Top Proprietary Trading Firms of 2024 (2024)

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Prop trading, short for proprietary trading, is a type of trading where a financial firm or individual trader trades for its own account rather than on behalf of clients.

In prop trading, the trader uses the firm's capital to take positions in various financial instruments, such as stocks, bonds, commodities, futures, options or currencies, in the hope of generating profits.

Prop trading can be done by various types of firms, such as investment banks, hedge funds or proprietary trading firms.

There are hundreds of prop trading firms across the globe, all with advantages and disadvantages.

A List of the Top Prop Trading Firms for March 2024 Are:

Comparision Table of the Best Prop Trading Firms for March 2024:

Company

FTMO

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

10%

Performance Goals

5-10% monthly

Education Resources

Educational Courses

FTMO

Company

Topstep

Trading Capital

$30,000

Account Size

$150,000

Max. Drawdown

$6,000

Performance Goals

Varies

Education Resources

Trading Combine

Topstep

Company

Lux Trading Firm

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

Varies

Performance Goals

Varies

Education Resources

Extensive

Lux Trading Firm

Company

DreamTicks

Trading Capital

Various

Account Size

Various

Max. Drawdown

Various

Performance Goals

Varies

Education Resources

Educational Materials

DreamTicks

Company

Audacity Capital

Trading Capital

$25,000

Account Size

$50,000

Max. Drawdown

5%

Performance Goals

Varies

Education Resources

Educational Materials

Audacity Capital

Company

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

Varies

Performance Goals

Varies

Education Resources

Educational Materials

IG

Company

Tickmill

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

Varies

Performance Goals

Varies

Education Resources

Varies

Tickmill

Company

Funded Trader Program

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

Varies

Performance Goals

10% monthly

Education Resources

Educational Platform

The Funded Trader Prog

Company

Top Proprietary Trading Firms of 2024 (2)

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

Varies

Performance Goals

Varies

Education Resources

Varies

SurgeTrader

Company

Top Proprietary Trading Firms of 2024 (3)

Trading Capital

$5,000

Account Size

$1,000,000

Max. Drawdown

5%

Performance Goals

5% monthly

Education Resources

Trading Program

The 5%ers

Company

Fidelcrest

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

Varies

Performance Goals

Varies

Education Resources

Educational Platform

Fidelcrest

Company

City Traders Imperium

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

Varies

Performance Goals

Varies

Education Resources

Trading Courses

City Traders Imperium

Company

3Red Partners

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

Varies

Performance Goals

Varies

Education Resources

Varies

3Red Partners

Company

Akuna Capital

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

Varies

Performance Goals

Varies

Education Resources

Varies

Akuna Capital

Company

Top Proprietary Trading Firms of 2024 (4)

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

Varies

Performance Goals

Varies

Education Resources

Varies

Belvedere Trading

Company

Top Proprietary Trading Firms of 2024 (5)

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

Varies

Performance Goals

Varies

Education Resources

Varies

The Trading Pit

Company

My Forex Funds

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

Varies

Performance Goals

Varies

Education Resources

Varies

My Forex Funds

Company

FundedNext

Trading Capital

Varies

Account Size

Varies

Max. Drawdown

Varies

Performance Goals

Varies

Education Resources

Varies

FundedNext

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of IG retail investor accounts lose money when trading spread bets and CFDs with IG. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Description of the Best Prop Trading Firms for March 2024

1. FTMO

Pros

  • Access to MetaTrader platforms
  • There is a free trial
  • Refundable registration fee
  • 90% profit split

Cons

  • Overnight and weekend trading only available to those on the swing trader challenge
  • High costs compared to others
  • The verification process is more challenging than others

Best for: Security
Maximum capital allowance: $400,000
Leverage: 1:100
Fees: Starting at £155

FTMO was founded in Prague in 2014 and has a two-step evaluation process called the FTMO Challenge and Verification course.

The company also provides performance coaches and excellent customer service.

It offers trading in forex, stocks and bonds. Its scaling plan gives a 25% balance limit increase every four months.

