Proprietary trading, also known as ‘prop trading’, is used to exclusively refer to a financial firm or commercial bank that invests its own money in the markets for profit, rather than earning commissions by trading on behalf of clients.
Although these prop trading firms still exist, more and more forex prop trading firms started offering individual traders the same lucrative opportunities that were previously only reserved for firms with a lot of financial backing.
These days, there are many forex prop trading firms around that seek to fund talented individual traders to trade their own strategies from the comfort of their own homes.
In this article, we will explore what prop trading is, how it works, and provide a review of the best prop trading firms available to forex traders today.
What is Prop Trading?
Prop trading firms, as related to large financial institutions, seek to make higher quarterly and annual returns by actively trading the markets, rather than relying on the commissions earned from trading their clients’ money.
This type of trading is mostly speculative in nature and can include a whole variety of different derivatives and complex investment methods.
Prop trading for individual traders, on the other hand, generally involves an evaluation period whereby each applicant needs to show that they can manage risk properly by meeting certain trading objectives.
Because of the risky nature involved with trading the markets, each trader needs to show that they have the discipline and experience necessary to pass these trading objectives before they are allowed to trade for a forex prop trading firm.
Before we look at the best forex prop trading firms that have made our list, let’s discuss the most common pros and cons that you need to consider before you choose the prop trading firm that is right for you.
forex Prop Trading firms Pros and Cons
With so many remote online prop trading firms to choose from, it goes without saying that you need to practice your own due diligence when choosing the right prop trading firm for your needs. Here is a quick summary of the pros and cons associated with prop trading firms.
Pros:
- Capital funding. Once you have passed the evaluation phase, you get to trade with the firm’s money without risking your own.
- Various funding tiers. Before you get started, most prop firms will present you with various funding tiers to choose from that may vary in size.
- Traders who pass the evaluation phase and manage to perform at a high level will often get access to more capital to quickly scale their accounts to larger sizes.
- Structured risk management. Prop trading firms require their traders to follow strict risk management procedures to protect their own capital and to force traders to conduct their trading professionally.
- Flexible trading hours. Instead of rigid office hours, prop trading firms allow their traders to work at hours that are convenient for them.
- Trading strategy. Most of the best prop trading firms will allow traders to use their strategies if they align with the firm’s risk management requirements.
- Variety of trading platforms. Good prop firms will have a variety of popular trading platforms to choose from.
Cons:
- Trading style. Prop trading firms generally allow day trading activities only and do not cater for other trading styles that require longer holding periods.
- Limited trading instruments. Not all prop trading firms give their traders the flexibility to choose from a wide range of trading instruments.
- Strict trading rules. Although prop trading firms need to make sure that their traders stick to stringent trading rules, it might not be everyone’s cup of tea and prove too much for some to handle.
- High profit splits. All prop trading firms will require a profit share from their traders. After all, they are taking most of the risk. However, some firms might want to keep an unreasonable percentage of your profit, which benefits them more than you over the long run.
- Hidden fees. Not all firms are transparent about their fee structures. Make sure that you know all the costs involved before you start – for example, trading commissions.
The Best Forex Prop Trading Firms
Considering all the pros and cons mentioned before, here is a list of our top five best prop trading firms with an overview of each.
1. FTMO
FTMO has become increasingly popular in recent years and has a great reputation in the prop trading industry. Based out of the Czech Republic, it has created an international fund based on retail traders that offer a diversified portfolio to investors, while helping traders to reach financial independence.
Key stats include:
- Up to 90% profit split.
- Various funding tiers, ranging from $10,000 to $200,000.
- Two steps to become a funded trader: the FTMO Challenge phase over a 30-day trading period and a Verification phase over a 60-day trading period.
- A minimum of 10 trading days per step is required to become a FTMO funded trader.
- The firm refunds the fee paid for your selected tier with the first profit split when you become a FTMO funded trader. No recurring membership fees or hidden charges.
- Wide selection of instruments, including Forex, Commodities, Indices, Crypto, Stocks and Bonds.
- Choose from a variety of trading platforms.
- Hold trades over weekends – No
2. The Funded Trader
The Funded Trader was launched in June 2021 and founded by traders with extensive knowledge of the industry. It offers one of the highest scaling plans in the industry and is committed to excellent customer support.
Key stats include:
- Up to 90% profit split.
- Various funding tiers, ranging from $50,000 to $400,000.
- Two phases to become a funded trader: Phase 1 over a 35-day trading period and Phase 2 over a 60-day trading period.
- A minimum of five trading days per step is required to become a funded trader.
- The firm refunds the fee paid for your selected tier when you become a funded trader.
- Wide selection of instruments, including Forex, Commodities, Indices and Crypto.
- Choose from a variety of trading platforms.
- Hold trades over weekends – Yes.
3. BluFX
BluFX requires no performance challenge to become a funded trader with relaxed trading requirements – making it a perfect choice for beginner forex traders who require immediate funding.
Key stats include:
- 50% profit split.
- Two funding tiers: the Lite Package with $25,000 capital funding and the Pro Package with $50,000 capital funding.
- Low recurring monthly fees for each funding tier.
- 29 major and minor currency pairs plus Gold.
- Only one trading platform. Access from your PC and mobile device.
- Hold trades over weekends – Yes, but on request.
4. MyForexFunds
MyForexFunds was founded in July 2020 and is a leader in the forex prop trading firm industry. It currently has more than 300 staff globally and deals with more than 2,000 customers a day.
Key stats include:
- Up to 85% profit split.
- Three different account types – for beginner, experienced and professional traders.
- Various funding tiers depending on the account type.
- Huge scaling plan up to $1,350,000 for funded traders.
- Large online Discord community.
- Excellent 24/7 support team.
- Wide selection of instruments, including Forex, Commodities and Indices.
- MetaTrader 4 and 5 platforms only.
5. City Traders Imperium
City Traders Imperium is based in London and is run by a team of highly skilled traders with over four decades of experience.
Key stats include:
- Up to 85% profit split.
- Funded account sizes from $20,000 to $70,000.
- Instant funded accounts of various sizes – available for a one-time fee.
- Profit share from 50% to 70%
- Huge scaling plan up to $2m.
- Easy evaluation rules to follow.
- Minimum active trading days ranging from 0 to 30 depending on the evaluation tier.
- Access to forex educational material.
- Wide selection of instruments including Forex, Commodities and Indices.
- Only MetaTrader 5 platform available.
Are You Ready to Trade with a Prop Firm?
With so many forex prop trading firms to choose from, it is understandable that you might get confused with all the different benefits, funded account sizes and trading rules that they offer. This can make it difficult to choose the best prop trading firms that are right for you.
It might be easy to get enticed by the large sums of funded trading accounts, especially if you are an inexperienced trader. Remember that these prop trading firms are looking for traders who display solid risk management skills and that can stick to certain rule-based parameters.
These are skills that come with experience and the right mindset to become consistently profitable. Seeking funding from a prop trading firm might therefore not be for everyone unless you are willing to build up your experience and put in the hard work necessary to become a successful trader.
Hopefully, this article gave you a good starting point for choosing the best prop trading firms, but in the end, it is up to you to research each firm that appeals to your goals and experience.
Forextraders' Broker of the Month
BlackBull Markets is a reliable and well-respected trading platform that provides its customers with high-quality access to a wide range of asset groups. The broker is headquartered in New Zealand which explains why it has flown under the radar for a few years but it is a great broker that is now building a global following. The BlackBull Markets site is intuitive and easy to use, making it an ideal choice for beginners.