Howdy Lark Traders! This is Lark Digest, the trading newsletter that’s always on point, like your favourite trendline.

On today’s menu:

• How Influencers Keep Scamming Traders ❌

❌ Introducing The Influencer Scam Cycle

I don’t know about you, but I am absolutely tired of prop firms going out of business.

Even worse, I’m tired of influencer-backed firms going out of business.

You know, those firms launched by trusted YouTubers and Instagram traders that you’ve followed for years.

You got value from their videos, so why wouldn’t you join their firm and support them?

Because they keep going out of business.

And it needs to stop.

By now, the influencer prop firm cycle looks something like this:

1. The Grand Opening: A well-known influencer with thousands of followers opens up their prop firm with easy rules and great benefits. It’s like the grand opening of a new theme park—everyone’s excited, and the lines are long.

2. The Rush: Because of their popularity and easy challenges, traders flock to sign up. It’s like Black Friday at your favourite store—chaotic but full of promise.

3. The Realization: Within a few months, the influencer realizes their business model isn’t sustainable. Prices are too low, challenges too cheap, and risk management is non-existent. It’s like realizing you’ve been selling dollar bills for 90 cents.

4. The Tightening: The firm tightens its rules. Suddenly, there’s a 1-2% risk per trade rule, trader interviews before payouts, and more. They’re trying to stop the bleeding, but it’s like putting a Band-Aid on a broken leg.

5. The Too-Late Stage: By this point, it’s already too late. They should never have launched with their easy program, low prices, and excessive leverage.

6. The Closure: Finally, they announce they’re “looking for investors” to clear all pending payouts. This rarely happens, and soon after, the firm closes while providing zero to no refunds.

And so the cycle will repeat, with another influencer entering the market and not learning from others, or industry titans that have been in the business for several years.

At Lark, we’re tired of seeing this cycle repeat and traders losing their money.

So, what’s the takeaway and lesson here?

1/ Don’t Trust. Verify. With so many firms operating reliably for over 2 years, why should traders join an unproven firm? Don’t be fooled by flashy marketing.

2/ Barrier To Entry. Many influencers have entered the prop space because there’s a low barrier to entry. At least, there was. This is changing and will be good for the industry.

3/ Don’t Trust Influencers. At Lark, we’ve been vocal about our belief that 99% of trading influencers aren’t as great at trading as they might have you believe. There’s a reason we don’t work with a single influencer. Yes, there are exceptions, but 2024 has shown us that those exceptions are very, very rare.

4/ Professionalism Is An Asset. While connecting with your favourite influencers is fun, trading is a serious business and should be treated as such.

Reply to this email and let us know what you think. Did we miss something? Are you tired of this pattern as well?

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