Visit FTMO

2. Topstep

Pros

  • 14-day free trial, with a $150,00 starting balance
  • Keep your first $5,000 profits
  • Overnight holding and weekend trading allowed
  • Has an excellent referral programme
  • 80% profit split
  • Supports multiple trading platforms

Cons

  • Non-refundable registration fee
  • Difficult and timely to calculate all costs and fees
  • Performance coach is an additional $395 per month fee

Best for: Forex and futures traders

Leverage: 1:100
Fees: $165/month for $50,000 accounts, $325/month for $100,000 accounts, and $375/month for $150,000.

TopStep was founded in 2012 and has a history of being a reliable prop trading firm. It hosts traders in over 143 countries and is based out of Chicago.

It offers excellent training options, including live webinars, group performance coaching sessions and private coaching.

Visit Topstep

3. Lux Trading Firm

Pros

  • Access to several trading platforms
  • Live trading rooms
  • Daily market updates and information streams
  • Free trial
  • The evaluation process only has one stage
  • No time limit on targets
  • Weekend holding permitted

Cons

  • Profit split of up to 65% – other firms offer much higher
  • Maximum loss limit

Best for: Social trading
Leverage: 1:100
Fees: Between £299 and £499, depending on the amount you start with and refunded after stage 1.

Lux Trading is a London-based proprietary trading firm founded in 2021. Like many of the new prop trading firms, there is not enough data to confirm the trustworthiness of the company.

Traders work through stages, from one to eight, progressing when they reach a 10% target. Lux Trading offers trading in commodities, crypto, forex, indices and stocks.

There is a large element of social trading, with chat rooms and trading rooms open for idea-sharing and feedback.

Visit Lux Trading Firm

4. Audacity Capital

Pros

  • Superb support and trading conditions
  • Favourable scaling programme
  • No evaluation process

Cons

  • 50/50 profit share
  • Only forex trading
  • Monthly fee
  • Low funding compared to other firms

Best for: Funded programmes
Leverage: 1:5
Fees: £199 joining fee and £99 monthly fee

Audacity Capital was founded in 2012 in London and has traders all over the world.

It doesn’t have a typical evaluation process. Instead, traders apply for a role and are invited for an interview.

Successful traders choose between the Hidden Talents programme or the Funded Trader programme. The first is designed for traders with a natural ability but no experience, and the latter for experienced traders with a three-to-six-month track record.

Visit Audacity Capital

5. DreamTicks

Pros

  • Access to the world's leading trading platform MT4
  • Trade with real capital
  • No time limit on targets
  • Same day pay-outs
  • Reset the challenge at any time
  • Refundable registration fee
  • Up to 90% profit split
  • Scale account to $1,000,000

Cons

  • Max account is $200,000

% of Profits Retained: 80-90%
Leverage: Up to 1:60
Customer Service: Excellent

DreamTicks is a Maltese-based company founded in 2023. Its founders have long and proven track records from diverse backgrounds, including profitable day trading, executive roles in the regulated online gambling industry, and leadership in a global Tier One FX broker.

Offering personal onboarding, English and Spanish customer support, and limitless challenge resets, DreamTicks focuses on customer satisfaction and long-term engagement.

DreamTicks offers great spreads, and Traders can experience real market conditions with real money, proving the authenticity and financial robustness of their offerings.

Visit DreamTicks

6. IG

Pros

  • Highly regulated
  • MetaTrader 4 (MT4)
  • Over 10,000 instruments
  • Available in the UK and US
  • 24/7 customer support

Cons

  • High fees
  • No deposit compensation scheme for US accounts
  • No copy trading
  • Inactivity fees

IG invented spread betting in 1974 and today is the world’s leading online trading provider with more traders trusting them with their money than anyone else

IG is authorised and regulated by the FCA and provides traders access to over 18,000 markets. IG offers more 24-hour indices than any other provider, and extended hours on over 70 key US stocks

For those who prefer to own the underlying asset, IG offers access to over 13,000 global shares and ETFs, or a wealth portfolio managed by one of their experts.

Benefits:

  • Advanced platform and charting – L2 dealer, ProRealTime and MT4
  • Demo account
  • Extended trading hours
  • Extensive range of products
  • Daily expert analysis & educational resources
  • Round-the-clock customer service
  • Negative balance protection for retail clients

Based on revenue (published financial statements, October 2022). 24/7 excludes the hours from 10 pm Friday to 8 am Saturday (UK time), and 20 minutes just before the weekday market opens on Sunday night.

