Mornin’ Lark Traders! This is Lark Digest, delivering you hours of industry research in less than 5 minutes.

Mr.Lark

On today’s menu:

• Another firm closes down ❌ 

• Traders attack me for calling them gamblers 😬 

• Why firms are introducing new rules 👀 

😬 Swift Funding Closes Down

Another day, another firm closes.

*Is it just me that feels like I’m stuck in Groundhog Day?*

A few days ago, Lex, the CEO of Swift Funding shared the following announcement:

A little cryptic? Yes.

However, the real details were released by the owner of MyFundedFX, a co-owner of Swift Funding, when he said that MyFundedFX would be absorbing Swift Funding.

Here’s the good, bad and the ugly:

• This comes as a surprise as Swift Funding had an incredible amount of hype built around it for many months.

• We rarely, if ever see a situation handled as well as this. MyFundedFX is absorbing all clients and has said they’ll honour all payouts.

• This shows just how difficult operations have been for firms since MetaQuotes shut off firms.

So, is that the end of the story?

We thought so, but after a bit more diving, Lex said this is only a “pause” for Swift Funding…

So as usual, stay tuned on how this one plays out.

😬 Traders Come For Me

According to many traders, when I woke up Saturday morning, I chose violence when I posted the following tweet.

This tweet was a comment regarding the new challenge model we saw MyFundedFX and E8 Markets released late last week.

If you missed it, it includes:

• 2% daily loss limit (soft breach).

• 2% daily profit caps.

And, unsurprisingly, this new model has caused quite a stir across the industry.

*“Profit caps!? How could you!? This is antithetical to the entire premise of the industry! Blasphemy!”*

Now, considering the outrage, the ultimate question at hand is:

What’s the difference between a trader and a gambler? At what risk per trade are you no longer a trader?

This is an important question to answer because:

• If my tweet is accurate, then 2% profit caps may not matter.

• If I’m losing my marbles (completely possible), then profit caps are as dumb as when I tried scalping oil with 500:1 leverage.

Now when it comes to gambling, I’m something of an expert. For the first 5 years of my trading, while I identified as a trader, I was anything but.

From going:

• Full-margin on trades.

• Maxing out my credit card to take a short on XAUUSD (that’s a story for another day).

• Constantly reversing positions when they went against me (we’ve all been there).

I was the complete opposite of risk-managed.

So, bringing it back to the main question, is risking 2% per trade too much?

It all comes down to three words: Risk-Of-Ruin.

Let’s run the numbers and be generous with the stats. Assume:

• 2% risk per trade.

• 60% win rate.

• 2:1 RR.

When you run those through an equity simulator, the largest drawdown you’ll experience is 19.90% (ouch).

Increase your risk to 3%, and you’ll eventually have a drawdown of 24%.

Now, this doesn’t mean that your account is completely down to zero. It’s just a deep drawdown. No big deal, right?

Well, we know the Lambo driving gurus tell us 50% monthly returns are possible, and risk doesn’t matter. But at Lark, as much as we love a good Lambo guru covered with face tattoos, we prefer looking at the data.

What does the data say?

Over the last 24 months, across thousands of traders, essentially nobody has recovered from deep drawdowns of ~7-8%.

So imagine 20% 😬 

What’s that mean?

• Numbers and reality aren’t always aligned. Risking 2% per trade almost always leads to a breach of a challenge account.

• Statistically, risking 2% on a personal account might not lead to a completely blown account. But when you’re down 20%, emotions start to play a huge factor. And coming back from that requires legendary status.

Now, as I type this while getting an oil change on the Official Lark Van, I already hear you saying:

• “But my stats are way better than what you listed. I have an 80% win rate and an RR of 3:1.”

To those, I say, based on the data we’ve seen, if you have an 80% win rate and an RR of 3:1, you’re in the 0.01% of traders, and you’ll be rich without even using evaluation firms.

👀 Why Firms Are Introducing New Rules

All of this absolute mayhem has led to firms introducing new rules.

We break down why this is in our latest YouTube video and what it means for traders.

PS: What do you think of the Lark Van in the background? 👀 

😏 Active Goodies

We’re now only 26 days from our 2-year anniversary with the best payout record in the industry.

Now more than ever, reliability and trust should be the forefront of every traders m’s mind when it comes to picking an evaluation program.

As always, if you have any questions or concerns, just reply directly to this email.

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