The Top 5 Benefits Offered To Prop Traders

What are the benefits offered to prop traders?

Prop trading, short for proprietary trading, is the type of trading that a proprietary trading firm engages in. Prop trading firms are organizations or commercial banks that invest in various financial markets in order to turn a direct profit, as opposed to investment firms, who do so to make profit for their clients. Prop trading firms hire prop traders, who manage a portion of the firm’s funds and are tasked with making trades and investments to consistently turn a profit, with a small percentage of said profit going to themselves, and the rest going back to the firm.

Depending on who you ask, prop trading can be of great benefit to an individual trader, providing a means to attain significantly higher profits while building a lucrative career – though it’s not without its disadvantages of course. Here, we will focus on the advantages. The top five benefits of being a prop trader are:

• Access to capital;

• Access to technology;

• Access to training and education;

• Flexible work schedule;

• Opportunities for advancement.

Let’s look at each of these advantages in more detail.

Access to capital

The main benefit of working for a prop trade firm is that it provides access to significantly larger amounts of capital than that available to an independent trader. Higher starting capital inevitably means the ability to trade larger positions and the potential to generate higher profits. The amount of capital available within a prop trading firm largely depends on the organization’s size, though it can be anywhere from tens of millions up to hundreds of millions of dollars.

Utilizing a firm’s funds instead of a trader’s own capital removes the personal financial risk, though their employment is determined by their performance, so they can’t afford to be reckless. The removal of personal financial risk may alleviate the problems of emotional trading, leading to a more disciplined and effective strategy. The downside to having access to more capital is the potential to incur heavier losses – trading larger positions means higher risk.

Access to technology

Because prop trading firms are often large, highly capitalized organizations, they have access to a wide array of technology that individuals wouldn’t. The technology available via prop trading firms leads to more effective trading and better performance.

Prop traders gain access to cutting-edge trading technology such as high-frequency trading platforms, sophisticated analytics tools, and automated software. These technologies allow traders to access a larger range of markets and automate numerous trading processes, overall facilitating a more streamlined trading process and more efficient execution of entries and exits.

The software used by prop trading firms supplies real-time data and robust analytical tools with the power to rapidly execute trades. Their platforms integrate risk management into highly customizable dashboards so traders can have all essential tools at their disposal. Their software also lets traders assess their own performance using metrics such as win rates and risk/reward ratios, or explore different strategies using advanced simulations, all leading to continuous improvement and learning.

Access to training and education

Proprietary trading firms will usually provide their traders with training, both at the beginning of their career and throughout their tenure at the firm. A trader with a better understanding of financial markets will perform better at their job and be more likely to generate profits, so it’s in a firm’s best interests to train and mentor them effectively. Training and mentorship can take the form of one-on-one coaching sessions, market analysis and feedback from professional traders, or even meetings with a dedicated trading psychologist.

Additionally, working within a professional setting, alongside more seasoned traders and senior team members provides ample opportunity for inexperienced traders to build their confidence and expertise. A trading firm fosters an environment that facilitates continued learning and encourages team members to share knowledge and ideas with each other.

Flexible work schedule

The hours worked by a prop trader will ultimately depend on the firm, the prop traders’ position, and the financial markets they’re engaged with in their trading. However, as long as the trader is consistently producing positive results, their work hours can be quite flexible. Though beginner prop traders may be required to work 50-hour work weeks, sometimes pushing 12–14-hour days, they can reach a level where they determine their own hours, allowing them to have a healthy balance between their personal and work life.

Opportunities for advancement

Unless a prop trader has transferred over from another firm where they held a senior position, they are likely going to start as a junior trader or assistant trader within the firm. Though starting from the bottom may at first be difficult, there is plenty of opportunity for advancement. While working for a prop trading firm, a team member could rise from being an assistant trader or clerk, to junior trader, then senior trader or manager, and finally a partner.

Starting off at a small firm may also lead to working at larger firms with a better salary and more appealing benefits. The chance to actually have a career is, for some, preferential to being an independent trader where there is often no clear career path or even a stable job.

Best Prop trading firms

1

9.4/10

Go to broker

Your capital is at risk.

Minimum deposit:

$1

Review

Topstep is an international proprietary trading company registered in the USA. The company has been providing financial services since 2012 and offers exclusive trading terms for clients from different countries. Topstep provides financing of real trading accounts of its clients if they prove the skill to make trades and manage risks on a simulation account. Traders can trade CME Group futures. Trading on real accounts is carried out through the ECN broker Equiti Capital.