Visit IG

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of IG retail investor accounts lose money when trading spread bets and CFDs with IG. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

7. Tickmill

Pros

  • Low trading costs
  • No minimum deposit for some accounts
  • Variety of trading instruments
  • Advanced trading platforms

Cons

  • Limited product portfolio
  • Inactivity fees
  • Geographical restrictions
  • Limited social trading features

Best for: Active traders looking for competitive spreads and low commissions
Leverage: 1.3
Fees: $100 minimum deposit

Tickmill leverages its capital in financial markets to generate profits from various instruments. Its proprietary trading emphasizes risk management, market analysis, and technological innovation. The firm adapts to market changes with advanced technologies to identify opportunities across forex, commodities, indices, and cryptocurrencies.

Furthermore, Tickmill maintains a disciplined approach to trading, adhering to stringent regulatory standards and employing robust risk management practices to safeguard capital and ensure trading integrity.

Overall, Tickmill's reputation as a dynamic and innovative proprietary trading firm is supported by its disciplined approach, advanced technology, and commitment to compliance.

Visit Tickmill

8. The Funded Trader Program

Pros

  • Large selection of trading options
  • Trading during news and weekend allowed
  • Refundable registration fee
  • 80% profit split for standard accounts and 90% with scaling
  • Relaxed trading rules
  • Designed to suit all trading platforms, including MetaTrader

Cons

  • Free trials are not currently available
  • Customer service can take a while to respond
  • New company, so trustworthiness cannot be confirmed

Best for: Relaxed trading rules
Maximum capital allowance: $1.5m
Leverage: Up to 200:1
Fees: $315 for $50,000 account size

The Funded Trader Program is an online prop trading firm founded in Texas in 2021.

As it is so new, there is no historical data to confirm if the firm is reliable and trustworthy.

It offers three different accounts – Standard, Rapid and Royal Challenge – which traders progress through during their trading evolution.

Traders can take home profit splits of up to 90% and can trade in forex, commodities, crypto and indices.

The trading rules are very simple to follow and traders are allowed to trade on the weekends when they reach the Royal Challenge.

Evaluation periods are 35 and 60 days, and traders are rewarded for consistency.

Visit The Funded Trader Program

9. SurgeTrader

Pros

  • Traders keep 75% of profit
  • One-time audition
  • Free trial available
  • Easy-to-use tools and interface
  • No minimal trading days
  • News and overnight trading allowed
  • Quick processing of profits
  • No recurring fees for successful active accounts

Cons

  • Non-refundable registration fee
  • High expectations in the audition

Best for: High trade amounts with few restrictions
Leverage: 10:1 for forex, metals and indices, 5:1 for stocks and 2:1 for crypto
Fees: Between $250 and $6,500 depending on the package you choose

SurgeTrader was established in Florida in 202, meaning it doesn’t have enough of a track record to state whether it is reliable or not.

There is a one-time audition process that is reported to have strict standards.

SurgeTrader also offers lots of trading options, including oils, metals, crypto, forex, stock and indices.

As a trader, you start on the intermediate account before moving to seasoned, advanced and, finally, expert.

Visit SurgeTrader

10. The 5%ers

Pros

  • Extensive support and educational resources
  • Funding up to $4m
  • Considered the best prop trading firm
  • Overnight and weekend trading allowed

Cons

  • No disadvantages have been noted

Best for: Forex traders
Leverage: 1:30 or 1:6, depending on the model
Fees: Instant: €235; Freestyle: €285; $100k Bootcamp accounts: €85

The 5%ers was founded in 2014 and is based in Israel. Its goal is to facilitate the growth and success of forex traders.

There are three packages: Instant, Bootcamp and Freestyle. The Freestyle package allows for 100% profit, Instant 50% and Bootcamp 80%.

Once you have completed one of these challenges, you have access to unlimited funding.

