Proprietary trading, or prop trading, has become a widely embraced investment approach within the trading sector. In contrast to traditional methods, where earnings hinge on client trade commissions, best prop trading firms derive profit targets directly from market activities. For aspiring to become skilled traders, affiliating with top prop trading firms presents several advantages. Achievement in funded trading and adept market trend analysis through these firms can expedite the path toward financial autonomy. Furthermore, most prop trading companies extend incentives, such as bonuses and monthly salaries, to recognize and reward their top-performing or experienced traders.
Key Takeaways
- List of the best trading prop firms in 2024 with their key features and details of tradable assets.
- Understanding what a prop trading firm is, how it works, its advantages, and the risks associated.
- Learn how to join proprietary trading firms and safety tips for safe trading.
- Check frequently asked questions about prop trading and prop trading firms.
List of Prop Trading Firms That Are Top-Grossing in 2024
- FTMO – Best prop trading firms for beginners.
- Fundingpips – Top prop trading firm with the most reliable trading platform.
- The 5%ers – Best prop trading firm for experienced traders.
- FundedNext – Reputable prop trading firm with successful traders.
- Fidelcrest – Best funded trading firm for skilled traders.
Best Prop Trading Firms: A Brief Overview
Now that you know the best proprietary trading firm in the industry, let’s dive into the in-depth insight of each of them to make it easy for you to make an informed decision and choose the prop firm as per your needs.
FTMO is a top proprietary trading company that helps beginner aspiring traders become proficient. With a rigorous and fair 2-step evaluation process, the firm ensures that only skilled traders can gain access to its funds. The evaluation process consists of an FTMO Challenge and Verification specifically crafted to find trading talents.
After successful completion of the evaluation process, traders can trade on an FTMO account with a balance of up to $200,000. The firm offers a supportive trading environment with many learning resources, account analysis tools, risk management tools, and a trading community.
This firm has a transparent fee structure with no hidden costs or commissions. FTMO claims the top position in the best proprietary trading firm rankings because of benefits such as custom trading apps, unbiased account analysis, excellent customer support, free access to the FTMO academy, and an individual performance coach for traders.
Key features
- Profit split up to 85%
- 2-step evaluation process- FTMO challenge and verification
- Trading platforms – MT4, MT5, and cTrader
- Minimum Trading Days: Unlimited trading period or no restriction
- Buying power up to $400,000
- Leverage up to 1:100
Tradable Assets
- Forex
- Indices
- Commodities
- Stocks
- Cryptocurrencies
- Bonds
Fundingpips is a top prop firm for trading built by traders for traders. The evaluation process, trading terms, and conditions are all designed to offer the best experiences for traders. This firm believes traders progress through three stages in their professional trading journey: Student, Practitioner, and Master. Hence, they have built an in-house two-phased evaluation and funding process.
Other benefits this reputable prop trading platform offers include flexible pricing options, a rewarding scaling plan, high-profit sharing, and an array of trading instruments.
Key features
- Profit split up to 80%
- In-house-built two-phase evaluation process
- Trading platforms – MT5
- Unlimited trading period
- Buying power up to $300,000
- Leverage up to 1:100
Tradable Assets
- Forex
- Indices
- Energies
- Metals
- Cryptocurrencies
The 5%ers
“The 5%ers” is the best proprietary trading company and growth program that offers funding to professional traders (Top 5% Traders) with successful track records. Traders must undergo a comprehensive evaluation process, testing their trading skills and risk management abilities.
Other than the key features mentioned below, this firm offers additional benefits such as no subscription fees or recurring costs, unlimited access to trading resources, the freedom to trade without constraints on style, and free one-on-one performance coaching.
Key features
- Profit split up to 100%
- Immediate trading access after passing evaluation
- Trading platforms – MetaTrader 5
- Unlimited trading period
- Buying power up to $40,00,000
- Leverage up to 1:100
Tradable Assets
- Forex
- Indices
- Precious metals
- Stocks
- Cryptocurrencies
FundedNext
FundedNext is a renowned and registered global trading platform that selects and funds skilled traders based on their skills and trading strategies. FundNext differentiates itself from other prop trading firms with its 15% profit sharing at the challenge phase. The firm offers three types of challenges for funding: ‘Evaluation’, ‘Express’, and ‘Stellar’. There is no time limit to hit the profit targets in the ‘Express’ and ‘Stellar’ funding models.
In short, to secure funding at FundNext, you need to choose the challenge type or funding model, maintain consistency, and achieve funding. Additionally, the firm’s blogs are invaluable, providing the best tips, tricks, and news for funded traders.
