Best Prop Trading Firms

Forex Prop Trading Company

Retail forex trading is constantly growing, and so is the number of supportive firms entering the market and funding traders to keep up with demand.

Choosing your own trading firm is very difficult to make the right choice, especially when you are doing it for the first time.

Best Proprietary Trading Firms

All reference firms have their pros and cons which need to be considered when choosing a firm that suits you and your needs. This makes it quite a challenge to choose these days to find the best trading firm that suits you and your needs.

The main objective of proptradefirm.com is to compare the best remote trading firms to help you choose stocks, futures, or forex. The trading firms in our rankings offer a funded trading account from $10,000 to $1 million.

Prop Firm Comparison

1. Topstep

Topstep-Logo
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TopstepFX Features:

  • High leverage 1:100
  • Buying power of up to $500,000
  • Excellent reputation
  • Small monthly fee
  • Simple Rules

TopstepFX Rating: 9,8

Topstep Trader is one of the largest proprietary trading firms in the world. The TopstepFX brand is part of TopstepTrader and is designed to enable traders to join the Forex-funded trader program. Read our experience with this prop firm in our TopstepFX Review.

2. FTMO

FTMO
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FTMO Features:

  • Accounts worth $200,000
  • Solid reputation
  • No risk at all
  • No customer support
  • Profit sharing by 70%

FTMO Rating: 9,6

FTMO is a popular global prop firm that has the best reputation in the industry, good trader support, 70% profit share, a number of top brokers to choose from, simple trading rules and funding up to $300,000 for top traders! Read our experience with this prop firm in our FTMO Review.

 

3. Fidelcrest

Fidelcrest
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Fidelcrest Features:

  • Funding up to $400,000
  • Scalable up to $800,000
  • Profit sharing up to 80%
  • Leverage 1:100
  • Not always a good reputation
  • Low funding for novice traders

Fidelcrest Rating: 9,2

Fidelcrest is a prop investment firm specializing in forex trading that offers traders worldwide investments of up to $400,000. Read our experience with this prop firm in our Fidelcrest Review.

4. City Traders Imperium

City Traders Imperium
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City Traders Imperium Features:

  • Funding up to $2,000,000
  • Revenue share between 50% and 70%
  • Simplified Rules
  • Fast scaling
  • Training for traders
  • Excellent Reputation

City Traders Imperium Rating: 9,4

City Traders Imperium is a London based rop firm that offers funding up to $2,000,000 with one of the fastest scaling plans! Read our experience with this prop firm in our City Traders Imperium Review.

5. The 5ers

The 5ers
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The 5ers Features:

  • Financing up to $1.2 million
  • Funding doubles at every stage
  • Good reputation
  • Full transparency

The 5ers Rating: 8,4

The5ers funded trading account program offers up to $1.28 million in funding to expand a trader’s forex career. Read our experience with this prop firm in our The 5ers Review.

The Best Proprietary Trading Firms Complete List:

  1. Topstep Trader
  2. Fidelcrest
  3. FTMO
  4. Citytradersimperium
  5. the5ers
  6. DT4X Trader
  7. T4T Capital
  8. Lux Trading Firm
  9. NinjaTrader
  10. TSTrader
  11. TradingView
  12. MyForexFunds
  13. Funding Talent
  14. TraderSeed
  15. BluFx
  16. Audacity Capital
  17. Funded Academy
  18. The Prop Trading
  19. Forex Traders UK
  20. Speedup Trader
  21. Enfoid
  22. Funded Trader




Best Prop Firms

Best Prop Firms

Trading in the financial market is one of the most profitable activities. Today, any Forex trader who wants to increase his or her potential profit can get funds from his or her own firm. We believe that you will become a successful Prop Trader!

In this report, we will look at proprietary trading, what it is, and where to start, as well as the main advantages over retail trading.

Trade for Prop Trading Firm – How do I get started?

  1. Be evaluated and verified as a trader
  2. Get an offer at a proprietary trading firm
  3. Get balance management up to $1M

What is proprietary trading?

Retail trading, which is a popular trading approach, involves opening an account with an online broker and executing your trades. Proprietary trading (proprietary trading), is a strategy that involves trading with company money.

When an investment bank or financial services company engages in trading and investment activities in the stock market, these activities are called proprietary trading.

Why is proprietary trading better? Because traders need to use the strategies of the funding company to execute trades and minimize risk.

There are many companies that offer proprietary trading services. A proprietary firm allows people from all over the world to trade with their money. This allows them to maximize their profits by hiring other traders and opening their specialized trading platforms to them.

