The Downside Of Simulated Trading: Why Prop Trading Firms With Real Accounts May Be A Better Option
Detroit, Michigan
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November 26, 2024 01:00 PM Eastern Standard Time
By Meg Flippin, Benzinga
Click here to check out BluSky’s prop trading platform, where you keep 90% of what you make!
Simulated prop trading firms provide traders with access to the futures markets without the inherent risk. With no money on the line, clients of these firms don’t have to worry as much about a strategy going south. But that often means they don’t get the real experience and opportunities to make money that live trading affords them. It’s why BluSky Trading Company uses real Wall Street brokers and real money in its prop trading firm accounts.
Without a doubt simulated trading or demo accounts serve a purpose in futures trading. They give investors a way to hone their skills and learn about the markets. Traders can test strategies, take risks and develop positions they can eventually bring into the real world. However, simulated trading carries its own set of downsides.
The Downside Of Simulated Trading
The way BluSky sees it, simulated trading can cause more harm than good. For starters, it can give traders a false sense of confidence as emotions are taken out of the equation. Money isn’t involved with virtual trading. If the trade doesn’t pan out, the trader doesn’t have to worry about losing cash. Sure, they put in the time and effort, but their money is still intact. As a result, it may not trigger common emotions like fear, dread and greed. In the real world, a big loss may manifest, and if a trader doesn’t know how to react, it can lead to poor decision-making.
Then there’s the potential for overconfidence. It’s easy to take risks when you aren’t trading your own money. However, what happens on a simulated trading platform may be very different from what happens in the real world.
Limited access is another common complaint about some virtual trading platforms. They provide delayed market data and limited asset classes to invest in. That makes it harder to learn and execute complex trading strategies.
Simulated Trading Payout Problems
Ultimately, simulated trading platforms can sometimes actually prevent traders from reaching their full potential, which is why BluSky Trading Company offers real money accounts to trade with. That’s not true of simulated trading firms, which don’t have real brokers and have to pay out of pocket which can take weeks. If cash in the coffers suffers, so do the payouts.
That has led to some instances in which virtual trading firms delayed or denied payments without a clear explanation, reports BluSky. It has also resulted in the shutdown of some prop trading firms, including Fast Track Trading, which closed six months after launching. Fast Track Trading had very competitive pricing, which lured traders to its platform but ultimately did the prop trading firm in.
Fast Track Trading’s demise underscores the need for traders to conduct due diligence before joining a prop trading firm. It’s important to choose an established firm that has a good reputation in the market and is transparent about its fees and payout rules. It’s something BluSky prides itself on. It knows its reputation is everything and goes to great lengths to be completely transparent with traders and offer them what BluSky says is top-notch support. In general, prop firms with real money have stricter and more transparent evaluation rules than simulated trading accounts.
To get started trading a real brokerage account with BluSky, click here.
When Traders Do Good, Everybody Wins
BluSky is looking for experienced futures traders and doesn’t make it cumbersome for them to trade for the firm. To access a funded account, traders sign up and trade the evaluation simulator for at least eight days. If the trader doesn't break any rules and meets his or her profit goal they move on to a funded account. They don’t have to trade for weeks or months with a simulated account to prove their mettle.
BluSky is also willing to invest in their success. After all, the better the trader does, the better BluSky fares. Its entire business model is focused on retaining successful traders, which is why traders keep 90% of their profits.
BluSky doesn’t have any payout rules either. With BluSky, traders can take all the payouts they want; they just have to maintain the minimum balance in the account. Educating traders on an ongoing basis is also part of BluSky’s business model. It gives them the tools to succeed, including free coaching. Trading is hard, but better education can make things easier. With BluSky’s free one-on-one coaching traders can brainstorm ideas and get tips to become better traders.
Prop trading with a real brokerage account brings transparency to the industry and empowers traders to make money they can access when they want it. It’s proving to be a successful business model for many and a differentiator in an industry in need of some assurances. To learn more about how to trade with BluSky’s real brokerage accounts, click here.
Try prop trading with BluSky’s real brokerage accounts — get 30% off your first evaluation using code ‘BENZINGA’ on its website.
Featured photo by Joshua Mayo on Unsplash.
This post contains sponsored content. This content is for informational purposes only and is not intended to be investing advice.
Benzinga is a leading financial media and data provider, known for delivering accurate, timely, and actionable financial information to empower investors and traders.
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