Top 10 prop firms for a private trader

For a long time, financial markets remained inaccessible to those with small capital. Buying just one lot of not-so-expensive shares required thousands of dollars. Over time, the entry threshold to the market decreased, but this led to another problem for beginners – they could trade, but could not earn enough. The solution to this situation was the emergence of prop firms. They changed the industry and made trading more accessible.

How prop trading firms help increase your income

To understand how everything works in proprietary trading, we should consider the case of a typical retail trader. We will rely on statistics, which says that, on average, traders have deposits of up to $600. This does not mean that everyone has this amount, some traders have capital in the tens of thousands of dollars. But there are also many traders with balances of $100-300. Thus, we get the average value.

For example, a trader has a small capital. They have also been trading for some time using/according to their strategy, which they have tested and know how to use effectively. According to the same statistics/statistical data, on average, a profitable trader has a trading income of up to 10% per month. It is important to note that this indicator remains consistent for the trader over the months. This means that in some months the income is higher, and in another it is lower, but over the months it is stable. This is a very important aspect of prop trading, which we will discuss in more detail below.

With a 10% monthly income and a $600 deposit, a trader can expect to earn $60 per month. Not a huge amount, is it? Now let’s look at the effort required to achieve this result. High profitability is usually achieved by switching to intraday trading., which is quite labor-intensive. So here are just a few of the complexities of such trading:

• Constant monitoring of charts. At any moment, the price may start moving, especially at the beginning of trading sessions.
• The need to adjust to the trading schedule. A trader strives to work during at least 2 sessions every trading day.
• Studying the news calendar and publication schedule. Besides, it is Important to follow the news feed, because sometimes it happens that a statement by an official sends prices up or down.

Let’s consider the average amount of time a trader spends on such trading, it is 4 hours a day. If we compare it with a regular 8-hour workday, the conclusion is disappointing. Basically, a trader works part-time, but earns $60 a month. Such work will not allow living off trading and will also take a lot of time. Some try to combine trading with their main job, but in this case, the profitability becomes much lower. In addition, a trader is left with no free time at all.

In such a situation, traders usually try to increase their income. Surely, many have seen chart images with very rapid growth. Indeed, there are examples of a quick boost where traders make 50-100% and even more per month. However, all such attempts to quickly increase the deposit invariably lead to loss of funds. After all, to earn more, a trader needs to either increase the deposit or increase their trading lot, which means that a trader will deviate from the rules of their trading system and violate all basic calculations. Risks increase disproportionately to profit, so all such accounts always end the same way – they are reset.

Here we come to the solution that prop firms offer in this situation. The idea of ​​prop trading is not new. To understand how it appeared, we need to delve into its history and answer the question: what is prop desk trading? In large financial companies, there has always been a large capital that was distributed among many traders. One person cannot effectively manage the fund and conduct absolutely all trading operations independently. Distributing the capital not only reduces the load on the fund but also allows for diversification. For example, in a department with 100 traders, some of them may have bad days with losses. However, the other traders will generate profits. This balances the overall fluctuations and makes the capital growth smoother.

Private companies decided to follow the same path, and thus the first prop firms appeared.  They operated on the principle of funds –  distributing capital to traders who worked in their offices. However, the situation has changed over the last 30 years and now there is no need for a trader to be present in the office. Today, it is possible to become a prop trader remotely. Moreover, some companies have even developed specializations. For example, it is possible to choose a forex funding program or find a futures trading prop firm. Nowadays, selecting the right option has become much easier – you can explore the list of prop trading firms we offer and create a list of suitable ones.

Modern prop firms offer traders the capital they so desperately need. These are companies where former traders often work, who have reached their capital goals and now act as investors. The income of a prop company is lower than in classic trading, but the company itself spends less time, merely controlling the capital.

So, how do such companies work and how prop trading firms make money? The basic principle of all prop firms is simple. It consists of increasing your capital through the trader’s trading ideas. In practice, this usually works as follows:

• The company has many accounts with certain amounts. These accounts are managed by traders who have full access. For example, if a trader earned $500 in a day, the company would take $100 of the profit as a fee for providing the capital.
• Prop firms often offer accounts that can be conditionally classified as demo accounts. This is a simulated environment where a trader has capital, and everything they earn will be real money. The company will also take a portion of the profit. What’s the point of this? The prop firm simply observes the trader’s actions. The trader becomes a source of signals, and the company can use them as it wishes.

It is important to highlight the key aspect of proprietary trading, which has become the driver of its popularity growth. A prop trader may make a loss, sometimes this amount can be significant given a large balance. However, they will not be responsible for such losses. In this situation, the company loses money, and a trader simply loses the account. Working with trading prop firms, a trader operates within the framework of an agreement signed by both parties – the trader and the company. Therefore, the prop trading environment is highly transparent. You get capital, and the company makes a profit from your trades. If you incur losses, it means that they are the company’s losses, not yours. But how do prop firms forex or other companies decide who to give capital to work with? Obviously, there will be many willing, including those who don’t know how to trade at all. This is indeed true, which is why prop firms conduct a challenge. It helps to identify good traders. Let’s consider this in more detail.

