WHY PROP-TRADING?

Hello traders! Let’s delve into the world of prop trading – a unique model offering the chance to manage capital, trade with minimal personal risk, and harness the financial resources of a prop trading company.

In a nutshell, prop trading involves a small entry fee granting you access to a challenge. Your task within this challenge is to demonstrate your trading skills, hitting financial targets while keeping risks under control. Successful completion results in gaining capital under management.

Gone are the days of grappling with a “3-5 year trading performance history,” seeking funds from friends and family, or risking your hard-earned money. We’ve been there, understanding the frustration of raising capital, which every trader goes through.

Prop trading transforms the game. No longer is it necessary to be born wealthy or hold a high-paying job or substantial savings. It levels the playing field.

Why do we believe prop trading is the optimal path for an individual trader’s career?

Consider this: While anyone can theoretically deposit $500-1000 into a broker account, turning that into significant numbers is an incredibly challenging task. Statistics may not be in your favor, and you could find yourself repeatedly burning your cash over and over again. But what if you had $50,000 for trading instead from the start, not being afraid of failure?

Well, you can sell your property. It will be a huge risk of damage, potentially harming you and your family, in case you fail. Don’t do that.

Seeking “investors” may sound appealing, but the 20/80 profit split between trader and investor makes a profit margin relatively small, and introduces moral hazards and psychological pressures, distracting a trader from focusing on the process.

Pamm accounts or social trading offer alternatives, but they bring inconsistencies to your trading business, as you have no control over your managed capital: should your strategy experience a drawdown, investors would take their capital and leave. 

What if, instead, you had an investor with a substantial account size, remaining silent in failure and ready to reinvest once you get back on track?

This is where the prop trading model comes into play. 

Prop trading model

The profit split is prop trading so that a trader receives the biggest proportion of a trading profit: usually, 70%-90%, A prop trading company specializes in providing trading capital under management, i.e. it is a professional investor who has the guts to withstand swings of your equity curve.

In prop trading, you take a modest risk by investing a predetermined sum upfront, granting you entry into a challenge. 

It involves trading on a demo account, showcasing your trading proficiency. The challenge has strict rules: you must reach a specified profit target, adhere to risk limits, and sustain your trading activity for a set number of days. While a challenge may comprise one or two phases.

Upon completing the challenge, you secure capital under management. That’s the essence of it – no investor discretion, just clear and rigid rules.

What happens if you encounter setbacks during the challenge or even while trading the real money account? No need to fret; you can opt for a new challenge and make another attempt. There’s no limit to the number of tries, relieving you of psychological pressure and creating a space for learning and overcoming mistakes.

Make no mistake: trading is a demanding venture; otherwise, everyone would be engaged in it. It’s possible that your current skill set might not be sufficient to hit the target. It may require time to develop as a professional trader.

In the past, trading failure could deal a substantial blow to a trader’s career, prompting many to abandon the trading business entirely. With prop trading, that’s no longer the case. Now, you have the freedom to make as many attempts as you need. Armed with consistency and dedication, nothing is standing in the way of your journey to trading success.

To sum it up, here are the main advantages of prop trading:

• It’s better to have $50000 under management rather than trying to run the $500 account.
• It’s better to have a split of 70/30 in your favor;
• It’s better to put at risk the capital of a prop firm, not your hard-earned money.