Forex Prop Trading – All You Need to Know [Comparison Table of Top 5 Prop Trading Firms] (2024)

No money in hand but passionate to trade. What to do? How to arrange a Funded Account with huge capital?

Go for FOREX PROP TRADING! If you want to be a prop trader, there is a lot you need to know about.

What is prop trading? How to become a prop trader? What are the pros and cons of it? How much does a prop trader make?

Read this post and feel knowledgeable at the end.

Proprietary trading is a firm that allows you to trade with their money. In return, you have to pay monthly fees or upfront fees. To join these firms, you will have to follow the rules. Not every trader can be a successful prop trader. These firms will train you to work for them.

All you need is time and patience. Don’t expect dollars will start moving to you without putting in hard efforts.

It’s a long game. Many people who fail to become prop traders actually fail to understand this system.

What Is Forex Prop Trading

Nowadays, many traders are trying to start their careers as prop traders. The reason is that they can’t sustain the losses as an individual trader.

Let’s read out: What is forex prop trading?

Forex prop trading or proprietary trading is a system or firm which allows traders to trade stock, futures, or commodities with the firm’s own money. The main purpose of this trading is to earn profit for this firm using different strategies. Sometimes traders get salaries, and sometimes they trade on a commission basis.

The main advantage of this trading type is that traders don’t risk their own capital. Any profit of prop trader is split between trader and firm.

Trader uses Technical indicators provided by firms. Certain firms train traders and recruit them when they pass assessments.

5 Reasons Why Become A Forex Prop Trader

Is it better to start your career as a prop trader or not? There are several reasons to join these firms. The main reason is to get easy access to high capital.

Other reasons include polishing your skills and trading strategies.

Below are few more reasons to become a prop trader:

1. Get Easy Access to Huge Capital Account

No trader can underestimate the Importance of huge capital. For individual traders, it may take months or years to develop a huge investment portfolio.

But prop trading will do this for you by offering a funded account in a moment. That’s why more and more traders are joining these firms.

2. Opportunity to Grow as A Professional Trader

The long trading track is essential whenever you join any remote trading task. Through prop firms, you can develop a strong trading track record just like a pro trader.

This track will help you to start your career as a professional trader.

3. Get Paid for Trading Every Month

Prop traders are not much stressed as they are paid for trading every month.

No matter what the situation is in the market. Some traders even get bonuses when they achieve targets.

4. Provide an Opportunity to learn Risk management

Prop trading helps you to understand risk management with high capital. By trading with huge real money, traders learn how to avoid risk.

However, individual traders may not focus on risk factor as prop traders do

5. Offers Risk-free trading

The good thing about this trading is that traders get a salary. They are stress-free as they are not risking their own money.

Moreover, they will not have to pay loss from their own pocket. They only pay commission fees one time and then get a salary.

How to Become A Forex Prop Trader: 6 Steps

What are the requirements of becoming a prop trader? Not very strict! You need to know and follow the rules.

Below is the step-by-step guide of this trading type:

Learn Pro Trading

Not everyone can make a profit instantly in prop trading. First, you need to learn trading basics.

It is essential to understand all factors that impact financial markets. Expert prop traders are learned people with a track record of 3 to 6 months.

Know the Rules of Prop Firms

Knowing prop firm rules is an essential step. These rules vary from country to country and from firm to firm.

For example, the prop for the US market should keep an eye on timing. Certain technical and statistical data need to be handled daily.

They should also learn the Volcker rule as it is applicable to prop traders.

Follow Proper Trading Strategy

To become a successful prop trader, set up a proper trading strategy.

Newbies follow Simple Moving Average (SMA), while experienced traders choose 50-period SMA or 100-period SMA within indicators. It is good to use indicators with multiple strategies to find out the best.

Practice Money and Risk Management Skills

Relying on indicators and trends may not guarantee 100% profit every time. Therefore, every trader should learn and apply risk management skills to stop losses.

They have to use leverage for every position they open. That’s why you are required to practice both money and risk management skills before joining this platform.

Practice on Simulator Account

Many prop firms offer simulator accounts where traders can determine their capabilities using paper money.

This step is extremely beneficial from a learning point. Many firms will recruit only those traders who perform well on simulator accounts using paper money.

Join Prop Trading Programs

After passing all the above steps, the trader can now join a prop trading program suitable to his needs.

Remember to do proper research and read the review of any platform that you are joining. At first, you will have to pass the online evaluation. If you succeed in the evaluation, you can register.

Advantages of Prop Trading

The major benefit of prop trading is that it provides high quarterly and annual profits to financial institutions and banks. When brokerage trades through the client, the firms earn revenue in the form of commissions or fees.

There are many other benefits of prop trading for traders:

• There is no set time for this job. You can enjoy time freedom
• Prop traders have the freedom to enter and exit at any level
• The trader is assessed through his profit-making skills.
• Bonus and rewards for exceptional traders.
• Opportunities to develop a long track record

Disadvantages of Prop Trading

Are there any bad things associated with prop trading? Yes, of course, there are certain cons of trading within these firms.

Let’s see the list of drawbacks:

• Prop trading is highly competitive and focuses more on individual trader’s performance.
• Many prop trading firms don’t offer a fixed salary
• Timing of this job is hard to meet by many traders
• Targets and goals are stressful to meet as firms expect a high return on capital

How Much Do Prop Traders Make

Wondering to know how much do prop traders earn?

The salaries of prop traders vary country-wise and firm to firm. The average national salary in the USA is $60,274/yr. Plus, certain firms offer % of bonuses and other incentives. The starting salary is $70-100k, depending on education background and experience level.

Some firms arrange training programs and will offer a bonus of $ 5-50k to achievers. When they start with significant money, they offer good packages.

Seniors at the desk often decide the salary of remote traders. For exceptional traders, salaries are negotiable based on track record.

5 Best Top Prop Trading Firms

For beginners, it’s challenging to choose the right prop forex firms. When you search online, you may get confused with so many results.

The authentic way of searching the prop firm is to read the features and reviews of each firm and compare them to decide the best of the best.

Below is a comparison table of 5 best prop trading forex firms you must consider:

FAQ

How much money do you need to become a prop trader?

It may be a zero or a few hundred-dollar fee for using platforms. When firms recruit traders, they offer them a salary.

But certain firms have a monthly fee from the traders. Based on performance, certain firms offer bonuses also.

How does a prop trader make money?

They make money through a profit share scheme. Many firms offer fixed salaries to traders who work for them.

Is prop trading dead?

No, not at all; prop trading is alive. It’s developing day by day like other firms. Its evolution is faster than individuals adopt it. So, it’s wrong to say that it is dying.

Last Words

In the end, prop trading is a broad topic. I tried my best to cover the main points through this post. Still, many aspects of this trading system are left.

To be a successful prop trader, you need to produce a consistent result. Live webinars are good for learning the rules of particular prop trading firms.

When you are confident to set winning trade as an individual, you can go for this trading type.

Have you ever traded as a prop trader? Don’t forget to share your experience with us!