Over the course of 2 years, we have seen an increasing number of trader-funding firms, marketing themselves as prop trading firms, entering the space, each bringing their own twist on trading challenges.
“Hold on a second,” you might say. “Was there actually anything remarkable? The majority of said challenges look quite similar, don’t they?” For the most part, you will be correct in your observations. The amount of similar offers we see on the market confuses even the leading experts on prop trading. How can a novice trader get around all that mess? After going through a number of trader-funding firms, I arrived at 4 principles of crafting an evaluation challenge.
These are transparency, fairness, simplicity, and variety.
Lets dive into each of these principles and explore how they might help a trader-funding company to craft a trader evolution challenge.
Transparency - The Most Important Principle
Transparency should be the cornerstone of any business. When it comes to trading challenges, all the metrics, performance indicators, and terms and conditions should be crystal clear. There are many cases when brands get into controversial PR scandals after closing accounts due to toxic trading activity or recalculating performance because there was an error with market data. Something retail brokers deal with daily by clearly communicating with their clients can become detrimental to prop trading firms. Thus, transparency is by far the most important principle of any trader funding challenge.
Companies Must Be Fair to Traders
Trading challenges are supposedly created to test traders' abilities and see how they can perform within set requirements similar to traditional proprietary trading firms. When we think about trading challenges from the perspective of educational projects, such challenges should reinforce good trading practices. Therefore, all restrictions and objectives should be in line with best practices and traders’ interests.
Whenever we see restrictions that are auxiliary and do not directly contribute to traders’ performance, but are there to prevent traders from winning, we start to question the validity of the firm or their promoted values. At the end of the day, it seems suspicious when a firm allows traders to pay extra to lift certain restrictions, and it becomes clear that the challenge was designed to clickbait with seemingly affordable pricing. If you are willing to provide instant funding or any other sped-up challenges, make them their own offers rather than mixing all the settings into a single place. This brings us to the next principle - Simplicity.
Simplicity Is the Key
Nothing speaks cheap and sketchy like clutter. You are less likely to be fooled when dealing with concise information. However, the current state of affairs is such that even I, as a marketer, feel lost when visiting TFFs' websites.
The amount of similar information being duplicated across several columns looks confusing if not daunting. How should anybody choose where to spend their money from all that? Guess what, the only brands whose offers were understandable at first glance were, in fact, from the original companies like FTMO, FunderPro, and The Trading Pit. The simplicity comes from clearly defined end goals and a minimal set of clear objectives/restrictions.
You might have an urge to introduce all the metrics and multiple different challenges just to see which one performs better, but that’s not how AB testing works and definitely not the way to start a project in such a competitive market. Take a step back and define who your target audience is and what performance indicators would make sense for them. Are they a novice trader looking for guidance, or are they experienced and need quicker access to a funded account? Each category of trader will require a different set of objectives and a different approach when creating a trading challenge.
However, it is possible to create a single challenge that will suit both categories, as in the case of FTMO. Can you guess how many restrictions/objectives they have in their 2-step challenge? Four! Minimum trading days, maximum daily loss, maximum loss, and profit target. That’s it. The fact that you can add 10-20 different objectives does not mean you should.
Variety Stands Out
I decided to include variety as the last principle because trading challenges by their nature are gamified services. Thus, I understand a desire to sprinkle an extra layer of interactivity at the registration stage.
The most popular way to do so is by changing the starting account balance. It has proven to be popular among traders, but there is another way to introduce variety: by crafting additional challenges. In that case, a trader will be choosing between different products rather than adjusting the affordability slider. One might have a quicker path but lower leverage to make it fair while still ensuring that the performance is consistent and the strategy is robust.
Another challenge might introduce fewer restrictions but require a longer period, once again making it fair, transparent, and simple to grasp. However, the main thing is that all their challenges are unique and introduce a different customer experience.
Building a strong brand takes time and effort, but it all starts from understanding your ideal customer and crafting a product to address their specific needs in the best way possible.
