Best Proprietary Firms For Beginners
Editorial Note: While we adhere to strict Editorial Integrity, this post may contain references to products from our partners. Here's an explanation for How We Make Money. None of the data and information on this webpage constitutes investment advice according to our Disclaimer.
If you're too busy to read the entire article and want a quick answer, the best prop trading firm for beginners is Hola Prime. Why? Here are its key advantages:
- Is legit in your country (Identified as United States
) - Has a good user satisfaction score
- Low starting capital requirements to start trading with small investments.
- Support and mentoring – access to support from experienced traders and analysts for a more confident start.
Best prop trading firms for beginners:
- Hola Prime - A prop trading firm licensed by the FSC of Mauritius that provides funding up to $500,000 with the potential to scale accounts to $4 million
- SabioTrade - Best for those who want to work as non-staff traders with up to 90% of profit
- Instant Funding - Prop firm offering instant funding with account sizes up to $80,000
- GoatFundedTrader - A proprietary trading firm registered in Saint Lucia and Hong Kong, offering simulated capital of up to $400,000 for Forex and CFD trading.
- Earn2Trade - Convinient scaling plans (relatively low profit goal, account upgrades after withdrawing first profit target)
Starting your prop trading career with the right firm is the key to a successful start for beginners. Prop trading firms provide access to their capital, which increases the opportunity to trade at a higher level and without significant personal investment. However, the terms and requirements of different firms can vary significantly. In this article we walk through the best prop trading firms for beginners, their features and benefits. Find out which one can help you confidently enter the world of trading.
Best prop firms for beginners
Choosing the right prop firms can be challenging for new traders. Some companies offer conditions that help newbies achieve their trading goals: minimal initial investment or the opportunity to start trading for free, which reduces financial risk. Educational programs are also available, including webinars and seminars, where experts share strategies and tips for making trades more efficient. In addition, trading contests give you the chance to test your skills and build your confidence in trading. These features help you find a firm that is ready to support your start in trading.
| Free Evaluation | Demo | Funding Up To, $ | Profit split up to, % | Min Trade Days | Max. Leverage | Funding Up To, $ | Open an account | |
|---|---|---|---|---|---|---|---|---|
| No | No | 4 000 000 | 95 | 2 | 1:100 | 4 000 000 | Open an account Your capital is at risk.
|
|
| No | Yes | 200 000 | 90 | No time limits | 1:30 | 200 000 | Open an account Your capital is at risk.
|
|
| No | No | 2 500 000 | 90 | 3 | 1:100 | 2 500 000 | Open an account Your capital is at risk.
|
|
| No | No | 2 000 000 | 95 | 3 | 1:100 | 2 000 000 | Open an account Your capital is at risk.
|
|
| No | No | 400 000 | 80 | 10 | 1:30 | 400 000 | Open an account Your capital is at risk. |
How to choose a prop firm for a beginner
Selecting the right proprietary (Prop) trading firm is crucial for beginners aiming to develop their trading careers. Here are key factors to consider:
Align with your trading style
Identify firms that specialize in your preferred trading approach, whether it's day trading, swing trading, or long-term investing. Choosing a firm that supports your style enhances your chances of success.
Understand fee structures
Prop firms have varying fee models, including profit splits, platform fees, and training costs. Some may offer lower fees but provide fewer resources, while others charge more but offer comprehensive support. Ensure you understand all associated costs to avoid unexpected expenses.
Assess the firm's reputation
Research the firm's track record by reading reviews, checking regulatory compliance, and seeking feedback from current or former traders. A firm with a solid reputation is more likely to provide a supportive and transparent trading environment.
Evaluate capital requirements and risk policies
Examine the firm's capital allocation, risk management protocols, and trading limits. Ensure their policies align with your financial capacity and risk tolerance. Some firms may require significant initial capital or impose strict trading restrictions.
Utilize demo accounts
If available, use demo accounts to familiarize yourself with the firm's trading platform and resources. This hands-on experience allows you to assess the firm's tools and support before committing real capital.