Visit The 5%ers

11. Fidelcrest

Pros

  • Funding up to $1m
  • Profit splits of up to 90%
  • Multiple bonuses and incentives
  • One-off entry fee
  • Account analysis
  • News trading allowed

Cons

  • Minimum 10 trading days
  • Low-profit share before verification
  • Long-term trading strategies are discouraged

Best for: Crypto
Leverage: 1:100
Fees: Between €649 and €1,599, depending on the account and funding

Fidelcrest was founded in Cyprus in 2018 and has a two-step evaluation process lasting 60 days.

If you are successful, there are two trading programmes: Micro Trader and Pro Trader.

Visit Fidelcrest

Top Proprietary Trading Firms of 2024 (6)Top Proprietary Trading Firms of 2024 (7)

Best Proprietary Trading Firms

12. City Traders Imperium

Pros

  • Excellent training and trading tools
  • Potential 100% profit split, though the standard is 70%
  • News and weekend trading allowed
  • Overnight holds allowed

Cons

  • Long evaluation period
  • Not ideal for scalping
  • Non-refundable registration fee

Best for: Gold and indices
Leverage: 1:10
Fees: From £109 to £640 for evaluation accounts and £109 to £3,099 for funded and forex funded accounts.

Based in London, City Traders Imperium was founded in 2014.

Traders can trade forex, gold, indices and shares.

There is a one-year evaluation process where successful traders can earn a 400% reward. However, that process can be skipped if you have the record to prove your trading ability.

Visit City Traders Imperium

13. 3Red Partners

Pros

  • Excellent software, tools and resources
  • International trading community

Cons

  • Lack of transparency

Best for: Advanced tools and resources

Very little information regarding profits and leverage is available for 3Red Partners.

What is known is that this Chicago-based company uses high-frequency trading platforms and specially created algorithms to read and interpret data, allowing traders to make well-informed trades.

Visit 3Red Partners

14. Akuna Capital

Pros

  • Focus on technologies and algorithms to improve trades
  • Accepts interns, intermediate and expert traders
  • Interns don’t need any qualifications, just talent
  • Educational resources
  • Career development opportunities

Cons

  • Lack of transparency

Similar to 3Red Partners, there is very little information about the prop trading firm.

It is another Chicago-based company, founded in 2011, and has a revenue of $100m to $500m.

Visit Akuna Capital

15. Belvedere Trading

Pros

  • Excellent learning programmes
  • Mentoring for new traders
  • Team-focused
  • Develops innovative software and algorithms

Cons

  • No transparency when it comes to the trader's benefit and employment package

Best for: Forex trading

As is the trend with most Chicago-based proprietary trading firms,there are very few details on Belvedere Trading’s leverage, profit split and trading programmes.

It was founded in 2002 and has a revenue of $16.58m, so it can be considered trustworthy, and it is obviously doing something right.

Its strength is the market-making trades, and it trades in indices, interest rates, energies, grains, softs, metals, equity index and commodities.

Visit Belvedere Trading

16. The Trading Pit

Pros

  • Up to $100m buying power
  • Up to 70% profit share
  • Excellent support and educational resources

Cons

  • No overnight holds
  • Unclear leverage
  • Minimum seven-day trade
  • Set a daily loss limit

Best for: Clear direction and scaling plan

The Trading Pit was founded in Cyprus and offers its best traders the chance to earn an official certification and become a fund manager.

It has an evaluation process where you need to prove your trading skills. Once you pass, you go on to become a Funded and Scaling Trader before finishing as a Trading Pit Expert.

Visit The Trading Pit

17. My Forex Funds

Pros

  • Large selection of trading options
  • Trading during news and weekend allowed
  • Refundable registration fee
  • Up to 85% profit split
  • Uses MetaTrader 4
  • Excellent support tools
  • Cover for beginner, intermediate and advanced traders
  • Relaxed trading rules

Cons

  • Only trades forex, crypto and metal
  • Customer service can take a while to respond

Best for: Skipping the evaluation process
Leverage: Up to 200:1
Fees: Registration fee between $499 to $2,450

MyForexFunds was founded in 2020 in Canada and has a two-step evaluation process that you can skip if you have enough experience.

It offers instant funding and provides customisable funding programmes.

