A Guide to Proprietary Trading for Beginners • Benzinga

With so many different terms, assets and currencies on the market today, many beginners just want to learn how to follow along with what they’re reading or listening to regarding the stock market. One term you may have heard thrown around if you’re just getting into trading is “prop trading,” which is short for proprietary trading. 

Prop trading is a type of commercial trading that involves buying and selling assets on behalf of an employer. While the realm of proprietary trading can be hostile to beginners, experienced investors can earn six-figure incomes. 

Large banks and brokerage firms trade on behalf of their clients; that is an important part of the business model. What you might know is that these large financial institutions also go to bat for themselves in the stock market, using their often-massive war chests to trade on their own behalf and try to increase their profits.

The process of a financial institution trading its own capital rather than that of its clients is known as proprietary or prop trading. The thought process is that the firm has a greater knowledge of markets, trends and forecasting to beat other investors and therefore provide a greater return for their stakeholders. Institutions hire experienced traders to prop trade on behalf of the company. 

Not just anyone can become a prop trader. Large financial institutions bring in prop traders with the expectation that they will make sound decisions with the company’s funds and grow their portfolio, so it takes time for someone to rise through the ranks and work as a prop trader. 

Here’s how to get started if working for a prop trading firm interests you.

The building block of a career in the financial industry is a strong education in a field related to economics, statistics or business finance. Without at least a bachelor’s degree from a reputable university, it will be difficult to obtain a job as a prop trader. 

Some of the best candidates use multiple fields of study to help their resumes stand out. If you have a good working knowledge of statistics and finance, then you likely have a solid foundation in place to pursue a job as a trader. 

Typically, traders with large firms are not hired without experience as an investor on the books. While obtaining your degree or shortly after graduation, start learning on the job with an internship or mentorship. 

Internships are often what you make them, so go beyond making coffee and set two main goals. First, learn as much as you can from people who have a career you would like to have, paying attention to the pros and cons of the job. Second, make personal connections with people in the field who can mentor or hire you full-time to help your future application as a prop trader stand out. 

With a solid education and some experience, you have a great chance of landing a job in the financial industry. Ideally, you will have choices in where to work; researching which firms fit your trading preferences and lifestyle is key to success in your first full-time job. 

Once you have an ideal firm in mind, use the connections you made and apply for entry-level trading positions. Like any other job, you’ll want to tailor your resume to the position that you’re applying for. 

If you’re considering a career as a prop trader, the points below should give you some idea of what the day-to-day in this field looks like. While experiences vary depending on firms, locations and experience levels, the main idea of being a trader still stands: you must produce results, whether that takes 30 hours per week or 60.

Typically, a day begins with your team of traders recapping after-hours trading and discussing potential opportunities for the day. This process involves staying current on happenings in the financial world and having your finger on the pulse of the day’s activity before the opening bell.

Traders are usually busiest, as you can imagine, at the start and end of trading every day, as they look to capitalize on market fluctuations. Some prop traders spend a lot of their time buying, selling and talking with their connections to get a feel for what the market is doing at any given minute of the day.

Other traders are more analytical and use their sharp mathematical skills to take in data in real-time and adjust forecasts and models to determine the best possible trades to make at that time. You’ll put your unique trading strategy into place to work on opportunities identified during your morning meeting. 

After the market closes, the team of traders discusses the day’s activity. As a new trader, this period can be a gold mine of information because you can learn who made successful trades and why they worked, and vice versa for bad decisions. New traders also typically work longer hours because they are expected to stay after the market closes and do the administrative work to ensure all trades are completed and everything is ready for the next day.

Moving up in prop trading can happen fast for top performers. The company you’re working for likely values production significantly more than seniority, so the best traders can move up quickly. Typically, the career path starts as a junior trader then moves to a senior trader and eventually a partner, with salaries increasing and administrative work decreasing every step of the way.

If you’re looking for an exciting career and have a knack for numbers and problem-solving, prop trading could be a great choice for your future employment. As long as you are selective about the firm you choose to work for, there are some great benefits to prop trading as a career.

• Potential salary: If you can rise through the ranks and become an effective prop trader, the possibilities for compensation are excellent compared to other careers in finance. 
• Teamwork: Because everyone on a trading team is working toward the same goal of increasing the company’s bottom line, there is typically a positive office environment of smart and high-achieving people.
• Level playing field: Most prop trading firms promote based on performance — not seniority. If you’re getting started in your career in finance but you’re confident in your skills as a trader, prop trading may provide you with the opportunity to move up faster in your career. 

