What is Prop Trading?
Prop Trading or proprietary trading is a term used for the non-client based, in-house trading activities conducted by investment firms with their own accounts without any prior-established relationships to external clients. This is when traders trade a number of global markets including stocks, forex and commodity all in one day and employ leverage. The prop firms also profits from the traders’ successes; as a result, it generally provides its traders with significant technological leverage and large amounts of capital to trade.
What is a Prop Trading Firm?
Prop Trading Firm is a company that gives its traders access to capital to trade financial markets. Firms like this will tend to include large amounts of training, resources and technology in order for traders from anywhere around the world could actually put themselves into a situation where there are going that is successful. The company, while putting the capital up to make trades on behalf of its clients, gains a portion of their profits in return. Prop firms can exist physically (where the trader goes to work in an office on a real trading floor) or virtually (the vast majority of prop firms today), where traders set up their remote operations and connect with the firm for funding. All of this can be essential but these firms are responsible for helping to develop your trading and allow access more capital.
What Qualities Make a Great Prop Trading Firm?
So, what differentiates a good prop trading firm?
– Trust: A top prop firm with a good record of honoring profit-sharing agreements and being upfront in its operations.
-High-Quality Support: Comprehensive client support which should also incorporate educational resources, mentoring and a community involvement.
-Technology: Access to Advanced trading platforms and tools necessary for successful trading.
-Profit Sharing: The base profit for all traders, with a Performance-based twist that gives successful capital allocators an increasing share of profits.
-Transparency: An open declaration showing all the fees and costs of operating trading programs.
What Signifies a Proper Trading Firm as Bad?
This type of red flags include the following:
– Unrealistic promises: Guarantees of great wealth with very little work or skill.
– Excessively high Fees: High or hidden fees that protect company revenues more than individual trader.
-Rule Constraints: When trading is bound by too many rules limiting the breadth of strategy execution.
-Transparency: Admittedly hidden fees or pull-over billing practices.
– Slow Payments: Challenges with end-of-month pay outs.
The Most Popular Prop Trading Firms and Funded Programs
FTMO
Pros:
– Longtime well-known firm with good feedback from the community
– Transparent fees.
– Up to 90% profit share.
Cons:
-Trading software limitations (what you can and cannot do like news trading, holding trades into O/N).
-10% Target in FTMO Challenge
-Continues to use demo accounts even in post-evaluation.
The Forex Funder
Pros:
– Funding up to $2.5 million
– Up to 95% profit share.
– EAs and news trading are permitted in less restrictive trading environs including no FIFO-rule, widening of spreads during high-leveraged periods (if applicable), trailing stops etc.
-A choice is given between phases which are evaluated more quickly versus those that take longer to evaluate.
– Unlimited time for Evaluation.
Cons:
– Expensive to join.
– Achieving profit target in early days.
-Drawdown limit (based on equity)
– Not traded demo accounts on the funding stage.
E8 Markets
Pros:
– Low joining fee.
– E8 Markets has relatively conservative profit targets.
– Evaluation phases have no time constraints.
-Custom evaluation goals
Cons:
-Competitive drawdown limits but not the lowest among competitors
– Low-level barrier to entry for proprietary rating ramp.
-Maximum 80% Profit Share.
– Trading on demo accounts.
The 5%ers
Pros:
– The5ers offers funding up to $4 million.
– Profit share up to 100%.
-Financial Instruments- Trading styles are flexible.
-Transparent prices and affordable programs
-Material for Education
Cons:
-Hard for beginners with a complex program structure
– Some programs have a hefty price tag to begin
-Lower leverage in a select few programs.
Funded Next
Pros:
– Fundednext offers funding up to $4 in million
– Up to 90% profit share.
-Profit sharing during challenge phase available
– Challenge without time limits
-Calculate drawdown based on balance.
Cons:
-Complex challenges with beginner structures.
– Short operating history.
-Demo account trading even on live accounts(Schedulers).
Funded Trading Plus
Pros:
-Different trading programs
– Funded trading plus has a high assortment of trading instruments available for the site
-Corona Monthly offer // Trading Days Unlimited
– Weekly payouts.
-Participation in profits from 80% up to 100%.
Cons:
– Available on weekdays for some programs.
-High-profit targets in the context of leverage.
– Trading on demo accounts.
– Maximum leverage of 30:1.
Best Prop Firms in Europe by Country
Germany
Germany is home to a variety of well-established prop firms which offer hands-off accounts for good traders. This means a dramatic leverage and support for many different instruments. Germany is one of the hottest places in Europe to prop trade by these kind of companies. German prop trading funds operate with very high entry requirements, allowing top-tier traders to get large fundings.
Italy
Several high profile international prop firms operate in the Italy market. As prop traders in Italy, these will give the lowest spreads possible with flexible stop-loss requirements and institutional-level capital to trade. Italian prop trading firms are globally recognized for their algorithmic/ creative/high frequency low-latency strategies and also the strong top notch of support they provide.
Portugal
The best prop group in Portugal also offers remote trading with competitive profit splits that can rise as much as 100%. It gives Portuguese traders access to large leverage account sizes and advanced trading platforms which will further increase the ability for great profits. The Portuguese trading environment is known for it flexible and trader centric nature.
France
Leading Technologies and Platforms Prop trading companies in France back avant-garde infrastructure for this trade including high-end MT4. French traders have access to powerful leverage and extensive education, which makes prop trading particularly amenable in France. In some cases, French prop trading companies offer complete training program and mentorship to train the traders, while they develop their own skills and strategies.
Russia
Luckily, most prop firms in Russia seem to offer a wide range of instruments and decent profit splits. Russian traders are also always welcome to combine into international companies, which allows them to trade with advanced brokers and provides more funding (USA$) so that they can got hedging options for profitable trades. Russia has one of the most resourceful prop trading communities known for their ability to be innovative and think outside-the-box.
Choosing the right prop trading firm can be very beneficial for traders throughout Europe to achieve high success within this fast paced, and competitive environment.
