What Are Proprietary Trading Firms?
Proprietary trading firms, or prop firms, trade financial instruments (stocks, bonds, commodities, and forex) with their funds, not clients’.
This model lets firms enjoy successful trades, aligning their interests with trading performance. In their competitive, fast-paced trading world, they need profound trading skills and a solid grasp of risk management.
Evolution of Prop Trading Firms
Prop trading has evolved over the years. These firms operated in physical trading pits, with traders shouting and signaling orders.
Today, the landscape has shifted towards electronic and algorithmic trading, enabling faster and more efficient trading strategies.
The Life of a Funded Trader
To become a funded trader, one typically undergoes an evaluation process by a prop firm. This process assesses the trader’s ability to meet certain profit targets while adhering to the firm’s trading rules.
Successful traders are then given access to a funded trading account, where they trade using the firm’s capital.
Profit Targets and Split
Each prop firm sets specific profit targets that traders must achieve to maintain their funded status. Additionally, profit splits are a crucial aspect of this relationship.
Profit-sharing splits between traders and firms range from 50/50 to as high as 90/10 in favor of the trader.
Exploring Different Types of Prop Firms
Forex Prop Firms
Forex traders find a welcoming space in forex prop firms, which focus on currency markets. These firms often offer leverage, allowing traders to control large positions with a small amount of capital.
Equity and Commodity-Based Firms
Other prop firms specialize in equities, commodities, or a mix of various financial instruments. The trading style and strategies employed can vary, catering to the diverse skill sets of professional traders.
How to Choose the Best Prop Trading Firm
When choosing a prop trading firm, several factors come into play. These include:
- The reputation and track record of the firm.
- The profit split and potential earnings.
- Trading conditions include minimum trading days, offered leverage, and the variety of tradable instruments.
- The cost structure, including any monthly fees or upfront costs.
Best Prop Trading Firms
Identifying the best prop trading firms requires thorough research. Consider factors such as features in funded trading programs, proprietary trading legal frameworks, and the firm’s ethos.
More funding options have been introduced in the industry to support skilled traders.
8 Cheapest Prop Trading Firms in 2023
The Funded Trader – Royal Challenge Account
The Funded Trader is a cheap prop trading firm that helps traders start their careers easily. This analysis looks at important things like trading rules, support and resources, profit targets, and adapting trading styles.
The Funded Trader stands out with its Royal Challenge Account, providing a $50,000 balance for a mere $289. Traders experience a two-step evaluation process, offering a profit split ranging from 80% to an impressive 90%. The firm maintains a stringent yet flexible approach with a Phase I profit target of 8% and a maximum daily loss of 5%.
Traders at The Funded Trader enjoy a supportive environment. The firm permits the use of Expert Advisors, Trade Copiers, and imposes no lot size limits in its Royal Challenge. Traders use resources to improve their trading journey, including drawdown options and managing more initial capital.
The Funded Trader sets clear profit targets for its traders. Phase I requires a virtual profit target of 8%, followed by 5% in Phase II. The firm’s scaling plan offers the potential to trade up to $600,000 on a TFT Account. With traders receiving up to 95% of the earnings, this demonstrates a commitment to rewarding successful traders.
The Funded Trader provides traders with the opportunity to trade various assets. This includes Forex, Indices, Commodities, Metals, and Cryptocurrencies, with leverage of up to 1:200. This adaptability allows traders to diversify their portfolios and explore different markets.
You can check out the full review by clicking here, and make sure to use the code “PW” for a 5% discount.
FundedNext is one of the cheapest prop trading firms, offering a range of balance options to cater to traders’ needs. The company offers traders a maximum funding of $200,000 and a plan to grow their business up to $4 million. Traders can earn up to 90% of the profit share to increase their income.
FundedNext offers a flexible trading environment. Traders can use leverage of 1:30 or 1:100 to trade Forex, Indices, and Metals. Traders can achieve this through a straightforward one-step or two-step process.
FundedNext provides a friendly environment for traders, with a personal account manager to help them succeed in their trading.
Traders can initially earn a 15% profit share. If they remain consistent and make profits, they have the opportunity to increase it to 95%. If they have $4 million in their account, they can receive a 40% increase in their balance every 4 months. This increase can continue until their balance reaches $4 million.
FundedNext helps traders choose the trading styles they prefer, like Forex and Crypto, among others.
To join FundedNext’s prop trading firm program, traders need to select their funding model, trade, and prove their skills. The firm offers a one-step challenge with an 80% profit share by default, with the potential to scale up to 90%. They also provide a two-step process, with profit share percentages of 8% (Phase I) and 5% (Phase II).
Don’t forget to check out our review for FundedNext and use code “SHINY10” for a 10% discount when you’re ready to get started!
E8 Funding – E8 Account
E8 Funding, a proprietary trading firm, is known for providing opportunities for Forex traders worldwide. It offers a simulated trading account with a maximum initial balance of $1,000,000. Traders can choose from two evaluation options: the E8 Account and the ELEV8 Account.