Any market participant with healthy ambitions strives to manage large capitals and consistently goes to it. But the starting conditions can vary greatly – some begin with a large deposit, others with a minimum, and still, others are looking for investors willing to entrust their money for management. And this is where strategies of proprietary trading come to the rescue.

What is a Proprietary Trading Firm?

Proprietary Trading (Prop Trading) means that a firm or bank trades commodities, stocks, bonds, or other financial instruments in its account using its own money instead of client money.

This allows the firm to maximize profits from the trade it conducts, not just the commission it receives from processing trades for its clients.

Financial institutions, Proprietary Firms, and banks engage in this type of trading to make super profits. Prop Firms often have an advantage over the average investor because of in terms of the market information they have. Another advantage is the availability of sophisticated modeling and trading software.

Proprietary traders use various strategies such as merger arbitrage, index arbitrage, global macro trading, and volatility arbitrage to maximize profits. Proprietary traders have access to sophisticated software and a wealth of information to help them make good trading decisions.

Key talking points:

  • Proprietary traders can perform certain market strategies: such as: fundamental analysis, index arbitrage, statistical arbitrage, merger arbitrage, volatility arbitrage, technical analysis and global macro trading.
  • Large financial institutions deliberately hide trading details to conceal activities that promote the company’s own interests.

The essence of prop trading companies

  1. Private trading – when companies transfer their assets to hired traders to trade on certain terms:
  2. Traders make a deposit, which is multiplied by the company’s prop depending on the amount.
  3. Bo time drawdowns losses should not exceed the amount of personal deposit.

The trading company sets a daily limit on the number of losses not less than 30 $, after which all transactions will be automatically blocked until the next session of the special risk management programs.

It looks attractive, but that’s just the tip of the iceberg – they don’t just give money to the first person they meet. Candidates go through a competitive selection process, where they have to prove that they have trading skills and successful experience in the market. Newcomers to trading are offered sensible training and given a small amount of money to manage, which increases gradually.




Proprietary Trading Companies

The prop trading begins when the trader contacts a company, such as Topstep or FTMO. The trader is introduced to the industry and then told about the company’s processes and its own trading approach.

If the trader is interested, he receives the trading software and equipment. Next, the trader is introduced to day trading, using the training platform as a demo account.

After all of this, the prop trading company will open an account with your money and you can begin actively trading. You will get a significant portion of the money you earn, this amount is usually around 50-70% and depends on the company and its conditions.

To find out the conditions, read our reviews of all trading companies at https://www.proptradefirm.com/.

You should choose a firm that trades props, has an easy-to-use trading platform, offers proper training, and has extensive experience in the industry.

How does proprietary trading work?

“Backed trading,” or proprietary trading, occurs when the trading desk at a brokerage firm, bank, hedge fund, or any other investment financial institution uses the firm’s capital and balance sheet to conduct self-dealing financial transactions. Such transactions are often speculative in nature and are conducted using a variety of sophisticated investment and financial instruments.

Their key difference from other formats is that they do not engage in raising client capital and trust management!

Prop trading companies in Europe, the U.S. and around the world trade only their own assets, i.e. the capital of a legal entity. Because of the high degree of risk in proprietary trading, banks do not take part in such trading. Their work is based on conservative schemes, where everything is subordinated to the main priority – safety.

If the risks in proprietary trading are too high, is it worth it? Definitely, it is worth it! Prop Company is created on the basis of 2 or 3 investors who develop a trading system with direct access to the financial markets. Then they find traders, give them money for management and take the agreed-upon percentage of profit.

Accounts of employees and risks are managed through the software. Contracts are signed with traders of different levels of training in order to diversify.

Benefits of proprietary trading

  • Professional coaching
  • Buying power
  • Mentors & Methodology
  • Easy to start a business

Professional coaching

A company that provides prop trading services will offer you appropriate training. Most people who start out in prop trading usually have little experience in the industry. So choose a company with good training. We recommend taking a trading course from Topstep. To do this, you need to select the coaching section on their website.

Buying power

The main problem for people interested in trading is having free money. Prop trading will give you the money to trade, you will need to pay a small fee for your trading equipment.

Methodology and mentoring

Prop trading, as opposed to retail trading, involves following a certain simple trading methodology from the company. This will help you avoid trading mistakes. You’ll also always have access to experienced traders who will guide you through the process, as it’s in the company’s interest to make its traders profitable.

Easily start

With proprietary trading, it is quite easy to start your own trading platform. It’s pretty hard to do as a regular retail trader.

Additional Advantages of Prop Trading

Proprietary trading provides a bank or other financial institution with various benefits that have higher annual returns.