Review of challenges in top 10 prop trading firms

The challenge is an integral part of the entire prop trading industry. It is conducted not only by top proprietary trading firms, but also by much smaller companies. What is it for? For example, you trade on forex and have extensive experience and good statistics. But the company does not know this, and proof such as account statements will not be accepted. The company wants to make sure of your skills for itself, so it offers you to take a forex challenge funding. What does the challenge consist of? This is a list of tasks that allows to see all the qualities of a trader in a real market. Below is an example of one of the challenges and this is how the tasks look like:

• Earn a 10% profit. You are given an account, and you need to achieve a profit of at least 10% of the amount initially in your account. If it was $20,000, you need to earn $2,000.
• Control risks. You must not incur a loss greater than 5% in one day. In our example, this would be a loss of $1,000. There is also a loss limit for the entire account during the challenge. It is 12%, or $2,400. The account must not fall below $17,600 for the entire duration of the challenge.
• Earn 0,5% or more for several days. Prop trading firms usually set the number of such days in the range of 1-30, most often 3. This means a trader must demonstrate that their earnings were not accidental but systematic.

Trading days with a set profit bar help filter out traders who open trades at random. For example, if you take a large volume and randomly buy or sell, there is a good chance to guess correctly and earn the required 12%. The profit condition will be met, but not the trading days. This approach is typical for almost all forex proprietary trading firms. The company understands very well that a trader may guess correctly, so they require showing profitable trading skills over several days.

The challenge requires a participation fee. This fact scares off many beginners, but at the same time it is a filter. The company will not waste its time and resources on traders who are not confident in themselves or are not serious. The cost of the challenge is not fixed, there are challenges with quite low cost, for example, $ 30-40. Why do they have different costs? The fact is that the challenge completely determines your funded trading program. Trading prop firms provide a choice. A low-cost challenge will allow you to get a funded account with a balance of $ 5,000-10,000. More expensive challenges will allow you to get a funded account for up to $ 300,000, and in some cases, even more. Absolutely all the conditions of trading funded accounts are formed in the challenge. These include the following:

• The balance of your funded account. The higher the cost of the challenge, the larger the balance.
• The account closure conditions. These are those drawdown limits. The conditions will continue to apply to the funded account.
• Profit distribution. This condition determines what percentage of your profit the company will take.

In addition to the listed conditions, one should also remember the trading terms. They are determined by the challenge. What does this mean? Let’s imagine that you’re choosing regular brokers, not prop trading firms. What parameters would you look at? Most likely, these would be leverage, trading platform, commissions, spreads, and the list of trading instruments. The same selection criteria apply to trading prop firms and their challenges. You check what you can trade and in which terminal. This is important for maintaining your familiar working style and format. You shouldn’t feel a difference between your usual trading and proprietary trading.

In some prop trading firms no challenge is an option that is designed to expand a trader’s opportunities. It works on a simple principle: you buy a challenge, but aren’t required to demonstrate skills. You get an instant funded account with a certain amount. Of course, the trading conditions will be much worse compared to those offered by challenges with an actual trial. Even best instant funding prop firms’ terms can’t compete with what you can get after passing a relatively cheap and simple challenge. This makes sense: the company wants to entrust significant capital only to those who’ve proven themselves. Note that there is no such thing as a prop firm demo account — you will not get an opportunity to practice before starting the challenge.

Not all traders manage to pass the challenge. Let’s assume that you didn’t succeed on your first attempt. This is no reason to be upset, because prop firms won’t close access to you. You will only lose the money you paid for the challenge. After that, you can try again, and the number of attempts is unlimited. You can take the challenge as many times as you want. Moreover, you can have different accounts not only within one company but also have accounts in different trading prop firms. No one restricts you, but it is important to remember to dedicate enough time to each account, because even a small mistake can lead to the loss of a funded account.

Conditions of working with prop firms

For many traders, proprietary trading is an opportunity to finally make trading their job. But to achieve this dream, it is important not only to know how to trade but also to understand all the details. What does this mean? You have probably seen terms in the conditions of various brokers that seem strange at first glance. These include bans on scalping, bans on hedging positions, and so on. Prop firms often impose even more serious trading restrictions. For example, a company may prohibit news trading. Why do they do this?

