What is a Prop Firm? A Full Guide

In modern trading, “prop firms” or “proprietary trading firms” have become very popular. These firms allow traders to trade with the firm’s capital instead of their own. This guide will explain what prop firms are, how they work and introduce you to the top 5 prop firms in the market today: FTMO, The 5%ers, MyFundedFX, OANDA, and Fxify.

What is a Prop Firm?

A prop firm, short for proprietary trading firm, is a company that invests its own money in financial markets, through a team of professional traders. Unlike traditional financial firms that manage client funds, prop firms allocate their own capital to skilled traders who aim to generate profits for the firm. Here we will explain Top 5 Prop Firms in 2024.

How Do Prop Firms Work?

1. Trader Evaluation: Most prop firms have a strict evaluation process to select traders. This process usually involves simulated trading or a trial period to test a trader’s skills and profitability.
2. Capital Allocation: Once selected, traders get access to the firm’s capital. The amount allocated can be different depending on the trader’s performance and the firm’s policies.
3. Profit Sharing: Profits made by the trader are usually shared between the trader and the firm. The exact profit split can differ from one firm to another but is usually 50% to 90% in favor of the trader.
4. Risk Management: Prop firms have strict risk management rules to protect their capital. Traders must follow these rules to keep their trading accounts.

Advantages of Trading with a Prop Firm

1. Capital: One of the biggest benefits is the access to large capital, so traders can take bigger positions and make more money.
2. Risk Sharing: Since traders trade the firm’s capital, they don’t risk their own money, so less financial stress.
3. Professional Environment: Prop firms usually provide a professional trading environment with advanced tools, resources and support.
4. Education: Many prop firms offer training programs and educational resources to help traders improve.

Top 5 Prop Firms 2024

Now let’s get into the top 5 prop firms in the market, known for their reliability, trader friendly policies and good support.

1. FTMO: Prop Firm for Traders

Overview:

FTMO is one of the most popular prop firms, famous for their trader friendly evaluation and good profit splits. They have built a strong reputation in the trading community for their transparent and supportive approach.

Features:

• Evaluation: FTMO has a two step evaluation process, Challenge and Verification. Successful traders can get funded up to $400,000.
• Profit Split: FTMO offers profit split up to 90% for the trader.
• Risk Management: They have strict risk management rules to protect their capital, daily and maximum loss limits.
• Support and Resources: FTMO provides quality support, educational resources, trading tools and performance guidance.

2. The 5%ers: Prop Trading for Growth

Overview:

The 5%ers is a prop firm that offers a growth program for traders. They focus on long term profitability and trader development, so they are a good choice for serious traders.

Features:

• Growth Program: The 5%ers have a growth program where traders can scale their accounts based on performance. This allows traders to grow their funding and profits.
• Profit Split: Traders get a profit split up to 70% which can increase as they progress through the growth program.
• Risk Management: They have a balanced risk management to protect their capital while giving traders enough flexibility.
• Support and Training: The 5%ers provide continuous support, educational resources, webinars and personal coaching.

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3. MyFundedFX: Flexible and Competitive

Overview:

MyFundedFX is a relatively new prop firm but has gained popularity for their flexible evaluation and competitive profit splits. They aim to provide a trader friendly environment.

Features:

• Evaluation: MyFundedFX has a simple evaluation process with clear criteria. Traders have the opportunity to secure funding of up to $200,000.
• Profit Split: They offer profit split up to 80% for the trader.
• Risk Management: MyFundedFX has strict risk management rules, daily and overall loss limits.
• Support and Resources: They provide traders with trading tools, educational resources and a community.

4. OANDA: Established and Reliable

Overview:

OANDA is a well known brand in the financial industry, famous for their reliable trading platforms and broad market access. They also offer a prop trading program for experienced traders.

Features:

• Reputation: OANDA is a global broker with a strong reputation for transparency and reliability.
• Platform Access: Traders have access to OANDA’s advanced platforms and a wide range of financial instruments.
• Profit Split: OANDA offers competitive profit split based on the trader’s performance.
• Risk Management: They have strict risk management protocols to protect their capital and to ensure sustainable trading.
• Support and Resources: OANDA provides good support, market analysis, trading tools and educational content.

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5. Fxify: Innovative and Supportive

Overview:

Fxify is a relatively new prop firm but has already made a name for themselves with their innovative approach and trader friendly policies. They focus on providing a supportive and growth oriented environment for traders.

Features:

• Evaluation: Fxify has a flexible evaluation process to identify skilled traders. Successful traders can get funded up to $150,000.
• Profit Split: They offer profit split up to 75% for the trader.
• Risk Management: Fxify has risk management rules to protect their capital while giving traders enough room to operate.
• Support and Resources: They provide trading tools, educational resources and a community.

Summary

Prop firms are a great opportunity for traders to get access to big capital, share profits and to develop their skills in a professional environment. Whether you are an experienced trader looking for a new challenge or a beginner looking to grow, prop firms like FTMO, The 5%ers, MyFundedFX, OANDA, and Fxify.

have programs and support for you to succeed. Choose the right prop firm and boost your trading career and reach your financial goals.