SurgeTrader is one of the most prominent figures in the prop trading scene. When you want to invest with the massive funds available for a larger trading house, you can turn to a prop trading firm. SurgeTrader offers a range of benefits, including:

• Quick trader funding after your evaluation
• Quick account setup
• Powerful educational tools
• High profit shares (up to 90%)
• Several account styles
• A simple platform that’s easy to use

Turning to prop trading is a good way for you to learn, invest and grow your career. You can also make money if you know how to trade well and work well with the platform. Reach out SurgeTrader at any time for more information on prop trading.

As you venture into the world of prop trading, you will find that E8 Funding offers a unique experience that funds individual CFDs (Contracts for Difference) and forex trading. 

To get started, you’ll complete an evaluation, and those who are skilled enough to continue are given an E8 Funding account, funds are deposited in that account and you can start trading right away.

With a profit share of 80% for the trader, E8 Funding makes it easy for you to earn an income from prop trading if you understand the forex and CFD space. There’s no loss exposure for traders, and there are a few other benefits, including:

• Using MT4 and MT5 at your discretion
• Tier 1 liquidity
• High leverage

Yes, you must complete the evaluation and a trial period, but the initial investment to get your audition can be easily covered when you succeed with E8 Funding. Anyone who knows how to trade forex and CFDs and is undercapitalized should have a look today.

When you want to get into prop trading, it can be difficult to know where to start and which platform to choose. Try Apex Trader Funding because the platform  helps you get into the futures trading space with a funded account for which you can qualify in as little as 7 days. Once you complete your evaluation, you’re ready to go, using funding provided by the platform.

When you try Apex Trader Funding, you receive 100% of your first $25,000 earned per account and 90% after that, meaning that Apex pays the most of any futures prop trading account firm. There are no daily drawdowns, you can trade on holidays and use your own system to get the best results.

Moreover, there’s no cap on payouts and you will see real-time data that can help you make the best decisions. When you start on the platform, you will use Rithmic or Tradovate and have the freedom to choose from one of several account types that allow a particular number of contracts, a profit goal, a trailing threshold and more. If you’re ready to enter the prop trading space, you can set up an account in moments and try Apex Trader Funding.

FXIFY is a new proprietary trading firm that offers access to up to $400,000 for those who pass the site’s assessment. With profit shares as high as 90%, you can scale your account up to $4 million. You can try the One-Phase or Two-Phase assessment, but make sure to review the terms and conditions of each assessment before beginning so that you know you’re taking the right path. 

Trading is available on MT4 or MT5 and assorted trading platforms through the firm’s partnership with FXPIG. There’s commission-free trading and access to stock indices, forex, precious metals, etc. Plus, you get relatively tight spreads, no trading restrictions, customizable leverage and more.

You can even use expert advisors or other automated strategies to get the best results. Traders with FXIFY also get instant payouts, no consistency rules, unlimited trading days and a 125% refund on the assessment fee with the first payout.

At The Trading Pit, you can entire the funded trading space with help from up to $5M in funding and up to an 80% profit share. The process is simple, you can look into multi-asset trading of:

• CFDs
• Futures
• Crypto (coming soon)
• Stocks (coming soon)

There are also multiple account styles, including:

• Lite—3 days of trading minimum, 90 day challenge periods, $1,000 profit target
• Standard—3 days of trading minimum, 90 day challenge periods, $2,000 profit target
• Executive—3 days of trading minimum, 90 day challenge periods, $5,000 profit target
• VIP—3 days of trading minimum, 90 day challenge periods, $8,000 profit target

All you need to do is pass the challenge for your account type, and when you do, you will become a funded partner with $5 million in funding where you will keep 80% of your profits. With simple rules, easy setup, real learning tools and quick payouts, it’s easy to access the prop trading industry from your desk.

Traders With Edge is one of the most popular prop trading platforms and a prop trader favorite because of its flexible and easily accessible trading features. Founded in 2022, a team of experts manages the platform, planning to fund up to 25,000 traders by 2025.

As a result of its unique structure, Traders With Edge offers:

• An 80% profit payout
• Diverse tradable assets
• The cheapest evaluation—challenge accounts starting from $55

There’s a comprehensive support structure that makes it easier for traders to get the information they need, along with core assistance on their accounts. There are several account sizes to choose from, and up to $3 million of capital could be accessible. 

Most traders have an issue with getting into the markets because they lack the capital required to take risks and see massive returns. This is why traders turn to Trade the Pool. Trade the Pool does more than give you the funds you need to get into prop trading. Trade the Pool also:

• Works for day traders, swing traders and prop traders
• Support professional trader who need another place to work
• Offers trading for stocks and CFDs
• Offers support for inexperienced traders
• Provides unlimited buying power
• A 14-day free trial
• Offers over 12,000 stocks and ETFs to trade
• Educates users
• Subscribes traders to several resources
• Provides space for traders to hone their skills

Founded in 2022, Trade the Pool using reputable risk management tools and ensures that traders have a place to trade that serves both parties rather well.