Any broker or prop trading firm can hang out a shingle, open a fancy
website and come across as a reputable operation. When you look beneath the surface you will find there are differences.
There are enough stories about prop firms springing up overnight and closing just as fast that you need to do your due diligence before signing up for a trading evaluation test.
In this regard, we have compiled a list of prop trading firms that we consider quality operations that we help narrow your choices.
Prop Trading and what is it all about
The world of trading can be an intimidating and complex endeavour. The upfront costs associated with trading, such as brokerage fees, software subscriptions, and the initial capital required, can often act as significant barriers that deter potential traders from venturing into the market. Moreover, there’s always the looming fear of losing your investment and being forced to start from scratch. However, amidst these challenges, a transformative concept has emerged in recent years – funded trading accounts.
What is a Funded Trading Account?
Funded trading accounts provide a safe harbour for aspiring traders, allowing them to explore and participate in the market without risking their personal finances. Essentially, traders can execute trades using a third-party’s capital. If their trades prove to be profitable, they retain a portion of the earnings as their own.
A funded account is a trading account backed by a third-party entity, typically a proprietary trading firm. These firms provide the necessary capital for traders to engage in trading activities, and in return, they receive a percentage of the profits generated by the traders they support. This unique arrangement enables traders to access the financial resources required without the burden of using their own capital to back the trades or the constant fear of significant financial loss of that trading capital.
How Do Funded Trading Accounts Work?
The process of acquiring a funded trading account is relatively straightforward yet rigorous. Traders typically undergo a comprehensive trading evaluation or Audition to assess their trading skills and abilities. Upon completing an Evaluation or Audition, traders are awarded a coveted funded trading account with the necessary capital to execute trades. This opportunity allows traders to showcase their trading skills and demonstrate their potential for profitability.
Once traders have been granted a funded account, the profits they generate from their trades are divided between themselves and the firm backing their account. The profit-sharing percentage typically falls within the range of 75% to 90%, with the remaining percentage allocated to the firm that funded the account. This not only incentivizes traders to perform at their best but also offers the potential to make extra income.
Rules and Regulations
While funded trading accounts provide a safety net for traders and eliminate the upfront capital commitment associated with trading, they also come with their own rules and regulations. Traders are typically subjected to certain trade size limitations and must consistently avoid daily and total loss limits to maintain the funding status of their account. These stipulations ensure that traders remain actively engaged in profitable trading activities and manage risks responsibly.
It’s crucial to adhere to the rules during an audition and within a funded trading account. Each firm has its own set of regulations, and it’s imperative to comprehend and comply with them. Some rules may encompass loss limits, profit goals, and risk management principles. During the SurgeTrader Audition, account access will be revoked in the event of a hard breach. If a funded trader incurs a hard breach of the trading rules, trading account access will be revoked. In a SurgeTrader account, any profits earned by the trader at that time will be distributed, but that is not necessarily the case with other firms that provide funded trading accounts! In case of a hard breach, traders can always start again with another SurgeTrader Audition. A 20% discount is available for a repeat Audition.
Why Funded Trading Accounts?
For disciplined traders who can navigate and adhere to the rules, funded trading accounts represent an exceptional opportunity. They offer a viable option for individuals with limited capital who wish to participate and thrive in trading. Furthermore, funded accounts provide a risk-free environment for traders to test their strategies, develop their skills, and potentially earn profits without fearing losing their personal trading capital.
Conclusion
In essence, funded trading accounts revolutionize the traditional approach to trading by providing aspiring traders with a means to trade using a third-party’s capital. These accounts constitute a valuable opportunity for individuals seeking entry into the market, as they eliminate the financial burdens and risks associated with the commitment of personal trading capital. Moreover, they offer a conducive environment for traders to hone their skills, test different trading strategies, and potentially earn substantial profits without risking their own capital.
Funded trading accounts have emerged as a transformative and innovative solution within the trading world. They provide a platform for aspiring traders to gain valuable experience, build their trading careers, and unlock their financial potential without the upfront costs and anxieties associated with personal investment. By offering a risk-free environment and a share in the profits, funded trading accounts democratize the trading landscape, opening doors to individuals who may have previously been discouraged from entering the market due to financial constraints or fears of loss.