Visit My Forex Funds

18. FundedNext

Pros

  • Maximum balance of $4m
  • Up to 90% profit split
  • Refundable registration fee
  • No restriction on trading style
  • Weekend and overnight holding allowed
  • An account manager for every trade

Cons

  • Minimum 10 days of trading
  • Still new so expect flaws
  • Consistency rules for express accounts

Best for: Relaxed trading rules
Leverage: 10:100

FundedNext is a new proprietary trading firm that operates out of the UAE, Bangladesh, UK and the US. Its partner broker firm is regulated by the Australian Securities and Investments Commission (ASIC), so the company does have a level of trust and reliability.

It offers low commissions and spreads and works with forex, indices and commodities.

Once you complete the two-step evaluation, the goal is simple: pick your funding model, stay profitable and get more funding.

Visit FundedNext

What Is a Proprietary Trading Firm?

Also known as prop trading, a proprietary trading firm is a financial company or commercial bank that recruits professional traders to make direct market gains.

A prop trading firm does not make trades on behalf of a client.

The capital for these trades is generated from the company or bank and used for trading in numerous assets including:

  • Stocks
  • Bonds
  • Forex
  • Cryptocurrencies
  • Indices
  • Futures
  • Commodities

It is also common for proprietary trading companies to specialise.

Traders who are hired by these companies are trained to earn profits. All profits made by the trader are split between the trader and the company.

To facilitate a trader’s success, the firm offers support by way of training, retraining, coaching, providing professional trading tools and more.

There are often stringent rules traders must follow, designed to encourage better profit levels and reduce losses.

When hiring, the best proprietary trading firms will start the recruitment process with a staged evaluation. This includes using a test account. These accounts prove whether or not traders have the skills required for the role.

Some trading companies will offer commission or profit splits during the evaluation, but others don’t.

Types of Proprietary Trading Firms

There are several types of proprietary trading firms, each with their own unique characteristics and strategies.

Here are some more details about the different types of prop trading firms:

  • High-Frequency Trading (HFT) Firms – These firms use complex algorithms and high-speed technology to execute trades in milliseconds or less. The goal of HFT firms is to take advantage of small price discrepancies in the market that may only exist for a fraction of a second.

  • Quantitative Trading Firms – These firms use mathematical models and statistical analysis to make trading decisions. They typically have a team of mathematicians, physicists, and computer scientists who develop these models and algorithms.

  • Market Making Firms – These firms provide liquidity to the market by buying and selling securities and derivatives. They typically make money by earning the spread between the bid and ask prices of the securities they trade.

  • Discretionary Trading Firms – These firms rely on the expertise of experienced traders to make trading decisions based on their analysis of market conditions. They may use a combination of technical and fundamental analysis to make their trades.

  • Event-Driven Trading Firms – These firms specialize in trading securities based on events such as earnings reports, mergers and acquisitions, and economic indicators. They analyze these events and try to predict how they will affect the market.

  • Arbitrage Trading Firms – These firms make profits by taking advantage of price discrepancies between different markets or securities. For example, they may buy a security on one exchange where it is undervalued and simultaneously sell it on another exchange where it is overvalued.

  • Multi-Strategy Trading Firms – These firms use a variety of trading strategies across multiple asset classes to diversify risk and maximize returns. They may use a combination of the strategies mentioned above, as well as other strategies such as trend following and mean reversion.

Benefits of Proprietary Trading Firms

Choosing the best proprietary trading firm for you can take time, but there are lots of advantages, such as:

  • Most firms offer funded trading, meaning you don’t need a large amount of capital investment. Often only a registration fee is needed.
  • Prop trading companies also often offer lots of training and retraining, with some encouraging social trading.
  • You have access to professional tools, information and top-level data software at either a reduced rate or no cost.
  • Prop Traders have access to the exchange
  • You don’t have to worry about conflicts of interest between companies and traders.