Key features
- Profit split up to 90%
- Need to pass an evaluation in two phases
- Trading platforms – MT4, MT5
- 5-10 days trading period according to account model
- Buying power up to $40,00,000
- Leverage up to 1:100
Tradable Assets
- Forex
- Indices
- Commodities
Fidelcrest
Fidelcrest is an award-winning proprietary trading firm known for its reliability and dedication to helping both beginner and seasoned traders evaluate, train and maximize their trading potential.
Fidelcrest stands out from other prop firms due to its wide range of features and benefits, including flexible trading challenges, a range of trading instruments, advanced trading platforms, excellent customer support, and educational resources.
Key features
- Profit split up to 70%
- Two-phase evaluation process – trading challenge & verification
- Trading platforms – MT4, MT5
- Minimum trading days up to 60
- Buying power up to $10,00,000
- Leverage up to 1:100
Tradable Assets
- Forex
- Indices
- Metal
- Stocks
- Cryptocurrencies
- Commodities
How We Chose the Above List of Top 5 Prop Firms?
The key to achieving success in prop trading lies in selecting the most suitable firm to collaborate with. Numerous companies vie for new traders, enticing them with advertised benefits and attractive profit targets with profit splits. However, it is crucial to recognize that profit target margins are just one facet of the decision-making process, and several factors warrant consideration before committing to a specific firm. In selecting the list of top proprietary trading firms, we considered several key factors:
- Reputation and Regulation: We thoroughly assessed each firm’s regulatory status, user feedback, and firm’s approach to addressing trader challenges.
- Fees and Commissions: We evaluated the fees and commission options for funded traders.
- Funding Options and Profit Sharing: We examined each prop trading firm’s funding options and profit-sharing models.
- Tradable Assets and Trading Platforms: We analyzed the range of trading platforms used by each firm, such as MT4, MT5, and cTrader, focusing on aspects like technical analysis or fundamentals.
- Evaluation Process and Duration: We compared the profit split, funding options, and tradable assets offered by the proprietary trading firms.
- Customer Support and Educational Resources: We assessed the reliability and responsiveness of customer support and the educational resources offered by the firms.
What Is a Prop Trading Firm?
A legitimate top prop trading firm is an organization that recruits professional traders, supplying them with corporate capital to engage in trading across diverse markets, including stocks, bonds, forex, indices, cryptocurrencies, futures, and commodities. These traders undergo comprehensive training to enhance their proficiency in generating profits by hitting the profit target, with the earnings subsequently shared with the company.
In addition to financial backing, these firms provide extensive support to experienced traders, encompassing initial training, ongoing education, funded accounts, professional coaching, and access to advanced trading tools.
How Do Prop Trading Firms Work?
Prop firms’ goal is consistently generating profits by exploiting price differentials across various markets or asset classes. Specialized funded traders within these firms employ various strategies to optimize returns, including technical analysis, algorithmic trading, fundamental analysis, merger arbitrage, forex indices arbitrage, global macro-trading, and volatility arbitrage. Once identified, the prop firm executes trades by dispatching orders to pertinent exchanges or brokers, awaiting the outcomes.
Many online trading prop firms equip their funded traders with valuable tools and resources to facilitate their work. These include access to real-time market data, news trading feeds, advanced charting software, and analytical tools. A funded trader would leverage these resources to enhance their likelihood of success and profitability in the dynamic trading landscape.
Moreover, these prop trading firms commonly provide personalized training and mentorship programs to nurture and refine trading skills and judgment.
Pros and Cons of Proprietary Trading at Prop Firms
Here, we have listed the pros and cons of proprietary trading to offer a comprehensive understanding of the opportunities and challenges within the trading space:
| Pros | Cons |
| Access to Large Capital | Performance Pressure |
| Reduced Trading Costs | Market Volatility |
| Access to Advanced Trading Tools and Platforms | Accountability for Losses |
| Performance-Based Compensation | Less Regulated than Retail Brokers |
| Mentorship, Training, and Support | Can Steal Your Intellectual Property |
| Risk Management Framework | Variable Income |
| Opportunity to Transition into Full-Time Trading | Involves Fees |
| Potential for Diversification | |
| Access to a Community of Traders | |
| Potential for Global Trading Opportunities |
Knowing both the pros and cons of trading for proprietary firms can give traders the knowledge necessary to navigate the financial markets securely and effectively. Let’s explore the advantages and disadvantages in detail in the sections below.
Advantages of Trading at Prop Firms
As a prop trader affiliated with a prop firm, you gain access to an array of advantageous features that can significantly elevate your trading career. These benefits encompass –
- Access to Large Capital – Proprietary trading firms furnish traders with substantial capital, enabling them to trade various financial instruments. This proves advantageous for those initiating their trading journey or seeking to expand their existing funded trading accounts.