How to become a funded trader
For many aspiring traders, the biggest obstacle to getting started is the need for more capital. Trading generally requires funds to be deposited to fund asset purchases, and even if you have the funds to get started, there’s always the risk of losing your capital. Fortunately, there is a solution: funded trading.
Funded trading is a way to get started in trading without having to risk your own money. Instead, you trade with someone else’s money, and if you’re successful, you get to keep a portion of the profits. This comprehensive guide will examine how to become a funded trader and what it takes to succeed.
Step 1: Educate Yourself
Before becoming a funded trader, you must have a solid understanding of the markets and trading. This means educating yourself on the basics of trading, including technical analysis, fundamental analysis, risk management, and trading psychology. Many resources are available online, including books, blog articles, videos, and online courses.
One of the best ways to learn is to find a mentor or join a trading community. A mentor can provide guidance and feedback on your trading, while a community can offer support and accountability. Many online trading communities include forums, social media groups, and specialized sites .
Step 2: Practice, Practice, Practice
Once you have a basic understanding of trading, the next step is to practice. This means opening a demo account with a prop firm so that you can trade in a simulated environment. A demo account allows you to practice trading without risking your own money, and it’s a great way to test your trading strategy and hone your skills.
When practicing, it’s essential to treat your demo account as a real one. This means following your trading plan, using proper risk management, and keeping a trading journal. By treating your demo account seriously, you’ll be better prepared for when you start trading in a funded account.
Step 3: Take a Trading Audition
After you’ve practiced and feel confident in your trading skills, the next step is to take a trading Audition. A trading Audition is a test of your trading skills, and it’s used by prop trading firms like SurgeTrader to identify and qualify talented traders.
The Audition usually consists of a demo trading account, where you trade in a simulated environment using the firm’s trading rules. If you pass the Audition, you’re given a funded trading account with which you can make your trades. If you’re unsuccessful, you can try again with another Audition or continue to practice until you’re ready. SurgeTrader offers a 20% discount on every repeat Audition!
Step 4: Follow the Rules
Following the rules is essential both during an Audition as well as after you’ve been given a funded trading account. Every firm has its own rules, and it’s important to understand and follow them. These rules may include trading loss limits, profit targets, and risk management guidelines.
Keeping a trading journal and reviewing your trades regularly is also important. This will help you identify areas to improve and adjust your trading strategy. Following the rules and staying disciplined will increase your chances of success as a funded trader.
Step 5: Manage Your Risk
One of the most important aspects of trading is managing your risk. This means using proper position sizing, setting stop losses, and limiting exposure to any market or position. As a funded trader, you’ll be trading with someone else’s funds, so managing your risk carefully is important.
It’s also essential to have a risk management plan in place. This plan should include guidelines for when to cut your losses, take profits, and adjust your trading strategy. By having a plan in place, you’ll be prepared for any market conditions and be able to make rational decisions based on your trading plan.
Step 6: Stay Disciplined
Finally, you must stay disciplined to succeed as a funded trader. This means following your trading plan, sticking to your risk management guidelines, and keeping a level head during periods of volatility. Getting caught up in the excitement of trading is easy, but remaining disciplined and focused on your goals is important.
A way to stay disciplined is to set trading goals and track your progress. This will help you stay motivated and focused on your long-term goals. It’s also important to take breaks and step back from the markets when needed. Trading can be stressful, and taking care of yourself mentally and physically is essential.
Conclusion
Funded trading offers an accessible avenue for aspiring traders to enter the market without the burden of risking their own capital. Individuals can increase their chances of success as funded traders by following a structured approach, starting with education and progressing through practice, Auditions, and disciplined adherence to rules. The emphasis on continuous learning, risk management, and discipline underscores the importance of treating funded trading with the seriousness it deserves. Ultimately, the path to becoming a successful funded trader involves a commitment to self-improvement, adaptability, and maintaining a balanced mindset amidst the challenges of the dynamic trading environment.