How to get funding
Securing funding from a proprietary (Prop) trading firm as a beginner involves a structured process designed to assess and enhance your trading skills. Here's a step-by-step guide to help you navigate this journey:
Research and select a suitable prop trading firm
Begin by identifying prop trading firms that align with your trading interests and offer programs tailored for beginners. Look for firms that provide educational resources, mentorship, and a supportive trading environment. Reputable firms often have transparent evaluation processes and clear funding criteria.
Understand the evaluation process
Most prop trading firms require candidates to undergo an evaluation to demonstrate their trading proficiency and risk management capabilities. This typically involves trading in a simulated environment where your performance is monitored against specific benchmarks. The evaluation assesses your ability to generate profits while adhering to the firm's risk parameters.
Prepare and practice
Before entering the evaluation phase, it's crucial to hone your trading skills. Utilize demo accounts to practice trading strategies and develop a consistent track record. Focus on understanding market dynamics, technical analysis, and effective risk management techniques. Some firms offer preparatory courses or resources to assist beginners in building a solid foundation.
Participate in the evaluation
Engage in the firm's evaluation program, which may be structured in phases. For instance, a two-step evaluation might require achieving a 10% profit target in the first phase and a 5% target in the second, all while adhering to specific drawdown limits and trading rules. Successful completion of these phases demonstrates your readiness to manage the firm's capital.
Review funding terms
Upon passing the evaluation, review the funding agreement carefully. Understand the profit-sharing arrangements, any associated fees, and the firm's expectations regarding trading activity. Ensure that the terms align with your trading goals and that you are comfortable with the firm's policies.
Begin trading with firm capital
With the agreement in place, you'll receive access to the firm's capital to start live trading. It's essential to continue adhering to the firm's risk management guidelines and maintain consistent performance to retain funding and potentially access higher capital allocations over time.
Additional considerations
Educational support: Some prop firms offer comprehensive training programs, which can be invaluable for beginners seeking to enhance their trading skills.
Community and mentorship: Engaging with a community of traders and accessing mentorship can provide support and insights, aiding in your development as a trader.
Regulatory compliance: Ensure that the prop trading firm operates within the legal frameworks of your jurisdiction to safeguard your interests.
Pros and cons of prop trading for beginners
- Pros:
- Cons:
Access to capital. Prop firms provide substantial trading capital, enabling beginners to execute larger trades and explore diverse strategies without risking personal funds. This access can accelerate learning and potential profitability.
Advanced tools and technology. These firms offer professional-grade trading platforms, real-time data feeds, and analytical tools that might be expensive for individual traders. Using these resources can improve decision-making and trading efficiency.
Educational support. Many prop firms emphasize trader development through training programs, mentorship, and continuous learning opportunities. This support is valuable for beginners aiming to build a solid foundation in trading.
Risk management framework. Prop firms have strict risk management protocols, including position size limits and stop-loss requirements, to protect both the firm's and the trader's capital. This structured environment helps beginners develop disciplined trading habits.
Profit sharing. While traders can earn profits, they are typically required to share a portion with the firm, often ranging from 20% to 50%. This means traders do not keep the full amount of their earnings.
Performance pressure. Prop traders must meet specific performance benchmarks and follow the firm's trading rules. Failure to comply can result in loss of trading privileges or termination, adding pressure that may affect decision-making.
Limited autonomy. Traders may need to adhere to the firm's strategies and risk management guidelines, which can restrict personal trading styles and flexibility. This might not suit those who prefer independent decision-making.
Evaluation and fees. Many prop firms require traders to pass evaluation processes, which may involve fees. These costs can add up, especially if multiple attempts are needed to meet the firm's criteria.
It's crucial to look beyond the surface offerings
When selecting a prop trading firm as a beginner, it's crucial to look beyond the surface offerings. Instead of focusing solely on profit splits or initial capital, delve into the firm's educational resources and mentorship programs. A firm that provides personalized coaching, interactive webinars, and real-time feedback can significantly accelerate your learning curve. For instance, some firms offer one-on-one sessions with seasoned traders who can provide insights tailored to your trading style, helping you avoid common pitfalls and develop a robust strategy.
