The online funding industry is competitive, with numerous firms offering opportunities for traders to access capital. However, the incentives driving these firms can vary widely, impacting the trader’s experience and success. Quite frequently, we don't put a lot of thought into the incentives behind the policies of each firm, but when examined they can reveal quite a lot. Here’s a closer look at the incentives for firms in the funding industry and how those incentives shape their business practices:
Evaluation & Reset Fees
Evaluation & Reset Fees are a massive source of revenue for most funding firms and generate significant amounts of revenue, irrespective of the success of the traders paying the fees. In fact, funding firms tend to make more of this type of revenue from struggling traders who continuously purchase new evaluations and resets. This can incentivize firms to keep traders in a cycle of evaluation and re-evaluation, sometimes by making the evaluation criteria excessively stringent or frequently changing the rules.
When a funding firm’s revenue model benefits more from struggling traders, it can lead to policies and practices that might not always be in the best interest of traders. Overly strict evaluation rules and requirements make it difficult for traders to pass evaluations and move to funded accounts, resulting in more traders failing and needing to retake evaluations, generating continuous fee income for the firm. Regularly altering the rules and conditions for evaluations and payouts can confuse traders and increase the likelihood of failure. Traders may be forced to adapt constantly, leading to more evaluation attempts and fees.
Simulated Funded Accounts
For a few years now, the norm in the online funding industry has been to place traders into simulated funded accounts, with no clear guidelines on how or when they will be moved to a live account. Using simulated funded accounts reduces costs for the firm as there are no real financial risks involved (not to mention data fees are cheaper in simulated accounts), and in turn this enables firms to increase the number of funded accounts available simultaneously without the need for substantial capital. While beneficial in this way, using simulated funded accounts has massive drawbacks.
When a funding firm uses simulated accounts, the payouts to traders come from the firm's own funds rather than from profits generated in real trading. As you would expect, firms design their evaluation processes and payout structures to ensure that the overall model remains profitable, otherwise their business model would be unsustainable. This includes setting high standards for passing evaluations, qualifying for payouts, and possibly implementing rules that reduce the number of traders who qualify for payouts.
Crucially, payouts from simulated accounts depend on the firm’s financial health and revenue from evaluations, rather than actual trading profits. Traders must trust the firm’s commitment and ability to honor these payouts.
Payout Structures
Apart from everything else, a funding firm's payout structure represents the heart of the issue. The payout structure is a critical aspect of any trading firm, significantly influencing both the traders' experience and the firm's reputation. A clear, fair, and attractive payout structure motivates traders to perform well. Knowing that their efforts will be rewarded fosters dedication and discipline. Transparent payout rules build trust between the firm and traders. When traders see that the firm honors payouts consistently and fairly, it strengthens their confidence and loyalty to the firm.
However, some firms implement complex payout structures and conditions that make it difficult for traders to withdraw their profits. This allows firms to retain more capital and delay or reduce payouts. The firm must design a payout structure that is financially sustainable, ensuring it can reward traders while maintaining profitability. When combined with simulated funded accounts, this reality is what leads most firms to have overly strict payout rules, and to constantly make changes to those rules and how they are enforced. At the end of the day, the peace of mind knowing that your trading profits are real and that you can take them when you want makes a huge difference.
Our Approach: Aligning Incentives with Trader Success
At Purdia Capital, we prioritize aligning our incentives with the success of our traders. Here’s how we stand out in the industry:
1. Real Accounts, Real Rewards
Live Accounts: We provide genuine live accounts funded with real money, ensuring that our traders gain real-world experience and profits. This commitment reflects our belief in transparent and authentic trading opportunities.
2. Fair and Clear Evaluation Process
Transparent Criteria: Our evaluation process is straightforward and transparent, with no hidden rules or arbitrary changes. We aim to assess and support traders fairly, ensuring that the path to funding is clear and achievable.
3. Honest, Fast Payouts
Honest Payouts: At Purdia Capital, our payout rules are simple and fair, ensuring that traders receive their due rewards promptly. Because we use genuine live accounts, the profits are real. We succeed when our traders succeed.
4. Supportive Trading Environment
Resources and Mentorship: We invest in the growth and development of our traders by providing resources, training, and mentorship. Our success is tied to the success of our traders, fostering a collaborative and supportive environment.
5. Long-Term Relationships
Sustainable Success: We focus on building long-term relationships with our traders. Our goal is to support their journey to consistent profitability and sustainable success, ensuring mutual growth and benefit.
By aligning our incentives with the success of our traders, Purdia Capital aims to create a fair, transparent, and supportive trading environment. Choose Purdia Capital for a genuine and rewarding trading experience where your success is our top priority.
