How Hard Is It To Get Into A Prop Trading Firm?

What are typical requirements for a prop trading job?

A prop trading job is an attractive prospect, particularly in the United States where average annual salaries range from $100,000 to $120,000, often complemented by bonuses for successful trading endeavors. However, qualifying for a position within a proprietary trading firm is a challenging feat. These firms typically have varying requirements depending on their business models and trading strategies.

Typical prerequisites for a prop trading job include:

• A bachelor's degree in finance, economics, mathematics, or a related field is often required, while some firms prefer candidates with advanced degrees

• Depending on the firm and the products traded, certifications (In the United States, in other countries usually there are some analogues) such as Series 7 and Series 63 may be mandatory for compliance with regulatory requirements

• Proven experience in trading, whether through internships, personal trading accounts, or prior roles in the financial industry, is highly valued

• An understanding of risk management principles and the ability to mitigate trading risks is crucial

• Strong quantitative and analytical skills to assess market data, trends, and trading strategies effectively

• Familiarity with various trading strategies, including algorithmic trading, technical analysis, and fundamental analysis, is often required

• The ability to maintain discipline and emotional control in high-pressure trading situations is essential for success

• Some prop trading firms may require traders to contribute their own capital to the trading desk, demonstrating commitment and risk-sharing

• A demonstrable track record of profitable trading, either in personal accounts or previous trading roles, is a significant advantage

What are requirements for a funded trading account?

Obtaining a funded trading account is a less regulated endeavor compared to traditional financial roles. While there are typically no special education and listening requirements, traders often need to pass a trading challenge or evaluation process, which may include meeting specific profit targets or demonstrating trading skill through simulated trading.

Requirements for funded trading accounts can vary significantly from one firm to another; some may offer fee-free evaluations, while others may impose additional, challenging prerequisites, making it crucial for traders to carefully research and select a firm that aligns with their trading goals and abilities.

Typical prerequisites for a funded trading account include:

• Traders must successfully complete a trading challenge where they are given a simulated or live trading account and are required to meet profit goals or trading criteria set by the firm

• Most firms may require traders to share a portion of their profits with the firm in exchange for access to capital. Usually prop firms get from 10% to 50% of a prop trader's profit

• A demonstrated understanding of risk management is crucial, as traders must showcase their ability to manage and mitigate trading risks effectively

• Traders should have a well-defined and profitable trading strategy that aligns with the firm's objectives

• Traders may undergo interviews or additional evaluations to assess their suitability for the funded trading program

It's important to note that funded trading accounts offer aspiring traders an opportunity to leverage capital without the same level of regulatory oversight as traditional financial institutions. However, traders must still demonstrate their skills and discipline to qualify for these accounts and to ensure their own success in the trading venture. Typically between 5% to 30%, of traders to successfully meet the performance criteria and progress to funded trading accounts.

Do prop traders need a license?

Yes, prop traders often need licenses, but the specific requirements vary depending on their location and the activities they engage in. In the United States, for instance, prop traders typically require a Series 7 license, which is the General Securities Representative license, allowing them to engage in securities trading and sales. Additionally, they might need a Series 63 license, the Uniform Securities Agent State Law license, which permits them to operate within specific states. These licenses are essential to ensure that prop traders adhere to regulatory standards and can legally conduct their activities in the securities market.

On the other hand, for funded trading accounts, the requirement for licenses is generally less stringent. Many firms offering funded trading accounts focus more on evaluating traders' skills and strategies through trading challenges or assessments rather than regulatory licenses. While some firms may prefer traders with relevant licenses as it can indicate a certain level of industry knowledge and professionalism, it is not a universal requirement.

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.

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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.

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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.

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