Drawbacks of Prop Trading Firms

Here are some potential drawbacks of prop trading firms:

  • Prop trading firms often take on higher levels of risk than other types of financial firms, which can lead to significant losses in volatile market conditions.
  • The profitability of prop trading firms is highly dependent on market conditions, which can change rapidly and unpredictably.
  • Prop trading firms may have limited diversification, as they may focus on a narrow range of financial instruments or trading strategies.
  • Prop trading firms may be less transparent than other types of financial firms, as they may not have to report their trades to regulatory authorities.
  • Prop trading is a highly competitive industry, and traders may face intense pressure to generate profits.
  • Prop trading firms require significant amounts of capital to operate, which can make it difficult for new firms or traders to enter the industry.
  • Prop trading firms may have high overhead costs, such as technology infrastructure and compensation for traders.
  • Prop traders may have limited exit opportunities, as the skills and expertise required for prop trading may not be easily transferable to other industries.

How to Choose a Proprietary Trading Firm

Before selecting and applying to a prop trading firm, you need to assess the pros and cons of each and decide which is the best one for you.

When evaluating the firms, consider:

  • Reputation – Check that the firm is profitable and reliable within its niche. This may take some lengthy research, and you may want to speak to other traders. TrustPilot is a great place to get started, as is Reddit and Quora. Those companies that are the most trustworthy are more transparent with company happenings.

  • Available Assets – Check which assets can be traded with each platform/company. If you want to specialise in just forex, then opt for a firm that has the resources for that. If you want to trade in all assets, you will need to find one that has a wide variety.

  • Fees – There are going to be fee structures. Sometimes this is just a one-off payment for the evaluation procedure. Others have monthly fees and fees for different types of trading.

  • Trading Platform – Ensure that the firm has a good trading platform that meets all the requirements. Ideally, you want to be able to test the platform first to ensure you are comfortable with the interface.

  • Trading Style – Different firms have different styles and approaches. Some rely on technical analysis, others on fundamentals. There are also some prop trading firms that encourage short-term strategies and others that allow for overnight/weekend holds. Decide what trading strategy you want to adopt and find the firms that accommodate it.

  • Customer Support – Customer service is important for working with any firm. Some have better rates of responding, a better reputation or more communication methods.

Hedge Fund vs. Prop Trading

Hedge funds and prop trading are both types of financial firms that engage in trading activities, but there are some key differences between them:

Objective

Hedge funds aim to generate returns for their investors while minimizing risk.

They typically use a variety of strategies, such as long/short equity, global macro, event-driven or relative value, to identify market inefficiencies and make profitable trades.

Hedge funds may also use leverage and derivatives to amplify their returns or reduce their risk exposure.

In contrast, prop trading firms aim to generate profits for their own account.

They typically use a combination of fundamental analysis, technical analysis and other quantitative methods to identify market opportunities and make trades that are expected to be profitable.

Capital

Hedge funds raise capital from external investors, such as high-net-worth individuals, institutional investors or pension funds, and use that capital to invest in various financial instruments.

The amount of capital invested in a hedge fund can vary widely, from a few million dollars to several billion dollars.

In contrast, prop trading firms use their own capital to trade financial instruments.

The amount of capital available to a prop trading firm depends on its size, profitability and risk management policies.

Risk

Hedge funds typically seek to manage risk by diversifying their portfolios and using hedging strategies to reduce exposure to market fluctuations.

They may also use stop-loss orders and other risk management techniques to limit losses.

Hedge funds may also be subject to restrictions on leverage and risk-taking.

Prop trading firms, on the other hand, often take on higher levels of risk, using leverage and other financial instruments to amplify their returns.

Prop trading firms may also be more focused on short-term trading opportunities, which can increase their risk exposure.

Regulation

Hedge funds are subject to various regulatory requirements, such as registration with the Securities and Exchange Commission (SEC) and compliance with securities laws.

Hedge funds may also be subject to regulatory oversight by other agencies, such as the Commodity Futures Trading Commission (CFTC).

Prop trading firms are also subject to regulation, but their activities may be subject to less oversight than those of hedge funds.

Prop trading firms may be subject to regulations related to market manipulation, insider trading and other types of fraud.

Structure

Hedge funds typically have a management fee and a performance fee, and their investors may have restrictions on withdrawing their funds.

The management fee is typically a percentage of the assets under management, while the performance fee is typically a percentage of the profits generated by the hedge fund.

Prop trading firms may have a different compensation structure, such as profit-sharing agreements or bonuses based on performance.

