Are you an experienced trader looking for a new firm to call home? Or are you a beginner trader who's not sure where to start? Either way, you've probably heard of prop trading firms. In this blog post, we'll give you a crash course on prop trading firms. We'll cover everything from what they are to the benefits of working with one. We'll even provide a list of the top 5 best prop trading firms. By the end of this post, you should have a good understanding of prop trading firms and how to select the best one for you.
What Is a Prop Trading Firm?
Proprietary trading, also known as "prop trading," occurs when a trader uses the firm's money to trade stocks, bonds, currencies, commodities, derivatives, or other financial instruments. In this blog post, we'll explore what prop trading is, how it can create conflicts of interest, and whether or not you should be concerned about it.
How Does Prop Trading Work?
Prop traders use the firm's money to trade financial instruments to make a profit for the firm. Because they are using the firm's capital, prop traders are under pressure to generate a certain profit percentage. This can lead to risky behavior, such as taking prominent positions in volatile securities or making trades that are not in the best interests of the firm's clients.
A prop trading company provides an opportunity for individuals with a passion for trading to earn a living doing what they love. The company recruits professional traders and gives them the capital they need to trade in various markets, including stocks, bonds, forex, crypto, indices, futures, and commodities. These traders are then groomed to become profit-makers for the company, earning a percentage of the profits they generate. In addition to providing funding, prop trading companies can offer their traders extra support and training, including retraining and professional coaching. As a result, these companies can be an excellent option for those looking to make a career in trading.
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The Top Best Prop Trading Firms
Finding the best prop trading firms can be difficult. You want to ensure you're getting a return on your investment, and you also need to consider the fees each firm charges. Therefore, it's important to understand what services are being offered by each firm, as well as how reputable they are. Additionally, it's essential to ensure you have all the information you need before investing in a particular prop trading firm. Here are our top 4 best prop firms.
1. Topstep
Founded in 2012, Topstep is a Chicago-based company that provides trading capital and education to retail traders from 143 countries. The company has funded over $100 million to its traders and withdrawn more than $3 million in 2021 alone. The company has a 4.3 score on Trustpilot and has been on the Inc. Magazine's list of the 5,000 fastest-growing private companies in the US for the past two years. TopStep's mission is to provide the opportunity for all through trading. The company does this by offering funding and education to retail traders worldwide.
What Does It Take to Become a Trader at TopStep?
The TopStep Combine is a competition that allows traders to earn their way into a funded account. A trader needs to pass two steps.
The purpose of the TopStep Combine is to assess a trader's ability to follow risk management rules and profit potential.
The rules are simple: The first step is to reach a profit target of $3,000 in a 50k account, trade for at least 5 days, do not surpass the daily loss limit, and do not allow your account balance to hit or exceed the trailing maximum drawdown.
The daily loss limit is monitored and calculated in real time during trading. In addition, the trailing maximum drawdown is calculated at the end of the day during the Trading Combine. These rules are in place to protect your account from excessive losses.
The second step of Trading Combine begins anew after each reset. If you had initially selected the Starting Balance of $50K, then you must reach a profit target of $3,000. No single day can be accountable for more than 40% of the total profits made. In addition, there is a daily loss limit of $1,000 and a weekly loss limit of $1,000 (although this rule is inactive until the trailing maximum drawdown reaches the starting balance).
The trailing maximum drawdown is $2,000. You are not allowed to trade during major economic releases and must follow the set scaling plan--the maximum number of lots you can trade depends on the account balance. You can always reset your step, though it comes at an additional fee of $99. Therefore, Step 2 of the Trading Combine provides both the opportunity and challenge to reach the ultimate goal.
2. The 5%ers
The 5%ers is a funded forex trading platform that two former Forex traders founded. Their main goal was to build a platform for future forex traders and help their professional growth. The platform is available worldwide, offering a secure and fair trading environment.
At 5%ers, they offer a variety of funding programs designed to meet the needs of every type of trader. From the Instant Funding program for experienced traders to the Bootcamp program for beginners, they have a right funding solution for you. Please keep reading to learn more about our different programs and see which is right for you.