The fact is that when copying such trades, stop loss slippage may occur. If prop trading firms use your signals, they open positions according to yours, only using their own funds. Often, this process is automated. And if you open a huge position right before the release of important news, your account may fall far below the level set in the conditions. You will simply lose your funded account, while the company will incur huge losses on its account. This is where such restrictions come from. There are others, such as a ban on using EA for prop trading. At best, you may be asked for the source code of such an advisor to understand how it works and prevent the opening of trades with huge volumes. There is also often a ban on martingales. This strategy can be effective, but only when profits are constantly withdrawn. Otherwise, soon or later, the profit along with the account will eventually be lost.

In light of the above, you should carefully study the conditions set by trading prop firms. They all have them, including the best funded broker. Your task is to understand what suits you and what does not.

Main characteristics and parameters of trading in top 10 prop firms

Trading in any prop firms is fully regulated. You know all the conditions in advance, which, as we noted, may differ across different challenges. Let’s list the most critical parameters to focus on when selecting a challenge:

• Balance of the future funded account. To compare conditions across different prop trading firms, you can use a simple formula: calculate how much balance you receive for every $10 paid for the challenge. Obviously, the more you get, the higher your profit. Cheap challenges provide less capital, expensive ones more. In the mid-price category, you can expect around $10,000 for $100-130.
• Percentage of profit taken by the company. This is simple: the less the company keeps, the more remains with you. Top prop trading firms in the UK offer traders up to 90% of profits. Some prop trading firms might take as little as 5%. This is not a very big difference but becomes significant with larger sums.
• Trading conditions. Earlier, we mentioned that here you evaluate the trading conditions of prop firms as brokers. Top 10 trading prop firms offer conditions similar to top brokers: tight spreads, low commissions, diverse asset categories, etc.

Another critical factor is how often and through which methods a company allows profit withdrawals. After all, you need not only to earn but also to withdraw your profit. Thus, you should review non-trading operation terms. Most trading prop firms support multiple payment methods: bank transfers, cards, and even cryptocurrency. Usually, stablecoins on various blockchains are used.

As for withdrawals, there may be additional restrictions, such as timelines and requirements. For example, some prop trading firms might require earning at least 10% profit before allowing withdrawals. As for timeline-wise, it is simple: it is almost always possible to withdraw funds every 7-14 days. Is it possible to speed up this process?  Sometimes. Many companies from the top 10 prop firms have a whole section with additional features. They are paid, and their cost is included in the final price of the challenge. These features are called Add-ons. What do they represent? Let’s consider the most popular ones among traders:

• Improvement of trading conditions. In this case, the company increases the drawdown limit.
• Reducing the period between profit withdrawals. You will be able to take profits more frequently.
• Challenge fee refund. The company will refund the cost of the challenge if you pass it.

On average, all three Add-ons increase challenge costs by 50%. ЕIf confident, you can purchase a challenge with enhanced terms and even receive compensation. Notably, some top 10 prop firms refund 100% of challenge fees without Add-ons.

Advantages and disadvantages of prop trading firms

The biggest advantage is that prop firms make the dream of significant earnings achievable. Of course, only if you pass the challenge. Imagine trading with a $600 deposit, earning $60/month. Then, after passing the challenge for $130 and obtaining a forex funded account UK for $25,000, your monthly earnings could jump to $2,500. This is not the limit! By earning on your first funded account, you can easily save up money for a more expensive challenge. For example, you could buy a challenge for $1500 and then get a funded account for $300,000. Note that prop trading firms often run promos, offering up to 20% discounts on challenges—monitor their updates to reduce costs.

As for the disadvantages, only one can be highlighted.. Typically, trading prop firms design their websites in such a way that traders often find it difficult to locate the section with key terms and conditions. And as you’ve already guessed, these can be extremely important. To avoid misunderstandings, look for the FAQ section or the detailed terms and conditions section, and only then proceed to consider the challenges. It is important, because it may turn out that you are trading with the help of a robot, but they are prohibited. Or you might be a scalper, while the company prohibits closing trades within several hours of opening them. Trading prop firms mostly have decent customer support teams. If you have a question, don’t hesitate to ask their specialists. The better you understand all the details, the more effective your trading will be. This is especially relevant if you want to learn how to get a funded crypto account. Crypto prop companies usually operate directly with exchanges, and it can be challenging to navigate a new platform and it’s trading rules.

How to choose the best company among top 10 prop firms

In the world, there are several dozen large prop firms and hundreds of small ones. Each company has its strengths and weaknesses. For example, it happens that a trader sees excellent trading conditions, but the cost of challenges is too high. Or a trader finds a good challenge, but the withdrawal of funds is only once a month. There are many parameters that you should consider. Try to make a list of priorities for yourself without a list of top 10 prop trading firms – how much you want to have in your funded account balance, the maximum cost you are willing to pay. You should also consider what you want to trade and on what platform. Once you do that, the list of suitable companies will be significantly reduced. From the remaining ones, you can choose what you need.