Lady of Crypto starting her own trading firm - Don't fall for this scam (Part 2)

2 days ago I opened this thread: https://www.reddit.com/r/CryptoCurrency/comments/x5xz8o/lady_of_crypto_starting_her_own_trading_firm_dont/

That day also marked one of the rare days where I was really proud of CT. Lady of Crypto got so much well deserved backlash, she decided to postpone the announcement about her prop trading firm so she can "implement some changes". This thread I linked above was posted as a screenshot in her comments by few people so I like to believe we deserve some of the credit as well.

She should be dropping an announcement today, so ahead of that, I did a little bit of research so I can help even more people to understand why online prop trading firms like hers are essentially a scam, especially in the crypto space.

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So, how does Lady of Crypto's online prop trading firm work?

She promises to give you her own capital to trade with. What you have to do is pay for an entrance fee and pass the test. It may sound good on paper, but, in reality, this is far from a fair deal. She's also claiming that she's using these entrance fees only for customer support and backend development. This is very misleading because these entrance fees are her entire business model. To understand this better let's compare it to an example of one of the biggest online prop trading services in TradeFi. In the screenshot below you can see how their evaluation phase looks like.

https://paste.pics/360e1e19cc4434f0daf7057cbc82d9aa

When compared to the example above, Lady of Crypto's evaluation phase is much harder, because you need to hit 10% profit targets in both phases and you have 10% overall drawdown.

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Now, let's pull some stats from this online prop trading service for October and November 2021:

October:

New live accounts: 3544

Passed phase one: 18%

Passed phase two: 31% of traders who passed phase one

Reached first profit split: 4% of traders who passed phase two.

So 2/1000 of new live accounts reached first profit split (0.2%).

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November:

New live accounts: 5718

Passed phase one: 10%

Passed phase two: 24% of traders who passed phase one

Reached first profit split: 3% of traders who passed phase two

So 7/1000 of new live accounts reached first profit split (0.7%).

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The statistics look pretty interesting. We can say that relatively decent amount of people passed the evaluation phase (remember that Lady's evaluation is harder than theirs). But, once traders started trading with live funds, only few of them ended up being profitable. Why did this happen? The most logical explanation is that traders, once they get capital to trade with, tend to risk big in hopes they'll catch a big break. Of course, in the big majority of cases this strategy backfires.

So, is Lady of Crypto aware of these things? Absolutely. That's why her claims that she's giving her own funds to traders are absolutely false. It would just be too risky. That's why the traders that successfully pass the evaluation phase will keep on trading on demo accounts while being under the impression that they are trading with live funds. This way her risk is reduced to almost nothing. Also, there's no way for traders to check if they are actually trading with live funds.

I'd like to add that people who think there's nothing wrong with business models like these tend to say that nobody forces people to get involved with them. Personally, I don't think this kind of argument is valid. Nobody forces people to get involved in any of the scams that happen in the crypto space on daily basis, yet it doesn't mean we should pretend that they are not happening. Crypto should be about the community, and it's up to us to educate others and help them realize what's truly happening.

One last thing: once Lady of Crypto drops her announcement today, I'd really appreciate if all of you could comment on it so we can spread awareness and hopefully help some gullible people to avoid losing money.

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Conclusion

Online prop trading firms are nothing but legal scams that are marketed towards new and unsuccessful traders. Their business model relies on entrance fees and an extremely low success rate. Lady of Crypto is dishonest about the way her business model works and she tries to convince people that she's using entrance fees only to cover customer support and backend development costs but that is far from the truth.