The 5%ers Instant Funding Program
The 5%ers Instant Funding Program is designed for experienced and disciplined traders. Under this program, traders have their account funded more frequently to keep trading and generating profits. This program is ideal for traders with a proven track record of profitability and looking for even more opportunities to trade and grow their account.
The 5%ers Aggressive Trader Program
The 5%ers Aggressive Trader Program is much riskier than the Instant Funding program but it offers the potential for higher profits. This program is designed for traders willing to take on more risk to increase their potential rewards. This program has several tiers, so traders can choose the level of risk that best suits their needs and goals.
The 5%ers Bootcamp Program
The 5%ers Bootcamp Program is the first low-entry-cost challenge where you can prove your trading skills and pay the rest only once you've passed. This program is designed for beginner traders who want to learn to trade without risking a lot of money upfront. The Bootcamp program allows beginner traders to get their feet wet and gain experience before committing to one of our other programs.
The 5%ers Freestyle Program
The 5%ers Freestyle Program is designed for traders who want to trade in their own style and keep 100% of their profits. Under this program, traders can get funded and keep all of their profits as long as they meet certain minimum profitability requirements. This program is ideal for experienced traders who want complete freedom over their trading decisions and don't want to give up any of their profits in exchange for funding.
3. FTMO
FTMO is the leading proprietary trading firm for forex, cryptocurrency, and commodities traders. With up to 90% profit sharing in funded accounts with top-tier resources & support from our community of highly successful investors; it's no wonder that this company has seen such rapid growth over recent years.
How to Become an FMO Trader?
After examination, FTMO offers funded accounts. $10,000-$200,000 is offered. Traders choose an account size and pay an upfront charge. To prove their trading skills, they must pass a 30-day FTMO Challenge.
What's the FTMO Challenge?
Future FTMO traders must follow particular parameters during the 30-day FTMO Challenge. These parameters include a profit and loss limit. If the trader hits or exceeds the profit target, they'll get an FTMO account.
The FTMO Challenge is a real-money trading competition for a position on the FTMO Pro Trader Program. The only trading parameters are daily and account loss limits. Currently, you can lose 5% of your beginning balance per day and 10% overall. So, for example, you're gone if you lose $500 in a day or $1,000 during the FTMO Challenge. These limits provide responsible trading and a fair chance for everyone.
FTMO challenges a trader's capacity to create consistent profits while adhering to basic risk management practices. To pass the challenge, traders must make 10% on standard accounts without breaching FTMO's trading parameters.
If the trader can't manage risk or generate unacceptable returns, they won't pass. To pass the FTMO challenge, traders must focus on consistent profitability and effective risk management.
Challenge Objectives
The FTMO Challenge teaches trading and tests your talents. Before starting the challenge, choose your risk level. Risk level determines daily loss, maximum loss, and profit aim.
- Standard Risk: The normal risk level defines a 5% maximum daily loss. The maximum loss and profit target is 10% of account balance.
- Aggressive Risk: Choosing Aggressive risk doubles all values. Maximum daily loss is 10%, while the Maximum Loss and overall Profit Target are 20% of the initial account value. With aggressive risk, you have more downside and must reach a bigger profit target.
Verification
The verification stage is similar to the challenge, except you have 60 days to make 5% profit under the same trading limitations. This level allows FTMO to examine your risk management and real-money trading abilities. If you pass this stage, you'll become an FTMO trader and get a real-money account. Your trading parameters won't change, but you'll keep 80% of your gains. This is an excellent chance for traders.
FTMO also offers a free trial account so potential clients can get a sense of what the firm offers before signing up for an official account and paying fees. The trial account is similar to the FTMO Challenge but does not require the same level of commitment. This is a great way to get a feel for FTMO's trading platform without having to make a financial commitment. However, it is important to note that the trial account does not offer access to all of FTMO's features and services. If you are serious about trading with FTMO, you will need to sign up for an official account.
