The volatile nature of the cryptocurrency markets demands astute risk management, making the PT:DD (Profit Target to Drawdown) ratio an invaluable metric for crypto prop trading firms. By examining this ratio, firms can gauge the risk management prowess of traders and harmonize their risk thresholds with the broader objectives of the firm. In this blog, we delve into the top 5 crypto prop trading firms catering to two-step evaluation 100K accounts, ranking them by their PT:DD ratios.
Significance of PT:DD Ratio in Prop Trading Firms
The PT:DD (Profit Target to Drawdown) ratio is an essential metric used by crypto prop trading firms to assess the risk-reward relationship for traders in the fluctuating cryptocurrency markets. This ratio indicates the relationship between a trader's profit target (PT) and the allowed drawdown (DD) before a trading halt. A high PT:DD ratio signifies a trading strategy that aims for significant returns while accepting a relatively lower risk. In contrast, a lower ratio can suggest a more aggressive strategy. In the dynamic world of cryptocurrency trading, this ratio helps crypto prop firms assess a trader's risk management skills, align the trader's risk level with the firm's objectives, and ensure efficient capital use. The ratio strikes a balance between achieving profit and safeguarding the firm's assets in a market characterized by significant price fluctuations.
#1 Consummate [Ratio: 1:0.92]
Leading the pack, Consummate, located in Nigeria, highlights a PT:DD ratio of 1:0.92 for their 100K account, evaluated in two stages. The initial stage pursues an 8% return, transitioning to 5% in the subsequent stage. The establishment has delineated a daily loss boundary of 6%. If this boundary is reached or exceeded during any trading day, traders are advised to halt their activities. Additionally, a 12% maximum total drawdown is set for the account. Having been active for a year, Consummate Traders grants access to a vast array of financial instruments on MT4 and MT5. They are affiliated with the brokerage, Kwakol Markets Limited. Leverage is standardized at 1:100 across all accounts, and commissions are applied only to ECN Accounts and Crypto Assets. Their portfolio includes Forex, commodities, indices, synthetic indices, cryptocurrencies, stocks, and CFDs. Additionally, profit disbursements are scheduled every 14 days.
#2 Blue Guardian [Ratio: 1:0.83]
Securing the second spot, Blue Guardian, with its 100K two-step account, demonstrates a PT:DD ratio of 1:0.83. The operation unfolds on the MT4 platform in collaboration with EightCap. In the initial phase, traders eye an 8% return, which is recalibrated to 4% in the second phase. A 4% daily loss benchmark is set, directing a trading pause if this limit is touched or crossed. A 10% total drawdown is also defined. Having two years of experience, Blue Guardian enables trading in diverse categories, with varied leverage structures. Affiliates benefit from an 85% profit share. Furthermore, pay-outs are organized every 14 days, and a commission of $6 is charged on most assets, barring cryptocurrencies.
#3 Skilled Funded Traders [Ratio: 1:0.83]
Matching the ratio of Blue Guardian, Skilled Funded Traders, a US-based trading entity sets a consistent 6% return target across both phases. A strong focus on responsible trading is evident with a 4% daily loss limit. Furthermore, a 10% maximum drawdown is enforced to monitor account health. Different account types are available, each with distinct leverage options. Commission fees vary based on the asset and broker, and trading is facilitated through MT4 and MT5 via EightCap. Moreover, profits are made accessible every 14 days.
#4 Crypto Fund Trader [Ratio: 1:0.83]
Crypto Fund Trader, though based in Spain and seemingly crypto-focused, is notably active in the Forex arena. Their 100K two-step account reports a PT:DD ratio of 1:0.83. In the first stage, traders target an 8% return, reducing to 4% in the next stage. A daily loss limit of 5% is established, prompting an immediate stop in trading activities upon its breach. Additionally, a 10% total drawdown limit is in effect. Across all accounts and instruments, a 1:100 leverage is offered. Commission fees vary with a 0.0125% charge for crypto trades. Additionally, pay-outs are planned on a monthly basis.
#5 Goat Funded Trader [Ratio: 1:0.83]
On par with the above firms, Goat Funded Trader presents a PT:DD ratio of 1:0.83 on their 100K two-stage account. In the initial stage, a 7% return is the benchmark, which modifies to 5% in the subsequent stage. Even though they've been active for less than a year, their digital presence is noteworthy, especially on the MT4 and MT5 platforms, supported by ThinkMarkets. The instruments they facilitate span Forex, commodities, indices, equities, and cryptocurrencies, with leverage determined by the evaluation model. Their revenue model allows traders to retain 75% of their gains. A daily loss limit of 4% is instituted, necessitating a pause in trading if this boundary is reached. A 10% overall drawdown limit is also operational. Commissions are defined at $5 per lot for certain categories and $7 for others. Moreover, profits are typically processed within a day of the first trade.
Summary
As the crypto realm continues to evolve, understanding such metrics becomes indispensable for optimizing profitability while ensuring capital preservation. The top 5 firms listed here, from Consummate to Goat Funded Trader, each bring their unique strengths and strategies to the table, showcasing the diverse ways in which the PT:DD ratio can be leveraged. Whether you're new to the game or a seasoned trader, it's crucial to align with a firm that mirrors your trading objectives. As the crypto market continues to evolve, so will the offerings and features of prop trading firms. Stay informed, and always consider the PT:DD ratio for your prop trading endeavors.