If an investment firm or bank trades on behalf of clients, they earn income through commissions. This income is usually a percentage of the total amount invested or profits earned. This process allows the institution to realize 100% of the profits generated by the investment.

The second advantage of proprietary trading is that the institution can take an inventory of securities. Any speculative inventory allows the institution to offer clients an unexpected advantage. This helps financial institutions prepare for illiquid or falling markets when it becomes more difficult to buy or sell securities on the open market.

Also, proprietary trading allows a financial institution to become an influential player by providing liquidity on a group of securities.

What does the structure of a proprietary trading company look like?

At the head is a group of investors of 2-Z people who make important decisions. The next link – up to 10 senior traders, each with their own specialization – action trading, scalping, trading currencies, stocks, other assets, etc.

One senior trader directly manages the group of rank-and-file – personally trained or invited professionals. A separate place in the hierarchy is occupied by risk managers, who control the positions of rank-and-file employees and the overall balance of the company’s risks. Their task is to do everything possible so that the company does not make critical trading mistakes and does not go bankrupt. If this has happened, it means that the risk control specialists were not competent enough.

Inside each organization, there is a training center where experienced practitioners teach the basics of trading to the newly hired. And the last link is technical support where specialists develop software and write programs for trading robots, create their own trading platforms.

How does the interaction within the proprietary trading company work?

The basic difference of the scheme of work of the organizations – 100 % protection of the capital. Any trading losses are covered by deposit fees of hired traders. Contributions are also called insurance or “on the drawdown”.

Each rank-and-file employee determines his own trading strategy. They make their own decisions and are responsible for the consequences. As soon as the drawdown happens and the trader suffers a loss, the system closes the position forcibly and automatically in order to prevent the number of losses from exceeding the amount of the security deposit.

If the financial result is positive, the organization will receive up to 50% of profit, while a novice trader will receive 10% or more, depending on the results of trading. Experienced traders with good results are offered even more profitable terms.

Best Prop Trading Firms

Prop Trading Pros and Cons

Advantages and disadvantages of cooperation with proprietary trading companies

Pros

  • Possibility to obtain start-up capital with low entry threshold
  • Free training in trading
  • Getting access to the software
  • Direct access to the exchange
  • Support of tutors in trading guarantees a small but stable profit during training, which will grow over time
  • Accelerated growth in the profession, gaining experience and deposit size
  • No conflict of interest between the legally operating company and traders
  • It is easier to observe discipline and risk management in the environment of the organization
  • Company priority – algorithms for fast profits. If you have the appropriate specialization, then this is a plus

Cons

  • You will have to pay a security deposit
  • You have to spend time and effort
  • You have to learn how to work with the software
  • In case of a series of losing trades, the account will be automatically blocked at some point

Benefits and disadvantages for prop companies

Pros

  • Capitals are fully protected from risks
  • In the long run, the passive profits are many times greater than the investments made in the training of the employee
  • Diversification of profits by attracting a large number of traders and applying different strategies
  • Wide set of opportunities and tools due to attraction of newcomers with different specialization
  • Independent software development and functional adaptation for your own needs
  • Opportunity to select the most talented trainees for further serious training
  • No conflicts between the interests of the company and traders due to transparent and legal business practices

Cons

  • Risk of not making a profit if the trader is unsuccessful in trading
  • The trader might turn out to be poorly trained and the cost of training him might not justify itself
  • High expenses for the development team
  • Material and moral costs of learning how to trade
  • What are the risks of prop-traders

Proprietary trading companies have their own risk management system that works to the mutual benefit of both sides: there are limits on losses per trading session, a daily volume limit on buying or selling assets, and no plans to roll over trades to the next day. Every trade is monitored by a manager, who has the right to stop the trade if the account amount is nearing a critical point.

What should be kept in mind when choosing a proprietary trading company?

  • The size and terms of the deposit. The deposit, increased by a portion of the organization’s capital, should provide an increase in the volume of transactions while not increasing the risk of current drawdowns and not forcing yourself to limit the volume.
  • Conditions for Participation in Traders Contests. Legitimate proprietors hold such events using demo accounts, not real ones. In contests on real accounts, anyone who happens to be without a prize risks not getting back the funds deposited. But even for the winner, there is no guarantee that he will get the money for management. You have to understand that market conditions of real trading cardinally differ from contest ones. To get into a reputable proprietary company, it is sufficient to prove by figures your trading qualifications. That is why they do not hold trading contests.
  • The organizations developed their own platforms. If from their work there is a lot of inconvenience, slippage, non-market price jumps, or interrupted communication, then there is a high probability that in this particular company there are scammers, who will not allow to withdraw the profit and trade to the profit.
  • Paid training. A trader in a prop company is an employee and it is the employer’s obligation to educate him free of charge. Most often, Russian pro-trading companies train for money, and they do not even guarantee employment. So read the terms and conditions of cooperation carefully!

