Prop Trading Training Programs Explained
The different types of prop trading training programs are: in-person programs, online courses, and mentorship programs. When selecting a program, traders should consider their own goals, budget, experience, learning style, and trading psychology.
When proprietary trading firms are deciding which traders they want to put in charge of massive funds with large amounts of capital, they look for those with a proven track record and the ability to produce continuously positive results. While some prop firms may personally train traders to develop the right skills, traders will often need to find training outside of a prop firm.
In this article, Traders Union will be exploring the different types of prop trading training programs, what prop trading training programs offer, and how to choose the right prop trading training program.
Fund your account with Topstep!Types of prop trading training programs
Prop trading firms, who invest in financial markets for direct profit rather on behalf of investor clients, require their prop traders to consistently generate profits and perform substantially better than your average trader. A prop trader who can’t maintain positive returns is likely to lose their role at the firm or have their funded account confiscated.
Because of these stringent requirements, it’s essential for prop traders to, firstly, be trained well enough to fully understand the markets they operate in and secondly, receive continuous training throughout their prop trading career that they can stay up to date with the latest market developments and technological advancements.
There are several ways that prop traders can receive this training. We’ll be looking at three types of training that prop traders receive:
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In-person
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Online
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Mentorship
Let’s look at each in more detail and explore the benefits and challenges posed by each type.
In-person training programs
In-person programs operate similar to an educational course or degree and are typically offered by prop trading firms or universities. Students study on campus or in-house at the prop trading firm’s offices. Courses can last anywhere from a few intensive days to several months and may involve a combination of lectures, workshops, and hands-on trading experience.
👍 Advantages:
• In-person training programs may be better suited to those who find it difficult to study at their own pace and require a more concrete, structured approach to learning.
• Having an instructor or educator present means receiving immediate feedback, which facilitates a more rapid understanding of concepts.
• The classroom-like setting also allows students to share ideas and learn from each other, while establishing networks with other like-minded people that have a passion for trading.
👎 However, there are downsides to in-person training that may put off some traders.
• The schedule is less flexible, with pre-set hours that may interfere with a trader’s personal life or employment (if they have any).
• The location that the program is taught in could also prevent some traders from taking part, whether that’s because of travel time or distance.
• Participation in in-person courses will likely also involve higher costs, including tuition, travel, and accommodation expenses.
Online programs
Online programs are a much more affordable option than in-person programs, with prices starting as low as 14 dollars for a 54-hour Udemy prop trading course. There are even free courses available online, though these will not be as in-depth as paid ones. Online prop trading courses typically offer a self-paced curriculum that can be completed at the student's own pace.
👍 Advantages:
• Online programs offer students flexibility, as they can study as often as they want, according to a schedule that suits them.
• The courses can be taken from anywhere in the world.
• Additionally, the low costs mean that courses are more accessible to people from a range of economic backgrounds and multiple courses can be taken.
👎 Disadvantages
• Online courses are often not as reputable as in-person courses operated by actual firms or universities. A prop trading firm interview candidate with just an online course qualification would likely be at a disadvantage when compared to a university graduate.
• Additionally, online courses offer limited or no interactivity with other traders and instructors.
• Learners may also find it difficult to stay focused when learning from home and suffer from technical issues such as low connectivity or platform problems.
Mentorship programs
Prop trading mentorship programs involve students receiving one-on-one guidance from a successful prop trader, who can provide them with specific knowledge and direct instruction. The tailored nature of mentorship programs means that traders can work on their own trading strategy and improve it within the shortest timespan possible.
👍 Advantages:
• The information is personalized, catering to the learner’s strengths, weaknesses, and learning pace.The information is personalized, catering to the learner’s strengths, weaknesses, and learning pace.
• The attention is solely on the student, meaning they can have all their questions addressed in real-time as they progress.
• The curriculum can also be customized to suit the student’s needs and goals, facilitating a deeper understanding of prop trading.
👎 Disadvantages:
• Learners miss out on the peer interaction provided by group learning environments.
• Dependency on the instructor’s schedule or availability limits flexibility.
• The cost of learning with a one-on-one mentor can also be extremely high, putting it out of reach of most traders. There are cheaper options available, though learners should be aware that this may come at the cost of receiving training from a less qualified teacher, or the program may even be a scam.
What prop trading training programs offer
Depending on the level of and type of course, prop trading training programs may cover areas from basic, fundamental concepts in trading, all the way up to more complex technical analysis and economic theory. Some courses are specifically designed to prepare traders for prop trading challenges, while others may be more generalized.
The core aspects that are typically included in most prop trading training programs are:
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Technical Analysis: Prop traders need to understand how to utilize technical analysis to evaluate investments and identify trading opportunities by assessing price trends and patterns seen in charts.
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Fundamental Analysis: In a prop trading course, learners are usually taught fundamental analysis how to evaluate economic data, scrutinize financial reports and company earnings, and assess the true value of a stock or other asset, so they can decide when to buy and sell a position.
