Prop trading firm “True Forex Funds” had ceased all operations as of May 13. It really seems like there’s a new prop firm shutting down every other week! From the outside it looks like complete chaos. Prop firm’s reputation as a whole is at an all time low because of the prop firms shutting down after denying payouts or just not giving them to clients.
Let’s dive into our theory for why this is happening. Well, what happened is that in the past couple of years more and more prop trading firms have been opening, but the number of traders hasn’t risen by that much (at least not enough to give all these prop firms enough clients). There are over 200 prop firms today, meaning there’s A LOT of competition.
Traders that use prop firms are not directly trading with the market so all of their profits are being paid to them out of the firm’s pocket. If there are too many profitable traders and not enough people failing the evaluation challenges the company is at a loss and eventually won’t have a way of paying out their profitable traders.
So how can prop firms bring more traders to pay their employees, traders, and whatever they need money for? Easier rules! Prop firms understand that we’re in a fast paced world and if they won’t keep up they won’t succeed in the industry. Everyone wants everything here and now, so prop firms start easing up on the rules so that people will buy their challenge accounts. Since the rules are easier to follow there are more traders passing these challenges and more traders getting funded and more traders getting payouts.
And since the prop firms are paying everything out of pocket, they can’t survive all of these payouts, so they eventually close. Prop trading is not about easy rules yet today every firm is focused around who has the biggest leverage or highest profit splits. It’s all to bring new traders on board, beware because it won’t last.
What Happened to True Forex Funds?
True Forex Funds had a rough year, in February Metaquotes terminated their trading license which caused a temporary global shut down. CEO Richard Nagy called on Metaquotes decision saying it was irrational and incomprehensible. For three months clients’ accounts were frozen and TFF had no income. When they finally partnered with cTrader and resumed operations, the damage got too big. There are more than 300 payouts owed to traders (estimated at 1.2 Million dollars!).
In the end, True Forex Funds became a cautionary tale in the world of forex trading. What was once hailed as a beacon of innovation and success now serves as a sobering reminder of the risks inherent in the volatile market. The legacy of True Forex Funds lives on not in triumph, but in the hard-learned lessons that shape the future of the industry.
What Should True Forex Funds’ Traders Do Now?
The proprietary trading sector is extensive, with varying ethical standards among firms. True Forex Funds’ case underscores the need for thorough research and due diligence. Traders must exercise caution to protect their investments and potential gains.
TFF shutting down will be a turning point for all prop firms, tighter rules, harder challenges etc… But, fortunately, prop firms aren’t going anywhere soon, and neither is OFP Funding. We sincerely welcome any trader who has been affected by the recent news in the prop firm industry to join us and become a real profitable trader. Start trading today with a real prop trading firm.
FAQs
True Forex Funds Has Permanently Shut Down Due to Financial Insolvency. Prop trading firm “True Forex Funds” had ceased all operations as of May 13. It really seems like there's a new prop firm shutting down every other week! From the outside it looks like complete chaos.
Is True forex funds shut down? ›
True Forex Funds has ended its operations and announced plans to permanently close due to financial insolvency. According to a statement on the proprietary trading platform's official website, the firm was unable to improve its financial situation, leading to the discontinuation of its services.
Why is prop trading illegal? ›
The Volcker Rule is one of the more controversial pieces of legislation to emerge from the financial crisis. Attached to the Dodd-Frank Act, the rule was intended to limit banks' ability to make speculative investments that do not benefit their customers.
What happened with my forex funds? ›
Why was My Forex Funds shut down? The CFTC closed MFF's accounts due to their allegation that MFF was defrauding its clients by actively trying to prevent them from becoming funded traders, while promising the opposite.
Why are prop firms getting shut down? ›
Prop trading firms have been shutting down or suspending their services, particularly to U.S.-based clients, because of a crackdown from MetaQuotes, the company behind the popular MetaTrader trading platforms.
Who is the billionaire in forex? ›
1. George Soros. George Soros, often referred to as the «Man Who Broke the Bank of England», is an iconic figure in the world of forex trading. His net worth, estimated at around $8 billion, reflects not only his financial success but also his enduring influence on global markets.
Where is true forex funds based? ›
True Forex Funds is a prop trading firm based in Hungary. You can get a funded account with up to $2.5 million in balance and an 80% profit split payout.
What company owns forex? ›
We are a wholly-owned subsidiary of the StoneX – a NASDAQ-listed Fortune-100 company with assets of $7.2 billion that provides an institutional-grade financial services network to connect people to the global markets.
Can US citizens use prop firms? ›
US citizens can easily get a Forex prop firm account by choosing platforms like True Forex Funds. They offer trading platforms such as Match Trader, along with good spreads, fast execution, and reliable customer support.
What if a prop trader loses money? ›
Profits from trades are generally divided between the firm and the prop trader; however, the risk distribution is asymmetric. This means that in the event of a loss, the trader bears 100% of the losses, while they don't receive 100% of the profits.
The speculation now is that the governing bodies and regulators will put a ban on the whole prop firm industry – which is not going to happen. The prop firm industry has been alive, well and regulated for decades. It's only the online prop firm space that is yet to see regulation.
What is the lawsuit against my Forex funds? ›
The CFTC sued Kazmi and My Forex Funds, also known as Traders Global Group Inc., in September. The agency alleges that the business charged over $300 million in customer fees by falsely promising to grant retail investors access to the forex market.
Why am I losing so much money in forex trading? ›
The reason many forex traders fail is that they are undercapitalized in relation to the size of the trades they make. It is either greed or the prospect of controlling vast amounts of money with only a small amount of capital that coerces forex traders to take on such huge and fragile financial risk.
Why is forex trading closed? ›
The forex market is open 24 hours a day during weekdays but closes on weekends. Because this market operates in multiple time zones, it can be accessed at any time except for the weekend break. With time zone changes, this break gets squeezed. The forex market opens on Sunday at 5 p.m. local time in New York City.
Why is forex halted? ›
Trading halts are put in place when a market has moved too far, too fast – they are time dependent. Up/down limits have a much larger tolerance as they're based upon the price movement of the whole trading session, without short-term considerations.
Where is true forex funds located? ›
Regulatory Challenges in Proprietary Trading Sector
Last week, Finance Magnates reported the abrupt cessation of operations by True Forex Funds, a Hungary-based online proprietary trading firm, following the alleged termination of its MT4 and MT5 licenses by MetaQuotes.
Will forex ever shut down? ›
Forex is likely going to last. It has so many attractions that make it difficult to ignore. The sheer volume of transactions, the highly diverse trading parties, its benefits for individual traders, and its impact on the global economy make it a long-lasting market.