Another often overlooked aspect is the firm's community and support network. Engaging with a prop firm that fosters a collaborative environment can be invaluable. Access to active forums, peer review sessions, and group trading activities allows you to learn from others' experiences and share your own insights. This communal approach not only enhances your trading skills but also provides emotional support during challenging trading periods, which is essential for maintaining resilience and a positive mindset.
Our methodology
Traders Union applies a rigorous methodology to evaluate Prop companies using over 100 quantitative and qualitative criteria. Multiple parameters are given individual scores that feed into an overall rating.
Key aspects of the assessment include:
Trader testimonials and reviews. Collecting and analyzing feedback from existing and past traders to understand their experiences with the firm.
Trading instruments. Companies are evaluated on the range of assets offered, as well as the breadth and depth of available markets.
Challenges and evaluation process. Analyzing the firm's challenge system, account types, evaluation criteria, and the process for granting funding.
Profit split. Reviewing the profit split structure and terms, scaling plans, and how the firm handles profit distributions.
Trading conditions. Examining leverage, execution speeds, commissions, and other trading costs associated with the firm.
Platform and technology. Assessing the firm's proprietary trading platform or third-party platforms it supports, including ease of use, functionality, and stability.
Education and support. Quality and availability of training materials, webinars, and one-on-one coaching.
Conclusion
When choosing a prop trading firm, it is important for beginners to evaluate the profit sharing terms, capital requirements, and educational resources offered. Choosing a firm with a suitable trading style, transparent risk management policies, and access to the necessary tools will help reduce initial risks and adapt to the market faster. Support in the form of mentoring or consulting can also be a useful resource for beginners. Once you have considered all aspects, you will be able to choose a firm that best suits your goals and objectives.
FAQs
How much can you make trading Prop?
Your trading income depends on your results, which are determined by market conditions, your strategy, and the size of your investment. Most prop firms will give you 70-90% of your profits. Review the platform’s terms to learn about profit sharing and fees. Be aware of the risks and only invest what you can afford to lose.
What is the average income for a prop trader?
According to Payscale, the average prop trader has a median salary of around $81,000. Traders can choose between firms that offer a fixed salary and commission-based pay. Commission-based income depends on the profits you make and the split rule set by the firm.
Can you start prop trading without investing?
Most prop firms charge a fee to join, which can range from a few hundred to thousands of dollars, as well as monthly fees to cover expenses. Starting capital is usually required, as leverage is limited at these firms.
What strategies do the best trading firms use?
Common trading strategies in prop trading include global macro trading, merger arbitrage, index arbitrage, and volatility arbitrage. There is no one-size-fits-all strategy, so traders use the strategies they are most familiar with.
Related Articles
Team that worked on the article
Parshwa is a content expert and finance professional possessing deep knowledge of stock and options trading, technical and fundamental analysis, and equity research. As a Chartered Accountant Finalist, Parshwa also has expertise in Forex, crypto trading, and personal taxation. His experience is showcased by a prolific body of over 100 articles on Forex, crypto, equity, and personal finance, alongside personalized advisory roles in tax consultation.
Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data. He is also an educator in the field of finance and technology.
As an author for Traders Union, he contributes his deep analytical insights on various topics, taking into account various aspects.
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).
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.
Options trading is a financial derivative strategy that involves the buying and selling of options contracts, which give traders the right (but not the obligation) to buy or sell an underlying asset at a specified price, known as the strike price, before or on a predetermined expiration date. There are two main types of options: call options, which allow the holder to buy the underlying asset, and put options, which allow the holder to sell the underlying asset.
Index in trading is the measure of the performance of a group of stocks, which can include the assets and securities in it.
Day trading involves buying and selling financial assets within the same trading day, with the goal of profiting from short-term price fluctuations, and positions are typically not held overnight.
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.
