OspreyFX is a powerhouse broker that offers leverage of up to 1:500 to trade forex, crypto, stocks, or more. They recently launched the OspreyFX Funded Account Challenge, a chance for traders to manage $100,000 with zero risk. The OspreyFX Challenge is the latest in a series by the new industry of prop trading firms, a new business model for brokers to share profits with skilled traders.
What are prop trading firms?
There is a new buzzword in the trading community: proprietary trading companies. Also known as "prop trading firms," these platforms headhunt expert traders with whom to work. The prop firms use an inhouse "challenge" to test applicant traders, and the successful Traders otherwise strapped for cash get the opportunity of trading with up to $4 million. In return, the prop firm keeps a profit cut (and they take the hit of any losses). The prop firms differ in their leverage offers, platforms, extra features, and trading rules. Good deal, right?
Each firm is slightly different in how they poach, test, and reward traders. One may score highly on the payout, giving a generous percentage share to winning traders, but have stricter trading requirements such as no overnight or weekend positions. On the flip side, another firm may not offer such a high cut of profits but provide greater leverage and more trading flexibility in return. Osprey is one of the latest prop firms bringing a fresh offer to the table. Before we sink our teeth into the details (profit split, scaling opportunities, trading rules, and asset options), let's address the elephant in the room:
If this isn't the first time you are reading about prop firms, you may have come across some debate online. Prop firms are a divisive topic among traders. Many see the hidden gold in the potential of trading with millions in exchange for a small sign-up fee and challenge. There are plenty of others who warn that the offer is too good to be true, and these platforms are not aligned with the interests of traders. In short, they claim prop firms are a scam. Are they right?
First off, any trader with a sensible head on their shoulders will read the small print of any offer. What the online doubters argue is true. Many prop firms make money through the challenge fees (only a minority of traders get to the top). Prop firms also benefit from helping traders win – after all, the profits are shared! Traders who consistently meet their profit targets can use prop firms to access excellent leverage and take positions; otherwise, they would never be able to afford it. There are millions of user reviews, YouTube testimonials, and online forums from satisfied traders becoming successful through prop firms. Best of all, there is no risk (to the trader!), only potential profits. Ultimately, each trader should have all the information at their disposal and decide for themselves. Let's go through the cynics claims one by one:
Why is this a problem? Of course, proprietary trading firms will use fee collection to fund their scouting of expert traders. There is nothing below board about this. Many prop firms let you take the challenge multiple times and refund you the fee should you pass. Prop firms can seek revenue both through fees and profitable traders.
Prop firms use risk management to ensure the traders they take onboard do not transfer excess losses onto the platform. Risk controls protect the firm and educate the trader to learn to safeguard their profits when they are trading their own capital.
This is true with retail trading in general. Many traders assume that scouting firms guarantee successful trading. The truth is that retail trading requires skill, strategy, and risk control. The beauty of trying your hand at trading through a prop firm is that they often invest in their traders with educational resources and coaching programs so that you can improve as you go along.
Prop firms indeed make money through the challenge fees. However, these are a fraction of what they could gain from a 10-20% cut of a $5k position. Prop firms want their traders to succeed – after all, it is a partnership, not a competition. That is why platforms like Osprey and FTMO offer coaching to their traders in the form of mentorship programs and training courses.
At the end of the day, prop trading firms offer the chance for traders to have near-instant funding at minimal risk. For a one-off fee of a few hundred dollars, you get an account balance of up to $2 million. For traders with decent win rates who dream of taking more significant positions, this is the opportunity of a lifetime. The only risk is the initial fee, and even that is returned to you if you make it through the challenge!
OspreyFX Challenge review
OspreyFX is throwing its name into the hat of many prop firms. How does it compare to its competitors? FTMO offers higher payouts (80% base), and the 5%ers have a more extended challenge period (180 days). Finding the best prop trading firm requires weighing up many features; however, finding a challenge that scores highly across the board.
For this reason, we've decided to rate the OspreyFX Funded Challenge on a sliding scale, with each feature given a score out of /10.
OspreyFX is an ECN broker that offers institutional-grade liquidity with ultra-tight spreads. ECN brokers operate as financial intermediaries that use electronic communications networks (ECNs) to connect clients between markets. OspreyFX clients trade alongside major financial institutions and banks with spreads starting at 0.0 pips. They also use an STP execution model to safeguard against any requotes, manipulation, or conflict of interest. The ECN model operates as a type of financial hub, while the STP model is a routing channel used in real-time trading to send orders directly to the market.
OspreyFX offers a range of financial assets, including:
Traders are equipped with the most popular forex platforms (MetaTrader 4 or MetaTrader 5). These charting and analysis software programs offer customizable price charts, tools for plotting technical indicators and market analysis, and intuitive order placing. OspreyFX also provides a demo account, an excellent way for beginners to test the waters or expert traders to perfect strategies in a virtual trading environment.
As an ECN broker, OspreyFX uses electronic coordination for market orders, i.e., straight to market without passing through a dealing desk. The advantage of this is greater transparency of market data, higher liquidity, and tighter spreads.
OspreyFX has laid a new deal on the trading table: Pass the OspreyFX Funded Account Challenge to trade with $100,000 in your account. The idea behind the challenge is to create a win-win scenario for both parties. Traders can access unprecedented leverage at zero risk. In return, OspreyFX keeps a cut of the profits (and takes the hit of any losses).
The only downside is that you have to pay an entry fee to sign up for the challenge. Hey, nothing in life is free, right? Successful traders who pass the virtual challenge (in two stages) can access up to $100k in an instantly funded account. At this point, traders can move to a live trading account and stand to keep 70% of all profits.
Traders can choose between three demo accounts, with starting balances of $25k, $50k, and $100k, respectively. Each account will have a different sign-up fee depending on the size. The first stage of the challenge is the "Demo Stage," requiring 10% profit in 30 days. The max overall loss is a decent 12%, and traders have a minimum of 10 trading days. Successful traders then move onto the "Verification" stage, where they once more demonstrate their profitability on a demo account with the same requirements. Stage 2 winners are then funded and can begin trading in a real account, with profits issued weekly.
OspreyFX may not be the first broker to launch a funded account challenge. However, looking under the bonnet shows that they may have taken the best from their competitor prop firms and improved on it for an impressive challenge. Definitely worth a punt!