- Reduced Trading Costs – Proprietary firms extend cost-saving benefits to a funded trader, including diminished trading costs such as lower commissions and entry to institutional-grade platforms. These reductions improve overall cost efficiency, enhancing the trader’s profit target.
- Access to Advanced Trading Tools and Platforms – Proprietary firms grant their traders access to trading technologies, encompassing advanced trading platforms, data feeds, and analytical tools to start trading.
- Performance-Based Compensation – Prop trading firms often implement lucrative profit-sharing models. Some firms offer a profit split of up to 100% to their top-performing futures traders, presenting a potentially highly rewarding trading career path.
- Mentorship, Training, and Support – Prop firms boast a community of experienced traders from financial institutions, investment firms, hedge funds, and social media platforms, offering invaluable mentorship and support.
- Risk Management Framework – Prop firms often establish risk management teams to assist novice and seasoned traders in managing risk exposure and ensuring a secure trading experience.
- Opportunity to Transition into Full-Time Trading – Prop traders associated with trading prop firms receive competitive compensation packages and benefits, enhancing the overall trading experience.
- Potential for Diversification – Many prop trading firms empower traders to implement diverse strategies or follow relaxed trading rules across various financial markets like forex, indices, etc, without any constraints.
- Access to a Community of Traders – The operational model of the best prop firms fosters a closely-knit community of traders. This environment facilitates sharing insights, strategies, and collaboration for mutual success.
- Potential for Global Trading Opportunities – These firms can swiftly emerge as significant players in global markets, providing traders access to diverse and expansive trading opportunities worldwide.
Risks and Disadvantages of Prop Trading
Prop trading generally entails higher risk than traditional brokerage services due to a lack of equivalent regulatory safeguards. Let’s understand the risks and disadvantages of proprietary trading –
- Performance Pressure – A proprietary trading firm’s speculative nature heightens the risk of substantial losses. Coupled with the demand for consistent profit targets, this dynamic renders a notably stressful activity for many practitioners to bring desired profits within minimum trading days.
- Market Volatility – The speculative nature of the prop trading space necessitates the implementation of strict trading rules and strategies to manage risks associated with prop trading market volatility. Approaches like volatility arbitrage, global micro-trading, and merger arbitrage are commonly employed to navigate the inherent uncertainties.
- Accountability for Losses – The leverage in the prop trading space poses a significant risk of rapid financial losses, with statistics indicating that a substantial percentage of retail investors incur losses in Contracts for Difference (CFDs).
- Less Regulated than Retail Brokers – Following the 2008 financial crisis and the implementation of the Volcker rule, regulatory scrutiny on these prop firms has intensified. Approximately half of prop trading executives acknowledge that regulatory challenges pose significant obstacles to the industry.
- Can Steal Your Intellectual Property – Traders with their unique trading strategies may face the potential threat of their intellectual property being duplicated or reverse-engineered by the firm, introducing an element of risk.
- Variable Income – Unlike traditional employment structures with fixed salaries, proprietary traders earn income based on performance. This variable income model necessitates careful financial planning to navigate income fluctuations while performing in minimum trading days.
- Involves Fees – Most firms charge various fees, such as commissions, transaction costs, and profit split with a profit target.
How to Join a Prop Trading Firm?
Advertisement
In a broad overview, to join a prop trading company, the procedure involves:
- Learn to trade and understand the different trading styles and strategies.
- Follow trading rules and principles.
- Create a trading strategy based on your learning and market analysis. Practice money and risk management.
- Register for a prop firm’s trading challenge/program to demonstrate your trading proficiency.
- You will receive login credentials for a trading account with allocated capital upon completing the trading program.
- Complete the firm’s trading program. Once you complete the firm’s trading program, get funded. After that, trade on a funded account as you would normally, with the option to withdraw your monthly profit split in most instances.
Becoming a part of a prop firm is a challenging endeavor, as they actively seek out top-tier traders, targeting the top 1% who consistently deliver outstanding returns, irrespective of market conditions. To even be considered by the best proprietary trading firm, you must have a proven track record spanning several years, showcasing consistent futures trading performance using a specific trading strategy. Top Prop firms generally discourage approaches from traders still operating on demo accounts, refraining from trading with their own money, regardless of their impressive returns.
The first step is that before engaging with any firm in the prop trading industry, a comprehensive trading portfolio backed by years of statistics is a prerequisite. The brands who are into prop trading would meticulously examine the provided metrics, emphasizing your profit factor from such profit split, Sharpe ratio, and the crucial drawdown to profit target ratio, irrespective of your very relaxed trading rules and strategy.
For those equipped with a stellar portfolio and a proven track record spanning multiple years on a singular strategy, the next step involves approaching numerous firms. Engage in conversations and collaborate with the crypto prop trading firms offering the most favorable terms in your contract.
