Why do some prop firms cap profits ?
A friend was on 2% drawdown on a $100k funded account , took a 1:7R swing trade and made $7k
Which took the account from $98,000 to $105,000
Time for payout....
Prop said the profit cap is $3k and so they deducted $4k ontop
Now $2k out of the remaining $3k recovered the 2% initial drawdown, leaving only $1k left for payout.
After 80/20 split.............. they paid only $800
Tbh I don't think this is fair.
And I don't know why some firms do this , but it's a screaming red flag. I.e. They don't have liquidity to run the business . Which can only mean one thi