CEO Dylan Elchami, with a background in real estate and luxury cars, founded the USA-based firm in 2021. E8 Funding earns recognition for its user-friendly interface, accessible payouts, and unique evaluation programs.
E8 Funding offers two evaluation options: the E8 Account and the ELEV8 Account. With maximum initial balances of $300,000 and $1,000,000, respectively. Traders can engage in Forex, commodities, indices, crypto, and equities trading. The firm offers a user-friendly dashboard for trading.
The firm provides a 3-phase evaluation process. Traders get to keep 80% of profits and the company covers all losses when their funded account is successful. The initial fee paid is refundable upon the first profit withdrawal from the Funded Account.
E8 Funding offers traders 80% of the profits. Additionally, it allows them to increase their overall drawdown by up to 14% through the use of unique risk scaling. The success rates are not explicitly mentioned in the available information.
Traders can trade Forex, commodities, indices, crypto, and equities with varying leverage depending on the trading asset. The firm offers a simulated trading account that allows traders to experience the power of trading with E8 Funding.
Don’t forget to use the code: PW10 to enjoy a 10% discount.
FTMO
FTMO is a cheap prop firm offering affordable account sizes, which range from €155 for a 10k balance to €1080 for a 200k balance. FTMO operates with a two-step program, and profit splits depend on your chosen trading mode.
In non-scaled accounts, traders receive 80% of the profits. If you opt for scaled accounts, your profit share increases to 90%. FTMO provides opportunities for investment management. Traders can trade Forex, Indices, Commodities, Cryptocurrencies, and Stocks, enabling diverse market exposure.
FTMO is highly recommended due to its excellent support, trustworthy reputation, and unique perks. The company has paid out over $130 million in profits to traders on their platform in over 180 countries.
FTMO extends trading opportunities across various financial instruments. Traders can choose between Normal Mode and Aggressive Mode, depending on their trading style.
FTMO, as an investment company with excellent broker-level service, comes highly recommended for traders seeking additional capital to trade with.
Don’t forget to check out our review for FTMO.
SurgeTrader
SurgeTrader operates as a prop trading company, offering flexible options, low-cost evaluation, and a high profit share. It stands out as one of the cheapest prop firms.
SurgeTrader provides flexible options to align with traders’ capital and trading needs. It provides various low-cost account balances, ranging from $25k to $1m. This accessibility caters to traders with different capital requirements.
The firm emphasizes risk management, with a daily loss limit of 5% and a maximum drawdown of 8%. The program is simple. You can earn a 75% profit. If you buy something extra, the profit can increase to 90%.
SurgeTrader’s profit split allows traders to keep up to 90% of their profits, which is high compared to other prop firms. This can be attractive to traders aiming for higher profit retention.
SurgeTrader caters to a variety of trading interests, including Forex, Stocks, and Cryptocurrencies. This allows traders to diversify their portfolios. It offers different leverage ratios based on the asset class, suitable for traders with various trading styles.
Don’t forget to check out our review for SurgeTrader and make sure to use code “SHINY” for a 10% discount when you’re ready to get started!
City Traders Imperium – Instant Funding Account
Consider one of the cheapest prop trading firms, City Traders Imperium because of providing an Instant Funding program. Enabling traders to choose a balance option aligned with their trading capital.
The program is a one-step process offering profit shares ranging from 50% to 100%. It sets an initial profit split at 9% and maintains a maximum drawdown of 5% for effective risk management. The firm supports trading across various asset classes, including Forex, Cryptocurrencies, Commodities, and Major Index Stocks. Leverage ratios vary based on the asset type.
The company trains and supports traders who have funding, helping them adjust their trading style for various types of assets.
Don’t forget to check out our review for City Traders Imperiumand make sure to use code “SHINY10” for a 10% discount when you’re ready to get started!
Elite Traders Funding
Elite Trader Funding earns its reputation as one of the cheapest prop firms. Because of its favorable profit split, low subscription fees, and various evaluation options catering to different trading styles.
Elite Trader Funding provides various evaluation options. These options include 1 Step, Fast Track, Static Drawdown, End of Day Drawdown, and Diamond Hands. These options offer flexibility for traders with different trading styles and risk preferences.
The firm supports funded traders by offering free NinjaTrader license keys, real-time data, and a subscription fee covering account maintenance and a level 1 data feed. This helps ensure traders have the necessary resources for their trading activities.
The profit targets and success rates vary based on the evaluation option chosen. For example, the 10K Eval has a profit target of $1,250, while the 250K Eval has a profit target of $15,000.
Elite Trader Funding offers futures on currency, cryptocurrency, agricultural commodities, energies, and metals. Traders enjoy the flexibility to engage in various asset classes based on their preferences and strategies.
The Trading Pit
One of the cheapest prop trading firms, The Trading Pit. Stands out for its transparent and simple rules, devoid of profit withdrawal limits or small print. The firm offers a one-time challenge fee, and traders can keep up to 80% of the profits, withdrawable at every step.