4. SurgeTrader
Based in Florida and launched in 2021, the firm offers a wide range of tradable assets, including stock market indices, forex, metals, oil, and cryptocurrencies. With a minimum account size of $25,000 and a maximum of $1 million, SurgeTrade provides ample opportunities for traders of all experience levels to get involved in the market.
What Does It Take to Become a Trader at SurgeTrader?
If you want to become a trader, there are a few things you'll need to do. First and foremost, you'll need to pass the SurgeTrader Audition. This is a test that assesses your trading ability and determines whether or not you have what it takes to be successful. Once you've passed the audition, you'll need to open a starter account with SurgeTrader. This account comes with an initial balance of $25,000 and a $250 audition fee.
Once you've opened your account and funded it, there are a few simple requirements you'll need to meet to stay active as a trader. For starters, there is a 10% profit target that you'll need to reach daily. Additionally, you'll need to stay below the daily loss limit of 4% and the maximum trailing drawdown of 5%. If you can meet these requirements, you'll be well on your way to success as a trader!
What Are the Benefits of Trading with SurgeTrader?
SurgeTrader is an online broker that offers traders access to the forex market. The company operates on two platforms - Eightcap M4 and Eightcap M5 - and also allows news trading. One of the benefits of trading with SurgeTrader is that it has an easy-to-use trading dashboard with useful analytical tools and features. As a SurgeTrader, you can access trade analytics in real time and improve your trading performance as time goes on. Additionally, the company doesn't impose minimum trading days or require a 30-day assessment period like some other firms do. This means you can trade as much or as little as you want without worrying about meeting unrealistic requirements. Lastly, SurgeTrader allows traders to keep 75% of their profit share - which is higher than most other firms out there.
If you're looking for an online broker that will give you the tools and freedom necessary to succeed as a trader, SurgeTrader is definitely worth considering!
How To Select The Best Prop Trading Firm For You
A prop trading firm allows you to day trade with the firm's capital instead of your own. To find the best firm, you should look for a few key factors that will be important in your decision. These include reputation, fees, the challenge to get funds, available assets, profit split, trading platforms, and customer support.
1. Reputation
The first factor is reputation. You want to make sure that the firm you are looking at has a good track record. Ask around and see what other people's experiences have been like. A firm with a good reputation will likely be more trustworthy and provide a better experience overall.
2. Fees
Another vital factor to consider is the fees. Some firms charge monthly or yearly fees, while others take a percentage of your profits. Make sure to compare the different costs to find the most affordable option. While the fees are an essential factor, they should not be the only deciding factor, as some of the more expensive firms may be worth the price tag.
3. Challenge to Face to Get Funds
The third criterion is the challenge to face to get funding from the firm. Some firms have a very rigorous application process, while others are more lenient. Consider how much time and effort you are willing to put into the application process and choose a firm accordingly.
4. Available Assets
The fourth thing you should consider is what assets are available to trade with the firm's money. If you are only interested in stocks, then there is no need to choose a firm that also trades forex or futures. However, if you want more options available, then pick a firm that offers a variety of assets.
5. Profit Split
Another critical point is how profits are split between you and the firm. Some firms give their traders a smaller percentage of the profits while keeping most of it for themselves. Others give their traders a more significant cut so that they can keep more of their own money. Consider how much profit you want to keep and choose a firm accordingly.
6. Trading Platforms
Trading platforms are another important consideration when choosing a prop trading firm. Make sure the platform is user-friendly and offers all the features you need. You should also make sure that it is compatible with your computer.
7. Customer Support
Last but not least, you should ensure that the firm's customer support is good. You don't want to be left in the dark if something goes wrong or if you have any questions. So choose a firm with friendly and helpful customer support staff who are easy to get in touch with.
Best Prop Trading Firms- Conclusion
Choosing a prop trading firm can be overwhelming, but it is important to take the time to make an informed decision. Make sure you look at all the factors mentioned above and choose a firm that meets your needs.
If you are looking for a prop trading firm that will give you the tools and freedom necessary to succeed as a trader, FTMO or TopStep is worth considering! With its strong reputation and comprehensive suite of features, this could be the perfect choice for you. Good luck with your search, and happy trading!