Proprietary Trading vs. Retail Trading Account
In the vast ocean of financial markets, investors have several options for engaging in trading activities. Two distinct approaches stand out in this dynamic environment: proprietary trading and retail trading. Both paths have merits, risks, and unique characteristics that cater to different traders. In this blogpost, we will delve into the nuances of proprietary trading and retail trading accounts, providing a thorough understanding of each and to help traders chart a course that aligns with their goals and risk tolerance.
Understanding Proprietary Trading
Proprietary trading, often referred to as “prop trading,” involves prop trading firms using their own capital to fund traders interested in their trading program. In exchange, they earn a percentage of the profits generated by the traders. This unique arrangement liberates traders from using their personal capital for trades, alleviating concerns about potential financial losses. This allows for larger positions, increased leverage, and potentially higher returns.
However, the high stakes of proprietary trading come with rules. Since these firms use their own capital, traders must purchase and pass a demo audition for eligibility for a live trading account. The SurgeTrader program is an extremely valuable service that has been priced to support a healthy relationship between traders and SurgeTrader as a source of capital.
The fees charged for Auditions are the only costs traders will ever incur. The Audition fee serves as a filter for serious traders. The SurgeTrader community only works when it comprises experienced traders who can consistently generate a profit. The fee ensures that the trader is committed to the process and committed to successful, disciplined trading practices. When traders have paid for their Audition, they are incentivized to treat their accounts responsibly and carefully. And, for those who pass the Audition, their fee and commitment is rewarded with tens or hundreds of thousands of dollars of the firm’s capital to trade.
The best part of this arrangement for traders is that the Audition fee is the only capital they risk. Traders cannot lose more than this fee, as SurgeTrader covers losses on a Live Funded Account.
The Retail Trader’s Perspective
We find retail trading accounts on the other side of the spectrum, where individual investors trade their money through online brokerage platforms. Retail trading has gained immense popularity in recent years, fueled by the democratization of financial markets through technology. Individuals can now easily open trading accounts, access real-time market data, and execute trades with the click of a button.
Retail trading offers a level playing field for investors of all sizes, allowing them to participate in various financial markets, including stocks, options, forex, and cryptocurrencies. With lower barriers to entry, retail traders can start with relatively small amounts of capital and gradually scale up their positions as they gain experience.
However, the accessibility of retail trading does not diminish the risks involved. Emotional decision-making, lack of risk management, and susceptibility to market hype are common pitfalls that retail traders must navigate.
Risk and Reward: A Comparative Analysis
The risk and reward dynamics become apparent when comparing prop trading and retail trading accounts. Armed with institutional financial resources, Prop traders can take larger positions and increase leverage to achieve higher returns potentially. However, the stakes are equally high, with the potential for substantial losses of the prop firm’s capital, resulting in the trader’s account being closed as loss limits are breached.
In contrast, retail traders operate with smaller capital, limiting the size of their positions and potential returns. While retail trading allows for more flexibility and control over individual investments, it also exposes traders to greater vulnerability due to the absence of institutional support.
Conclusion
In the intricate world of financial trading, choosing between proprietary trading and retail trading accounts is a decision that hinges on individual preferences, risk tolerance, and financial goals. Proprietary trading offers access to institutional resources and advanced strategies, but it comes with heightened risks and potential volatility. Retail trading, while more accessible, demands a disciplined approach, risk management, and a deep understanding of market dynamics.
Ultimately, the key to successful trading, regardless of the chosen path, is education, continuous learning, and a prudent approach to risk. Whether navigating the turbulent waters of proprietary trading or charting your course in the retail trading seas, a well-informed and strategic approach is essential for long-term success in the dynamic world of financial markets.
Disclaimer: All information provided here is intended solely for study purposes related to trading financial markets and does not serve in any way as a specific investment recommendation, business recommendation, investment opportunity, analysis, or similar general recommendation regarding the trading of investment instruments. The content, in its entirety or parts, is the sole opinion of Global-view and is intended for educational purposes only. The historical results and/or track record do not imply that the same progress is replicable and does not guarantee profits, future profitable trading records, or any promises whatsoever. Trading in financial markets is a high-risk activity, and it is advised not to risk more than one can afford to lose.
The above text is a courtesy of SurgeTrader