Funded Prop Trading Account. What is Prop Trading?

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Do You Trade The Financial Markets, Or Are You Thinking Of Trading Them?

Then we, ALPHA CAPITAL GROUP, are looking for you to join our community of successfully funded proprietary traders.

We fund talented traders like you with accounts up to $200,000, where you keep 80% of your profits. Scale your account up to a maximum of $2,000,000.

Choose from one of our challenges, and start trading with a funded account!

You also pay ZERO COMMISSIONS on any trades!

In the context of a bank or financial institution, prop trading (eng. Proprietary Trading or Prop Trading) refers to the trading activities of an organization using its own funds. This means that the company has no right to use deposits or other cash reserves of clients to carry out transactions, the profit from which goes to the company. Given that it uses its own funds, the company not only takes profits for itself but also takes on all potential losses.

As a rule, special departments are allocated for prop trading, which does not have access to client funds. However, they may take part in the company’s market-making: for example, a client may purchase illiquid securities from the prop trading department. Since prop trading is regulated by strict rules, most companies try to ensure that these departments operate independently.

As for the prop traders themselves, they use the capital of the company to make trades. In this case, an individual acts as an agent of the company, taking a part of the profits. Companies often train traders and provide them with a prop trading platform. Currently, many choose this direction as a full-fledged career. The initial investment is small and the potential benefits are vast. However, depending on the amount invested by the trader, certain restrictions may apply.

In this article, we will mainly talk about prop trading from the point of view of individuals and look at how, with the right experience, you can become a professional prop trader.

How does prop trading work?

There are several models of prop trading. Here are some of them:

With little or no initial trader capital.

In this case, the trader only bears the costs of training and does not require large investments from him to start trading. The company takes a significant part of the profits – up to 50%. Traders also incur additional costs, such as software fees. Given that the trader’s invested capital is small, his personal risk in this case is also lower.

With large investments by the trader.

This is an alternative to the above model. Here, the prop trading company offers the trader to invest the bulk of the capital. In return, he gets a much larger share of the profits. Considering the probability of losing the initial investment, this model is suitable for traders with an increased risk appetite. In this case, companies typically take 10% of the profits, and commissions and other fees may also apply.

Mixed model.

It is also worth looking at the option that combines elements of the previous two models. A trader’s initial investment is significant, as is his share of profit and loss. By ensuring the equal participation of the parties, this model encourages more efficient use of capital and allows you to balance the interests of the trader and the company. The principle of equal shares in profit and loss serves as a deterrent for traders who are inclined to take risky trades since if they fail, their equity will suffer equally.

Benefits of prop trading.

Many do not understand why work for a prop trading company because profits can be made on a personal trading account. However, they overlook the many benefits of prop trading that equity trading does not provide. Below are some of them.

Access to more start-up capital.

We mentioned earlier that prop trading is a full-time job option, but for this, the profit of the trader must be significant. When using only equity capital, a trader may never achieve high returns, given the limited amount of funds available. Prop trading gives traders access to more capital. The additional funds that the company is willing to invest provide a higher potential for profit. This form of trading allows the trader to do without the use of leverage. Although it can significantly increase profits, leverage comes with certain costs.

Lower Risk.

In most cases, prop traders invest only a small amount of funds, and the share of capital contributed by the company is much higher. Thus, the trader’s participation in the capital is small, which allows him to take greater risks. In such a situation, the company may be at a disadvantage if the trader begins to make too risky transactions that he would not have taken with his own funds. It is worth noting that in such a model, the trader’s limited level of risk is combined with unlimited potential profit.

Reduced brokerage commissions and fees.

When you trade on a personal trading account, brokerage commissions and fees can be higher than for a prop trader, since trading costs for companies are generally lower than for retail investors. Due to the fact that transactions on behalf of the company are made more often and in a larger volume, the trader’s costs can be significantly reduced, and he also pays less for account maintenance or is completely exempted from this fee.

Access to training and trading platforms.