Prop trading firms may also be more focused on short-term profits, which can lead to a different compensation structure.

Overall, hedge funds and prop trading firms have different objectives, sources of capital, risk profiles, regulatory requirements and compensation structures.

While both involve trading financial instruments, they are distinct types of financial firms.

How to Become a Prop Trader

Inspired to become a prop trader after reading this article? Here are our tips to help you get started.

Remember, becoming a prop trader requires dedication, hard work and a willingness to take risks.

It may take time to build up the necessary skills and experience, but with persistence and determination, you can achieve your goals.

Step 1. Gain a Solid Understanding of Financial Markets and Trading

Start by learning about the basics of finance and trading, including stocks, bonds, commodities, futures, options and forex.

You can do this by reading books, taking courses, attending seminars or even pursuing a degree in finance, economics or a related field.

Step 2. Build a Track Record of Trading Success

Start trading on your own, even with a small amount of capital.

This will help you gain experience and develop your trading skills.

You may also want to consider joining a trading competition to showcase your skills and gain recognition.

Step 3. Get Licensed

Most prop trading firms require you to have a securities license, such as the Series 7 or Series 56.

These licenses demonstrate that you have a solid understanding of financial regulations and ethical standards.

You must pass a qualifying exam to obtain your license and then pay a fee to obtain the licence itself.

The exam will need to be with the appropriate regulatory organization. For example, in the US, the Financial Industry Regulatory Authority (FINRA) administers most securities licensing exams.

Step 4. Network

Reach out to prop trading firms and other trading professionals to learn more about the industry and potential job openings.

Attend industry events, conferences and meetups to expand your network and gain exposure to new opportunities.

Step 5. Get a Job as a Prop Trader

Once you have identified a prop trading firm that interests you, submit an application and prepare for the interview process.

Be prepared to discuss your trading experience, track record, and why you are interested in prop trading.

Frequently Asked Questions

There is no minimum or maximum a prop firm trader can make. Depending on your skill level, you can expect to make around £200,000 a year, increasing to over £1m as you become a more senior trader.

If you are a competent trader, then, yes, prop firms are worth it. You find one that suits you, register, pass the evaluation, pay your fee and start trading with the funds now available to you.

The more successful and consistent you are, the more funds you will have access to.

While it isn’t always essential, a degree in a related field such as business, economics or finance will help you with your trading decision.

However, as this information is something you can learn on the job, your skills and attributes have more value.

As with any type of trading, there is always a risk. Markets change and events happen that affect all stocks and shares.

Most proprietary trading firms do ask for a joining fee or fee of some sort upfront.

This figure varies greatly between the firms and is dependent on the type of programme or account you want to open.

The best way to get a job in a prop trading firm is to first get a degree and/or master’s in a related field such as finance, economics, computer science, statistics or business.

While studying, you should look to apply your knowledge through work experience and internships. Assuming you have a good track record, you will be able to apply for a position in a prop trading firm.

The main difference between a hedge fund and a prop trading firm is that hedge funds use their clients’ money to make investments. A prop trading firm uses its own money.

Jane Street Capital is believed to be one of the biggest proprietary trading firms based on profits. In 2020, Jane Street reported it traded more than $17tn worth of securities.

The tax process for prop traders can get very complicated, as there are a lot of technicalities and grey areas in legislation.

It is advised that you speak with an accountant, financial advisor or lawyer to ensure you don’t make any mistakes. The possible taxes you will have to pay are National Insurance, income tax and capital gains tax.

Yes, many prop firms trade stocks. These include SurgeTrader, Fidelcrest, The Trading Pit and LuxTrading Firm.

Final Thoughts

Proprietary trading, like all trading, comes with a lot of risk and caution should be taken when making trades.

A large number of the best prop trading firms have stop-loss and minimum profit loss rules in place to minimise damage.

That being said, if you have the knowledge and talent for trading, then this can be a lucrative career option.

Before committing to one firm, remember that there are hundreds of firms across the globe and some are better than others. Do your research, check the trustworthiness of the firm and confirm that it supports your trading style.

WikiJob does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circ*mstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.

Top Proprietary Trading Firms of 2024 (2024)

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