Pros/Cons

•Real trading accounts are financed by a broker, there is no need to invest your funds in trading.

•The company provides a wide range of free training materials, including free group coaching.

•You can contact the support team using several convenient methods.

•The broker offers a referral program for extra income.

•The company doesn’t offer bonuses, automated trading, or other passive income options.

•The support service works only on weekdays during set hours.

Study Review

2

9.2/10

Go to broker

Your capital is at risk.

Minimum deposit:

€155

Review

FTMO is an international proprietary trading company created in the Czech Republic in 2014. The platform brings traders into its fold and after traders successfully pass a two-step testing regime, FTMO transfers 400 thousand dollars to the trader’s account. Transactions are monitored by FTMO to grow the deposit. There is a payment of 80% at the first stage of real trading. The 90% Profit Split is available only to those FTMO Traders that have reached Scaling Plan. The company works in full accordance with European financial legislation and is under the local regulator.

Pros/Cons

•Quite low testing cost is €155.

•Classic platforms such as MT4, MT5, and Ctrader are familiar to many traders. For these platforms, hundreds of indicators, scripts, and advisers have been developed.

•The starting reward is 80%.

•Diversification of tariff plans. Candidates can choose a demo deposit from 10 thousand to 200 thousand US dollars. There are tariff plans that span from standard to aggressive trading.

•Leverage is up to 1:100.

•Strict requirements for the test period. The allowable maximum loss is 10% of the deposit amount. The target profit is 10%, for which 1 month is provided.

•There is no information about how the company is funded.

Study Review

3

9.1/10

Go to broker

Your capital is at risk.

Minimum deposit:

$119

Review

Funded Trading Plus clients trade CFDs on currency pairs, indices, precious metals, energies, and cryptocurrencies. There are 18 programs with one- and two-phase challenges, or without evaluation. These programs also differ in initial fees, profit targets, maximum total drawdown, and other criteria. Traders can receive from $5,000 to $200,000 under management upon successfully passing the challenge or immediately if they choose the program without evaluation. Scaling up to $2,500,000 is available. The profit split is 80%/20% at the start and 90%/10% or even 100%/0% later. Traders work on MetaTrader 4 and MetaTrader 5. Leverage is up to 1:30.

Pros/Cons

•Wide choice of programs with universal parameters and acceptable requirements;

•One-time initial fee, refundable for programs with one- and two-phase challenges. No monthly subscription;

•Simple and understandable conditions, no hidden obligations, and profitable trading split;

•The prop firm partners with Eightcap and ThinkMarkets. It offers spreads from 0 pips and low trading fees;

•A demo account with $100,000 in virtual funds is available for exploring the trading process and instruments;

•24/7 technical support is provided via four communication channels;

•Deposits and withdrawals are made with Visa, Mastercard, bank transfers, and crypto wallets without fees.

•The Master program without evaluation is very expensive — a non-refundable initial fee of $4,500 is required for the balance of $100,000;

•Funded Trading Plus offers only CFDs without real assets or futures;

•The firm’s website contains much information, but some important nuances, like the reset fee, are not provided.

Study Review

Tips for finding a prop trading firm

With so many benefits to working for a prop trading firm, you may be wondering “how do I find a prop trading firm?” Well, Traders Union has got you covered. Selecting the best prop trading firm will depend on what an individual is looking for, so it’s important to choose carefully. Consider these factors:

• Trading style. Search for a firm that matches your trading style. Some firms will specialize in day trading for example, while others might opt for swing trading.

• Experience. A beginner trader is likely not going to be able to land a position at a large, reputable trading firm. The more experience you have, the better chance you have of working for a more desirable firm.

• Track record. Not all prop trading firms are created equal. Do your research and look for firms with a track record of reliability and positive trader experiences.

• Education support. Look for firms that offer educational support and training. Access to educational resources, webinars, and mentorship programs can enhance your trading skills. Choose a firm invested in the success and development of its traders.

• Capital allocation. Evaluate the amount of trading capital the firm provides and its leverage policies. Choose a firm that aligns with your risk tolerance, trading style, and financial goals.

• Trading platforms and tools. Assess the trading platforms and tools used by the firm. A robust and user-friendly trading platform is crucial. Ensure the firm provides the necessary tools for effective market analysis and execution.

• Read the fine print. Before signing any contracts with a prop trading firm, be sure to read the fine print carefully to understand the firm's trading rules, risk management policies, and profit-sharing agreements.