Should a Prop Firm be Your Only Option?

If you have been trading for a good amount of time independently and have sound knowledge of your trading strategy, then you must have considered becoming a prop trader once in a while. Prop firms are a safe haven for skilled traders who lack good capital.

A proprietary trading firm, simply known as a “prop firm,” is a financial institution that provides a healthy amount of funding capital to potential traders against a small percentage of profit. This is a great way to earn bigger profits while investing larger capital in trading. However, as you are given the funds of a firm, you must show your trading competence before becoming a funded trader of any prop firm in the forex industry.

Things to Consider About Being a Prop Trader

1. After you purchase a particular funding plan from a prop firm, you must pass a few challenge phases to prove that you are worthy of being a funded trader.

Profit Target

– During these challenge phases, you will be trading in your demo account. So this will be the test of your trading skills.
– You must prove yourself by reaching a certain profit target within a strictly given time frame; ninety days is a market standard. However, many prop firms do not have any maximum trading day limits. 
– If you are a professional trader, earning the given profit target will not take a long time. However, a prop firm will restrict you to trading for a minimum of a certain number of days to prove your consistency and assess your trading strategies.

Loss Limit

– In trading, losing money is so definite. But when you are trading with someone else’s money, you must control the losses you make. 
– Proprietary firms confine their trading plans in such a way by setting some strict rules for minimizing your losses. This helps you to keep track and prevent impulse trading.
– There are two kinds of loss limits. The Daily Loss Limit and the Overall Loss Limit This measure is to increase your profit potential under a well-thought-out discipline.

2. After earning the funded account, you must remember all the time of the day that you are responsible for hundreds and thousands of dollars given by a company.

– When you earn the funded account, the prop firms usually withdraw the profit target, if not for the scale-up plan. So you can earn as much as you want.
– You have to share a small percentage of the profit with the prop firm.
– Many prop firms offer a great deal of scaleup plans to increase your account balance up to a seven-digit number. 
– Although there won’t be any profit targets, the Loss Limits will still exist all the time. A company can never let you go without any restrictions. That is not how things work. 
– There will be some trading rules in each and every proprietary firm as they assess your trading journey continuously.

You can earn a good amount of money by trading with a prop firm. But do you want to trade with someone else’s capital for the long run? Wouldn’t you prefer to become an independent trader, holding the power to trade according to your personalized strategies? This is the dream of any trader. We believe it’s yours as well. So, we would recommend training yourself with a bigger profit from a prop firm and getting used to the strict environment where you make minimal losses and profit big.

Michael Scott
Michael Scott

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