivotal metric is the PT:DD (Profit Target to Drawdown) ratio. This ratio not only provides insights into a trader's risk and reward approach but also reflects the alignment of a trader's strategies with the firm's objectives. Dive into our analysis of the top 5 Forex prop trading firms, ranked according to their PT:DD ratios for 100K two-step evaluation accounts, and discover which firms stand out.
Significance of PT:DD Ratio in Prop Trading Firms
In Forex prop trading firms, the PT:DD (Profit Target to Drawdown) ratio stands as a crucial metric for assessing the risk and reward dynamics of proprietary traders. It serves to quantify the connection between a trader's profit objective (PT) and the permissible drawdown (DD) before encountering a stop-out scenario. A higher PT:DD ratio signifies a more cautious trading approach, where traders aspire to achieve greater returns relative to the risks assumed. Conversely, a lower ratio suggests a more aggressive stance. For prop trading firms, this ratio plays a pivotal role in evaluating a trader's adeptness in risk management, aligning their risk tolerance with the firm's objectives, and ensuring efficient capital utilization. It underscores the delicate equilibrium between attaining profitability and safeguarding the firm's capital.
#1 Consummate [Ratio: 1:0.92]
Topping our list is Consummate Traders, headquartered in Nigeria, boasting a PT:DD ratio of 1:0.92 on their 100K account, subject to a two-phase evaluation process. Phase 1 sets an ambitious target of an 8% return, while Phase 2 adjusts it to 5%. The firm imposes a maximum daily loss limit of 6%, necessitating traders to suspend trading upon reaching or surpassing this threshold within a single trading day. Furthermore, there's a stipulated maximum total drawdown of 12% for the account. Consummate Traders, with one year of operational history, offers a diverse range of financial instruments for trading via MT4 and MT5 platforms and operates under the brokerage entity known as Kwakol Markets Limited. They provide a leverage of 1:100 across all account models and only levy commissions on ECN Accounts and Crypto Assets. The firm's trading offerings encompass Forex, commodities, indices, synthetic indices, cryptocurrencies, stocks, and CFDs. Additionally, traders can anticipate payouts at 14-day intervals following the realization of profits.
#2 Goat Funded Trader [Ratio: 1:0.83]
Goat Funded Trader emerges as a formidable contender, boasting a PT:DD ratio of 1:0.83 on their 100K two-step account. In Phase 1, traders are tasked with achieving a 7% return, followed by an adjusted objective of 5% in Phase 2. Despite being a relatively new player in the industry, with less than a year of existence, they have made a significant online presence, particularly on the MT4 and MT5 trading platforms facilitated by ThinkMarkets as the brokerage partner. The firm provides a comprehensive array of trading instruments, encompassing Forex, commodities, indices, equities, and cryptocurrencies, with varying leverage options contingent on the chosen evaluation model. Goat Funded Trader adopts a profit-sharing model wherein traders receive 75% of their trading profits. To safeguard capital, the firm enforces a daily loss limit of 4%, mandating traders to cease trading activities if this threshold is met. Additionally, a maximum total drawdown of 10% is in place. They apply a commission structure of $5 per lot for cryptocurrencies, indices, and commodities, and $7 per lot for forex and metals. Furthermore, traders can expect their share of profits to be disbursed within 24 hours from their first trade.
#3 Crypto Fund Trader [Ratio: 1:0.83]
Despite its name implying a focus on cryptocurrencies, Crypto Fund Trader, a Spain-based firm, has a prominent presence in the Forex domain as well. Having a PT:DD ratio of 1:0.83 for their 100K 2-Step account, Crypto Fund Trader encompasses various financial instruments, including forex, indices, commodities, and stocks. In Phase 1, traders aim for an 8% return, which subsequently decreases to 4% in Phase 2. To uphold prudent trading practices, Crypto Fund Trader has instituted a maximum daily loss limit of 5%, mandating traders to halt their trading activities for the day upon reaching this threshold. Additionally, there's a 10% ceiling on the total drawdown. The firm offers a 1:100 leverage across all account types and instruments. Commission structures vary based on the type of instrument traded, with a notable commission of 0.0125% per side for cryptocurrencies. Traders can anticipate profit share pay-outs on a monthly basis, with distributions occurring every 30 days.
#4 Blue Guardian [Ratio: 1:0.83]
Blue Guardian, featuring a PT:DD ratio of 1:0.83 for its 100K two-step account, conducts its operations on the MT4 platform through the EightCap brokerage. In Phase 1, traders target an 8% return, followed by a 4% objective in Phase 2. A maximum daily loss limit of 4% is in effect, obliging traders to suspend their activities if this threshold is reached within a single trading day. Furthermore, a cap of 10% applies to the total drawdown for Elite Guardian Challenges. With two years of industry experience, Blue Guardian facilitates trading in FX, indices, commodities, and cryptocurrencies, offering varying leverage options. Partners enjoy an 85% profit share from the outset of their trading endeavours. For convenience, traders can withdraw their funds every 14 days, with prompt processing times typically within a few hours. The firm provides round-the-clock technical support, with live chat as an efficient communication channel. Additionally, a commission of $6 per lot is applicable to all assets except cryptocurrencies, and a demo account is available for newcomers to explore the platform.
#5 Skilled Funded Traders [Ratio: 1:0.83]
Completing our list, Skilled Funded Traders, also featuring a PT:DD ratio of 1:0.83, is a US-based proprietary trading firm. Both Phase 1 and Phase 2 maintain a consistent target of 6%, offering traders a uniform benchmark throughout their trading journey. The firm places substantial emphasis on responsible trading, with a daily loss limit set at 4%. Furthermore, Skilled Funded Traders enforces a maximum total drawdown limit of 10% to ensure the overall health of accounts. They offer three types of accounts—Regular, Swing, and Skilled—each with varying leverage options. The commission structure is contingent on the broker and ranges from $0 to $7 per lot, depending on the asset and broker. They provide a trading platform for forex, metals, commodities, indices, and cryptocurrencies through MT4 and MT5 via the EightCap brokerage. Additionally, traders can access their earnings every 14 days, providing a consistent and regular pay-out schedule.
Summary
The PT:DD ratio is instrumental in discerning a trader's proficiency in balancing profitability aspirations with risk management, making it vital for prop trading firms. As observed in our rankings, Consummate Traders leads the pack, closely followed by contenders like Goat Funded Trader and Crypto Fund Trader. While each firm has its unique offerings and nuances, they all emphasize efficient capital utilization and prudent risk management. Whether you're an aspiring trader or a seasoned one, keeping an eye on such metrics can provide valuable insights into prop trading.