Given that these companies invest a significant amount of capital, they often train traders before they can move on to real trading. Although in most cases the cost of training falls on the trader himself, it gives him valuable skills needed in the world of finance. Working with other traders in the same company also contributes to the development of a trader, especially if he has little experience in this area. Most importantly, the trader gets access to valuable materials that will be very useful to him in trading.

How to find a job as a prop trader?

Many financial institutions post job openings for prop traders on job search sites. Each such company specializes in a certain set of assets from stocks to cryptocurrencies. Traders with experience in currency pairs, futures, and other derivatives are in high demand. Although experienced candidates are preferred, companies that provide appropriate training are willing to hire novice traders. Some companies even offer a fixed salary. In this case, there are two options: either the trader gives the company all the profits, while he is paid a bonus for good results, or he receives a small base rate and a commission on the proceeds.

Most of these vacancies can be found on the usual job portals, as well as on the websites of the companies themselves. Before submitting an application, the candidate must familiarize himself with the system of payment for his services and profit sharing. Also, be aware that sometimes there are scam ads asking the trader to make an initial deposit with the promise of incredible profits. Applicants should be wary of such schemes and carry out all necessary due diligence before committing any funds. You can also contact a reputable consultant to help you find a job as a prop trader.

Conclusion.

Working as a prop trader allows you to increase the potential profit at the expense of the company’s capital. This low-risk strategy is gaining more and more popular among traders. Today, there are numerous opportunities available to work from home, and not only is there an increase in the volume of such trading, but also an increase in the range of asset classes used in it.

For example, ALPHA CAPITAL GROUP.

THE JOURNEY TO BECOMING AN ALPHA TRADER.

1. Funding Evaluation
This is where you prove that you can navigate your way around the markets.

You’ll be set some straightforward trading objectives Phase 1 makes 8% profit, and Phase 2 makes 4% profit.

When you meet these objectives you will pass and progress on to a fully funded live trading account.

The traders that succeed generally have a strong understanding of the relationship between risk and reward and trade with logic over emotion.

2. Verification
Once you have passed your funding evaluation, the next step is to verify your results and verify your identity.

Once you have shared the necessary information and documents with our compliance team, your live-funded account will be created.

You will then receive your account credentials so you can start to trade live in the financial markets.

As an Alpha Capital proprietary trader, you can look forward to receiving 80% of your profits.

3. Alpha Capital Trader
You are now part of our funded trader community.

You will be part of a community where everyone wants you to succeed.

As you grow your account, we’ll help you by scaling the balance of the account.

Each time you achieve 10% profit we grow your account by 10%.

This is where you can scale your account up to a maximum of $2,000,000.

EVERY CHALLENGE PURCHASED ALSO RECEIVES THE FOLLOWING:

ACCESS TO OUR ADVANCED TRADERS DASHBOARD 2.0
ADVANCED TRADERS DASHBOARD – VALUE $497
TRADEMATE PANEL – VALUE $297
SESSIONS ZONES AND VWAP INDICATOR – VALUE $67
PIVOT POINT INDICATOR – VALUE $47
30-DAY ACCOUNT PERFORMANCE REPORTS
CUSTOM-BUILT TRADING JOURNAL
LIVE MARKET NEWS FEEDS
ECONOMIC CALENDAR
MONTHLY TRADING COMPETITIONS

Frequently Asked Questions

*** How do prop trading companies make money?
Prop trading companies provide traders with capital to trade various financial instruments. The profit from the transactions is partly or wholly for the benefit of the company, depending on the specific profit-sharing agreement. If the trader incurs losses, then the company loses money. Prop trading companies may also charge fees for training or using the trading platform.

*** How much can you earn from prop trading?
Purely theoretically, a prop trader can earn an unlimited amount, but in order to evaluate the real picture, let’s turn to the average values. According to a June 8, 2022, Payscale survey, prop traders earn an average of $85,000 per year, with 80% earning between $50,000 and $161,000. The maximum earnings, taking into account commissions and bonus payments, is $267,000 per year. The figures are before taxes.