AND HOW TO PICK THE RIGHT ONE FOR YOU
By Your Trading Mentor
Those of you who have been following my trading journey for a while will know that I have recently started trading with a prop firm after years of resistance. The reason for my initial resistance was the fact that I had heard about the strict rules and regulations which prop firms imposed such as minimum trading days and I felt like this was too restrictive for my style of trading at the time. I also had a small amount of money which I was happy and comfortable trading with and didn’t necessarily want to put any unnecessary stress on myself during my trading but worrying about trading someones else’s money. However recently (after several years of trading forex and working as a forex trading mentor) I decided for several reasons that having prop firm trading experience was the right move for me and my mentees.
First of all, the traders who I mentor often come to me with the aspiration of trading with a prop firm and need coaching as to how to pass their funded trader program or how to hit the 10% target each month in order to withdraw their funds. So I felt that as my job as a trading mentor it was part of my duty to have first hand experience in this myself in order for me to appropriately coach my mentees in this form of trading.
But also for myself and for my own personal trading journey I felt it was important tops myself out of my comfort zone and to gain that experience as well as to give myself the opportunity to scale up.
So I have now taken on the challenge and signed up to the prop firm FTUK, I went with this prop firm because one of my mentees trades with them and thought they were pretty good and they also offer instant funding. However the right prop firm for you is a very personal choice so first of all I’m going to have a quick look at how to pick the right prop firm for you to trade with and then I will go into the pro’s and con’s of trading with a prop firm verses trading with your own money.
If you’d like to sign up to FTUK you can use this link here:
Alternatively, Audacity Capital is also a popular prop firm, you can sign up to their programme here:
WHAT IS A PROP FIRM?
A prop firm, short for proprietary trading firm, is an organisation that trades financial instruments with its own capital. Unlike traditional financial institutions, which trade on behalf of clients, prop firms use their own funds to speculate on various assets such as stocks, options, and futures.
Proprietary trading firms typically hire traders who have a proven track record of success in trading and provide them with access to the firm’s proprietary trading strategies, tools, and technology. Traders are given a share of the profits they generate, and the firm retains a portion of the profits as well.
One significant advantage of working for a prop firm is that traders can leverage the firm’s capital to magnify their profits. This increased buying power allows traders to take larger positions in the market, potentially leading to higher profits. Prop firms also provide traders with a supportive community of like-minded individuals who can share insights, strategies, and feedback.
However, prop firm trading is not without its risks. Traders must adhere to strict risk management protocols to avoid catastrophic losses that could harm the firm’s bottom line. Additionally, traders must be comfortable with the pressure of performing consistently to maintain their position within the firm.
In conclusion, prop trading firms offer traders an opportunity to trade with significant capital and access to advanced tools and strategies. However, traders must be prepared to manage risk and maintain consistent performance to succeed in this competitive and challenging field.
CHOOSING THE RIGHT PROP FIRM FOR YOU
Choosing the right prop trading firm is a critical step for traders looking to succeed in the industry. Here are some key factors to consider when picking a prop firm:
Firstly, consider the firm’s trading style and strategy. Some firms specialise in specific assets, such as stocks, options, or futures. Others may have a particular approach to trading, such as high-frequency trading or quantitative analysis. Look for a firm whose trading style aligns with your skills, experience, and preferences.
Secondly, assess the firm’s risk management protocols. Prop firms typically have strict risk management guidelines to protect their capital, which can limit a trader’s ability to take on large positions or engage in high-risk strategies. However, some firms may have more flexible risk management policies that allow traders to take on more risk. Make sure you understand the firm’s risk management procedures and ensure that they align with your risk tolerance.
Thirdly, evaluate the firm’s fees and commission structure. Prop firms typically take a share of the profits generated by traders as compensation. However, the percentage of profits taken by the firm can vary significantly between firms. Look for a firm with a fair and transparent fee structure that allows you to keep a significant portion of your profits.
Fourthly, consider the firm’s training and support resources. Prop firms typically provide traders with access to advanced trading tools, technology, and training programs. Look for a firm that offers comprehensive training and ongoing support to help you improve your trading skills and stay up-to-date with market developments.
Finally, evaluate the firm’s culture and community. Prop trading can be a high-pressure environment, and it’s important to find a firm with a supportive, collaborative culture. Look for a firm that values teamwork, encourages knowledge-sharing, and fosters a positive and inclusive community.
