Prop Firms

What are Prop Firms?

How Prop Firms work?

Can you make money trading with Pro Firms?

What is Rithmic and why do Pro Firms use it?

How do I manage the money of a Prop Firm when I am not a professional trader?

Which Prop Firm to choose?

What are Prop Firms?

Proprietary trading firms, commonly known as Prop Firms, provide capital to traders who prove their skills through evaluations, also called challenges. Traders get access to significant trading funds without risking personal money, while the firm absorbs losses. The business model features profit-sharing (typically 50-90% to traders) and structured evaluations testing traders' ability to meet profit targets while following strict risk management rules. Evaluations vary from single to multi-phase challenges, with successful traders accessing $25,000-$250,000 in funding that can scale with performance. This allows traders to focus on their strategies without the financial burden of personal capital at risk, while the firm benefits from skilled traders generating profits. The profit-sharing model incentivizes traders to perform well, while the firm's risk management ensures long-term sustainability.

How Prop Firms work?

Your relationship with a Prop Firm goes through 3 phases in general:

The first phase is called the evaluation test phase. You start your relationship with a Prop Firm by selecting and paying for an evaluation test. During this evaluation test, you are given virtual capital to trade with, a profit target that you should reach within a specific period, and strict maximum drawdown rules. At the end of this period, you successfully passed your evaluation test if you reached the profit goal without breaking the rules. Then you can move on to the next phase. On the other hand, if you didn't achieve your profit goal or broke any of the evaluation rules, you failed your test, and you should renew the evaluation or start a new evaluation test and start over from the first. The second phase is where you trade to generate real profit.
After you have successfully passed your evaluation test, the Prop Firm will give you a digital certificate and make you sign a contract. The Prop Firm will claim to allocate real capital for you to trade. This is not entirely true. In reality, the Prop Firm will use the money it collects from other customers who fail the evaluation tests to pay you if you generate profit during this phase. Prop Firms profit from their customers who fail their evaluation tests; this profit is sufficient primarily to pay anyone who succeeds their evaluation test and later requests a payout. Generally speaking, only 10% of the customers pass the evaluation. The third phase raises a flag on the Prop Firm's internal systems.
Prop Firm monitors all its customers' activity. The Prop Firm’s platform will detect and flag your profile if you consistently generate profit (this is not a bad thing). Each Prop Firm has its way to manage its operational risk. If you generate much profit, then the Prop Firm will need to pay you from the money they collect from their customers, so you are eating into their profit. The solution for this issue is that Prop Firms will copy your trades while adding a layer of risk management to reproduce your trades on their side. This way, they will pay you from the profit they generate from copying your trades. Of course, this will not happen in the first month you generate profit. You need to consistently generate profit over a long period for this to happen.

Can you make money trading with Pro Firms?

Yes, of course. Our experience shows you can expect to make at least 5% monthly from trading with a Prop Firm. You can expect to make around $500 monthly if you start with $10,000 of Prop Firm trading capital. However, this can only be accomplished if you consider that your chosen strategy will determine how much profit you make. The Pro Firms partnership program still offers the possibility of supplementary income, even though only 10% of users pass their evaluation tests. If you start smart, practice in a simulator first, stick to a solid trading plan, and manage your emotions correctly, your profits will begin to accumulate.

What is Rithmic and why do Pro Firms use it?

Rithmic offers real-time price data and trade connections compatible with several trading platforms, including NinjaTrader software. It provides traders with advanced tools for market analysis and order execution. This compatibility ensures seamless integration, allowing users to leverage Rithmic's high-speed data for precise decision-making.

I'm not a professional trader, how come I get to manage a Prop Firm's money? Is that legal?

How do I manage the money of a Prop Firm when I am not a professional trader?

You are never trading real money with Prop Firms, even though they claim to allocate you real capital. Trading is always done on a virtual account with virtual money. However, the profit you earn on this virtual account will be paid in real money. Prop firms will copy the trades of successful traders internally to generate more income. Prop Firms has no legal issues with retail traders managing other people's money. Essentially, you provide them with trading signals and are compensated, which is legal.

Which Prop Firm to choose?

If you are a beginner and testing this whole Prop Firm business, you could choose the cheapest, most affordable option: Apex Trader Funding, Bulenox, or Day Traders. They always have an active promotion offering deep discounts regularly, with a monthly subscription from just $15 or $29.These firms are ideal for those looking to test the waters without making a significant financial commitment. They offer flexible plans and low-cost entry points, making them accessible for beginners. Additionally, their promotions provide an excellent opportunity to explore the Prop Firm business model with minimal risk. Remember that many firms provide only a monthly or two-weekly payout process.

If you are an experienced trader and want to guarantee fast payouts, we recommend going with Prop Firms like Take Profit Trader, Tradeify, or Earn2Trade. They are a bit more expensive initially, but are the best for the fastest daily payouts. Yes, you can get money deposited daily into your bank account when you choose to trade with one of these Prop Firms. For experienced traders, these firms offer reliable services, advanced tools, and higher withdrawal limits. They prioritize efficiency and transparency, making them ideal for those seeking consistent and rapid returns.

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