Online prop trading companies do not require a track record; instead, they challenge traders to assess profitability, risk management, and trading styles. While this may seem cumbersome, these challenges usually last a month or even less, significantly reducing the time investment compared to building a multi-year track record.
How to Stay Safe When Trading with a Prop Firm?
Staying safe while trading with forex proprietary trading firms is important. Here’s how you can do it.
- Prioritize Risk Management: Successfully navigating trades through a prop firm hinges on a vigilant approach to risk management, safeguarding your investments by monitoring multiple trading platforms.
- Understand Terms and Conditions: Begin by comprehensively understanding the terms and conditions outlined in your agreement. Knowledge is your protective shield, establishing a robust foundation in agreement comprehension.
- Select Reputable Broker: Choosing a reputable broker assumes the role of an anchor amidst the unpredictable financial market currents, offering stability and dependability.
- Trust Your Instincts: Trust your instincts, prompting you to seek clarification if any aspect raises concerns. Clear communication fosters a secure trading environment and facilitates understanding of the intricate dynamics at play.
- Strengthen Your Safety: This final point suggests strengthening your safety net in the dynamic proprietary realm by employing judicious position sizing, diversification, and emotional discipline. Stay abreast of developments, develop a unique trading style, remain vigilant, and let prudent risk management serve as your unwavering guiding principle.
Conclusion About Prop Trading Firms
In conclusion, prop trading stands out as an enticing avenue for individuals aspiring to build a flourishing career in the ever-evolving realm of finance. Key insights from this discussion highlight the necessity for thorough research and careful consideration when aspiring traders choose a prop firm to trade. Factors such as reputation, fees, and profit split-sharing models should be scrutinized.
Acknowledging the associated risks and implementing effective risk management strategies, like prudent position sizing and diversification, proves pivotal for achieving enduring success in this field. Encouraging aspiring proprietary traders to explore a reputable proprietary trading company, the message echoes the potential for accelerated professional growth and financial autonomy.
Prop trading, with its distinctive opportunities and challenges, beckons as a viable path for those possessing the determination and expertise to navigate the intricacies of financial markets through a funded account.
FAQs
Are Proprietary Trading Firms Safe?
When engaging in trading activities with a prop company, it is advisable to take certain precautions to ensure a secure experience. While most prop trading firms are not inherently fraudulent, the reliability of different firms varies. Conducting thorough research and due diligence on a specific firm before affiliating is pivotal. It involves heightened risks compared to conventional brokerage services, underscoring the importance of traders comprehending and assessing these associated risks. Traders associated with prop must be well-informed about the potential challenges and rewards before committing to a trading arrangement.
Are Prop Firms Legit?
Prop trading firms represent a legitimate avenue for individuals to generate substantial profits through strategic trading activities. Upon completing an evaluation process, participants gain access to funded prop trading accounts, allowing them to initiate trades using the firm’s capital, which can be substantial, potentially reaching millions of dollars and helping you potentially earn higher profit targets with the right profit split.
How Do Prop Firms Make Money?
The primary revenue model for the best prop trading firms involves taking a percentage from the profit target set by individual traders, ranging from 10% to 50%. Multiple platforms allow you to start trading and levy charges for supplementary services such as coaching and account opening. Often, they have regulated profit splits for profit targets.
Should I Trade With A Prop Firm?
For those possessing a robust trading strategy and aspiring to access additional capital and resources, joining a prop firm is recommended. However, it is advisable for inexperienced traders or those unwilling to share profit targets with the firm to reconsider participation. However, you can join these firms as they help you with trading combined with their funded account.
Is Proprietary Trading Legal?
The legality of this type of trading is contingent on the specific circumstances. Generally, engaging in prop trades is lawful, except when associated with major global banks. Following the 2008 financial markets crisis, regulatory restrictions prohibit banks from conducting proprietary trades through well-funded accounts. You can embark on this journey with a well-funded prop trading account. You can legally make the right money upon the desired profit target.
How Much Do Prop Firms Charge?
Advertisement
The top proprietary trading firms would work on 20% to 50% of the trader’s profits. Usually, these firms charge a minor fee to open accounts. Some brands only take 10% of the profit with them and let you have 90% of the trade profits.
Do Prop Firms Allow Scalping?
Indeed, a lot of prop firms permit scalping as a trading method. Before signing up, it’s wise to check the precise guidelines and procedures each prop company has regarding scalping.
What is the Difference Between Prop Trading and Hedge Funds?
Hedge funds invest in the financial markets using clients’ funds and are paid to generate gains on these investments. However, prop traders use their firm’s money to invest in markets, and they keep 100% of the returns generated. Unlike proprietary traders, where traders are answerable to their firms, hedge funds are accountable to their clients. Therefore, traders can take increased risks in prop trading, as no client funds are involved.