The Trading Pit is a global multi-asset prop trading firm that allows traders to trade from anywhere with instant payouts. The firm’s commitment to making trading accessible to everyone includes offering innovative technology and tools to maximize their potential. Operating as a broker-neutral prop firm, The Trading Pit ensures an unbiased trading environment.
The firm is adaptable to different trading styles, including forex and crypto. Also, provides support and resources for funded traders. The profit target expectations and success rates are not specified on their website.
The data shows that finding the cheapest prop firm involves more than just looking at the price. Consider other factors, like challenge duration and the number of steps involved, despite the seemingly low initial price.
Finding a prop firm that aligns with your trading style and preferences is crucial. Assessing these elements becomes essential for making an informed decision.
Our website helps you make informed decisions by comparing the best no-evaluation prop firms with instant funding. While these firms usually cost more than evaluation-based options, they provide the chance to begin trading on a funded account right away.
For those seeking cost savings, you can visit our prop firm discounts section. You’ll discover discount coupons, promo codes, and special offers to get the best pricing available for the top prop firms. This way, you can optimize your choice based on your unique trading characteristics.
Legal and Regulatory Aspects of Prop Trading Firms
Prop trading firms trade financial instruments like stocks, options, futures, and currencies using their capital. Their popularity has risen due to their potential for high profits and their ability to trade with minimal capital. However, there are legal and regulatory aspects that prop trading firms must adhere to to operate within the law.
Regulatory Framework
Prop trading firms follow regulations from the SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission) to safeguard investors and uphold fair, transparent markets.
The Volcker Rule, a key regulation, requires prop trading firms to comply by prohibiting banks from engaging in proprietary trading. There are exceptions for certain types of trading, such as market making and hedging. However, there are exceptions for certain types of trading, such as market making and hedging.
The Dodd-Frank Act mandates prop trading firms to register with the CFTC and follow reporting and record-keeping requirements.
Legal Considerations
Prop trading firms must also consider various legal issues, such as intellectual property rights, employment law, and contract law. This involves ensuring trading strategies don’t infringe on others’ intellectual property rights and verifying the legally binding and enforceable nature of employment contracts.
In addition, prop trading firms must ensure that they comply with all applicable tax laws and regulations. This includes paying taxes on any profits earned from trading activities.
Frequently Asked Questions
What is the cheapest prop firm challenge?
The cheapest prop trading firms in 2023 offer various account sizes with different fee structures. The Royal Challenge Account offers a $50k balance for $289, with alternative account sizes at varying fees.
FTMO, like other firms, is known for being affordable and offers substantial funding with a profit-sharing model. Consider evaluation costs, profit split schemes, and trading rules when selecting a prop firm.
Each firm has its own characteristics and fee structures, so it’s essential to carefully compare them to find the most suitable option.
Are there any free prop firms?
Some prop firms offer free trials or demo accounts, such as FTMO and The Funded Trader. The cost of joining a prop firm varies, with some firms charging a one-time fee, while others charge a monthly subscription. The profit split between the trader and the company also varies, with some firms offering up to a 90% profit split. Prop firms have unique trading rules, and traders need to adhere to them.
How much is a prop firm?
Some prop firms charge a one-time fee, while others charge a monthly subscription fee. The cost of joining a prop firm varies widely, with some firms offering affordable evaluation costs. The profit target and minimum trading days also vary depending on the firm. Some firms offer instant funding programs, while others have scaling plans that allow traders to increase their account size as they meet profit targets.
What is the best funded prop firm?
The best-funded prop firm depends on individual preferences and trading styles. However, some of the top proprietary trading firms in 2023 include:
- TopTier Trader
- Fidelcrest
- Funded Trading Plus
- TopstepTrader
- Surgetrader
- FTMO
- LuxTradingFirm
- The Funded Trader
- Belvedere Trading
- Chicago Trading Company
- My Forex Funds
- City Traders Imperium
- Take Profit Trader
- Elite Trader Funding
These firms offer various funding options, profit splits, and evaluation processes. These firms provide various funding options, profit splits, and evaluation processes.
For instance, TopTier Trader offers funding up to $600k. These funds allow traders to keep up to 90% of profits.
Funded Trading Plus offers various funding options, including one-stage and instant funding, as well as a traditional two-stage model, beginning with a $12,500 balance.
City Traders Imperium offers instant funding programs with various account sizes, ranging from $4,000 to $80,000, and profit targets of up to 10%.
Keep in mind that the least expensive prop firm might not be the most suitable. Traders should also weigh other factors like trading conditions, support, and risk management.
To help you make an informed decision, our website offers a comparison of the best no-evaluation prop firms with instant funding. These firms generally have higher prices compared to evaluation-based options, but they provide you with the opportunity to start trading on a funded account right away.
For those seeking cost savings, you can visit our prop firms discounts section, where you’ll discover discount coupons, promo codes, and special offers to secure the best pricing for the top prop firms available in the market. This way, you can optimize your choice based on your unique trading characteristics.