In conclusion, picking the right prop trading firm requires careful consideration of a range of factors, including the firm’s trading style and strategy, risk management protocols, fees and commission structure, training and support resources, and culture and community. By doing your research and evaluating these factors, you can find a prop firm that aligns with your trading goals, personality, and values, and increase your chances of success in the industry.
ADVANTAGES TO TRADING WITH A PROP FIRM
Trading with a prop firm, or proprietary trading firm, offers several advantages over trading independently.
Firstly, prop firms typically provide traders with access to significant capital, which can be used to take larger positions in the market and potentially generate higher profits. This increased buying power can also provide traders with greater flexibility in their trading strategies.
Secondly, prop firms offer traders access to advanced trading tools and technology. This includes sophisticated algorithms, real-time market data, and high-speed trading platforms. These resources can help traders make more informed trading decisions and execute trades more quickly and efficiently.
Thirdly, traders who work for prop firms are often part of a supportive community of like-minded individuals. This can provide traders with access to mentorship, feedback, and networking opportunities that can help them improve their trading skills and advance their careers.
Finally, working for a prop firm can be a lucrative career path for successful traders. Prop firms typically offer traders a share of the profits they generate, which can be significantly higher than what traders would earn on their own. Additionally, many prop firms offer performance-based bonuses and other incentives to reward their top traders.
In conclusion, trading with a prop firm offers several advantages over trading independently. Traders have access to significant capital, advanced trading tools and technology, a supportive community, and the potential for high earnings. However, traders should carefully evaluate any prop firm they are considering to ensure that it aligns with their goals, trading style, and risk tolerance.
DISADVANTAGES OF TRADING WITH A PROP FIRM
While prop trading firms offer many advantages over trading independently, there are also several disadvantages to consider.
Firstly, prop firms typically have strict risk management protocols in place to protect their capital. This means that traders may be limited in their ability to take on larger positions or engage in riskier trading strategies. While this can reduce the chances of significant losses, it can also limit the potential for high profits.
Secondly, prop firms often take a portion of the profits generated by traders. While this is a common practice in the industry, it can reduce the amount of money that traders ultimately earn. Additionally, some firms may have high fees or commissions that further reduce a trader’s profitability.
Thirdly, working for a prop firm can be a high-pressure environment. Traders are expected to perform consistently and meet profit targets to maintain their position within the firm. This can be stressful and may lead to burnout or a lack of work-life balance.
Finally, prop trading firms may have strict rules and regulations that limit a trader’s flexibility. For example, some firms may prohibit traders from trading certain assets or using particular strategies. This can limit a trader’s ability to pursue their preferred trading approach.
In conclusion, while prop trading firms offer many benefits, traders should consider the potential drawbacks before committing to this career path. Traders should carefully evaluate the fees, risk management protocols, and culture of any firm they are considering to ensure that it aligns with their goals and trading style.
HOW MY FIRST WEEK OF TRADING WITH A PROP FIRM WENT
After all the time taken to make the decision to finally trade with a prop firm it was somewhat anti-climatical as the leverage was so much lower then I was used to and it meant the trade trades on the same lots sizes which I had previously been using were so small and worth hardly anything. What this made me realise is that once you sign up to prop firm it still takes a bit of time to get used the the new rules and regulations and also the different leverage. I spent a lot of time writing out a detailed trading plan for a new SMC trading strategy which I had been working on which focuses on the London and New York session open breakouts. The strategy works so well but in order to actually hit the 10% profit target which is required to [progress to the next stage of the prop firm challenge, I realise I’m going to have to put in a lot of time getting used to the appropriate lot sizes for the leverage and also so that I don’t go over the maximum draw down of 6%. So while I’m really excited about the time when I finally figure out the right lot sizes for the account and the leverage, I’m not quite there yet. The strategy work beautifully though its just a shame that every time I place a trade it only make me a few pounds. So this is a final note that I will add if you are thinking of trading with a prop firm, you will definitely want to have a really detailed trading plan which also looks at risk management and the Toal amount you are willing to risk per trade. At the moment my trading plan allow my to take on a maximum of 0.5% per trade.
If you’d like to see a full breakdown of how my first week of trading with a prop firm went as well as the details fo the trading strategy that I have been using then you can watch it here at Trading Angel’s YouTube channel. This video also shows you the exact amount which I made per trade
Let me know if you have any experience on trading with a prop firm and feel free to share any prop firm tips and tricks.
Until next time, Happy Trading
Love From Your Trading Mentor,
Trading Angel x