To become an employee of the organization, you must have at least minimal trading experience – after all, they are looking for traders who are ready to provide the employer with some evidence of successful trading in real financial markets.

What trading strategies are used here?

Practically all of them, from scalping, arbitrage, pair trading, volatility trading, and others. In high-frequency trading, trading according to an algorithm helps to realize a large number of deals in a short time, which is difficult or impossible to achieve by human efforts.

Here is also used an investment approach where the company’s analysts develop a trading idea and traders then open positions in basic or derivative assets for various periods of time – from 2 to 12 months.

Basic Proprietary Strategies

We’ll note the most basic strategies that will help you trade.

  1. Volatility Arbitrage
  2. Global Macroeconomic
  3. Merger Arbitrage

Volatility arbitrage

Traders who engage in volatility arbitrage are predicting changes that will occur to the value of an asset, not its price. When these changes occur, a difference is created between the estimated option price and the market price of the asset.

How can this be used in close trading?

Such options are part of a neutral portfolio in proprietary trading. Traders who buy these options hold a position with long volatility.

A long volatility position is betting that the future volatility of the asset will be greater than when the trade was made. A position with short volatility bets that the future volatility will be less. Some traders consider Volatility Arbitrage to be a risk-free strategy, but it is not.

Global Macroeconomic

A global macro strategy analyzes information about economic conditions around the world. In this way, it is possible to make a guess as to what effect this will have on prices. Using such a strategy requires the analysis of a large number of factors:

  • Market economy analysis
  • Quotes of different currencies
  • Global trade imbalances

Merger arbitrage

Risk arbitrage is a hedge fund that uses shares of two merging companies. To avoid risks, shares of each company are sold and bought at the same time.

But the main risk is that the merger can take a very long time or not be completed at all. Traders working with their own trading companies use this strategy quite often. The bet is that the stock of the target company is sold cheaper than it is after the sale and that difference between the two prices will bring them a profit.

Proprietary Trading vs. Hedge Funds

Hedge Fund managers are some of the wealthiest people in the United States. They include some of the world’s famous financiers.

A hedge fund is a company where the manager collects money from investors and then trades or invests for investors. The fund manager retains a percentage of the profits and also charges an annual fee for managing the assets.

The main differences between Prop Trading and Hedge Funds

Prop trading is different from hedge funds for basic reasons:

  1. In hedge funds, you need to have experience in the industry. With prop trading, you don’t need to have experience in it.
  2. With prop trading, you don’t have a set of investors. Instead, you trade only company funds.
  3. With hedge funds, you need to periodically write letters and interact with your investors. With prop trading, that doesn’t happen.

Prop trading and Forex

In some ways, proprietary trading works on the principle of leverage with low commissions, typical of Forex and futures markets. That’s why you will not find legally operating Forex proprietary trading companies. Let this fact be a warning beacon, which will not let any scammers to mislead you.

Conclusions about Prop Trading

The format of proprietary trading is good because it allows you to improve your skills in real trading in a relatively short time under the guidance of experienced mentors. For newbies this is ideal. For experienced market participants, this is not the most interesting option, but it would be wrong to write it off. Both trader and company are equally interested in profit, so there is no conflict of interest.

In our review, we have chosen the best pop trading companies to make it easier for you to choose the best trader in the market. All the best, all the editorial staff of proptradefirm.com

Proprietary trading is a good start to a career for anyone interested in trading or the financial market. By using a good proprietary firm, you will get to have the ability to trade a wide range of assets such as:

  • stocks
  • currencies
  • commodities
  • stock funds

And all this without risking you or losing a significant amount of money.

We know plenty of people who started from scratch and then opened trading offices with millions of dollars in profits! Maybe luck will favor you too?

TOP Proprietary Trading Firm

Best Prop Trading Firms Popular Prop Trading Companies
Topstep DT4X Trader
Fidelcrest Forex Traders UK
FTMO Lux Trading Firm
City Traders Imperium T4T Capital
The 5ers Audacity Capital

 

The Best Proprietary Trading Firms & Companies

The following sources were used in compiling this article: 

https://en.wikipedia.org/wiki/Proprietary_trading

https://www.investopedia.com/terms/p/proprietarytrading.asp

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