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Risk Management: Understanding how to implement stringent risk management into a trading strategy is essential, particularly for prop traders who trade with a firm’s capital and must perform consistently well.
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Trading Psychology: through trading psychology, students might learn about the mind’s cognitive biases and relationship with fear, how to manipulate their own habits and patterns, and to master their mind-body connection.
The Surge Trader offers one of the more reliable and legitimate prop trading training courses out there. To learn more, read Traders Union’s 2023 Surge Trader Review.
Best Prop trading firms
How to choose the right prop trading training program
Selecting the right prop trading training program for you will depend on several factors. You should consider your overall goals, how much you can spend, your previous experience with trading, and your own psychology. As mentioned above, several of these considerations are already settled based on whether you study in-person, online, or with a mentor. Let’s look at the considerations more closely:
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Your Goals: The first consideration should be the outcome of your learning. If training in-house with a firm, then the goals are already defined, and the firm will dictate your training goals. Otherwise, consider what you want to learn. Does the curriculum and content meet your needs? Does the duration or time frame of the course line up with your future goals? Do you want to network while studying? Consider what you want from a program before enrolling.
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Your Budget: The cost of different types of prop trading training courses varies greatly. You’ll spend a lot more on one-to-one mentorship or a university program than an online course. Select the type of learning that meets your budgetary requirements.
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Your Experience: Beginner courses that teach the core concepts of trading, including the basics, may be more suited to traders with little experience. More advanced courses specifically tailored for traders entering the world of prop trading, or mentorship programs, are better for those with more experience.
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Learning Type: Consider how you learn best before choosing your training. Do you prefer more hands-on, interactive learning opportunities, or is a flexible time schedule more important to you? Pick a type of course that suits your needs.
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Trading Psychology: Recognizing your own strengths and weaknesses, and learning to manage your emotions so that you develop better decision-making skills, is crucial. Aim for training that considers your own trading behavior and teaches you to manage it.
Before deciding to enroll in a training program, you may want to learn more about what prop trading actually is. Read Traders Union’s article: Proprietary Trader Job Explained.
Conclusion
Prop trading training programs can be a valuable investment for aspiring prop traders. By selecting a comprehensive program that’s best suited to you, and putting in the hard work, you can maximize your chances of becoming a successful prop trader and embarking on a lucrative career in the prop trading industry. Make sure, as always, to do your own research before investing any of your own capital into a program and consider the potential risks that may be involved.
FAQs
Do prop firms teach you how do you trade?
This depends on the firm. Some of the top, larger firms will only be hiring the most experienced prop traders, though they may provide further trading throughout their career. Firms would also provide training in using their own software or platforms. Smaller firms or funded accounts may offer training to less experienced traders.
Do you need a degree to be a prop trader?
In most cases, with legitimate prop trading firms, yes. Some traders may be able to skirt this through taking part in internships, prop trading courses, or paid prop trading challenges, but firms usually prefer traders to have a degree in a relevant field.
What is the prop trader training program?
Training programs for prop traders can take many forms. They may be university programs or in-house at prop firms, online courses offered by prop firms or educational institutions, or one-on-one mentorship programs. They teach you the core elements of prop trading.
How much do prop trading training programs cost?
Costs vary widely. An online course can range anywhere from free, to a few dollars, to thousands of dollars. In-person training programs will cost anywhere from a few hundred to several thousand dollars, depending on the course provider’s prowess and course length. Mentorship can range from $5 an hour (often poor quality) to thousands per hour.
Glossary for novice traders
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Broker
A broker is a legal entity or individual that performs as an intermediary when making trades in the financial markets. Private investors cannot trade without a broker, since only brokers can execute trades on the exchanges.
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Trading
Trading involves the act of buying and selling financial assets like stocks, currencies, or commodities with the intention of profiting from market price fluctuations. Traders employ various strategies, analysis techniques, and risk management practices to make informed decisions and optimize their chances of success in the financial markets.
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Prop trading
Proprietary trading (prop trading) is a financial trading strategy where a financial firm or institution uses its own capital to trade in various financial markets, such as stocks, bonds, commodities, or derivatives, with the aim of generating profits for the company itself. Prop traders typically do not trade on behalf of clients but instead trade with the firm's money, taking on the associated risks and rewards.
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Leverage
Forex leverage is a tool enabling traders to control larger positions with a relatively small amount of capital, amplifying potential profits and losses based on the chosen leverage ratio.
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Fundamental Analysis
Fundamental analysis is a method or tool that investors use that seeks to determine the intrinsic value of a security by examining economic and financial factors. It considers macroeconomic factors such as the state of the economy and industry conditions.
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Team that worked on the article
Jason Law is a freelance writer and journalist and a Traders Union website contributor. While his main areas of expertise are currently finance and investing, he’s also a generalist writer covering news, current events, and travel.
Jason’s experience includes being an editor for South24 News and writing for the Vietnam Times newspaper. He is also an avid investor and an active stock and cryptocurrency trader with several years of experience.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).