Sheperd M. on LinkedIn: Should We Advocate for Real Funds Only in Proprietary Trading Firms?… (2024)

Sheperd M.

Founder & CEO at Portfo || President at FAB (South Africa) || Author of ForexDecoded

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Excited to share this insightful article on the future of proprietary trading firms and the role of FunderPro in shaping the industry. As someone who cosigned FunderPro's vision, I believe in the importance of real capital infusion and collaboration for a sustainable trading ecosystem. Check out the article for valuable insights and perspectives on navigating challenges and embracing collaboration in the prop trading world.

Should We Advocate for Real Funds Only in Proprietary Trading Firms? Navigating Challenges and Embracing Collaboration with FunderPro. Sheperd M. on LinkedIn
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Sheperd M. on LinkedIn: Should We Advocate for Real Funds Only in Proprietary Trading Firms?… (24)

Sheperd M. on LinkedIn: Should We Advocate for Real Funds Only in Proprietary Trading Firms?… (25)

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Sheperd M. on LinkedIn: Should We Advocate for Real Funds Only in Proprietary Trading Firms?… (2024)

FAQs

Why is proprietary trading bad? ›

Personal Risk: One of the significant drawbacks of prop trading is the potential personal financial risk. If a trader doesn't perform well, they may lose their deposit, and in some cases, their job. Loss Limitations: Prop firms often implement daily loss limits to protect their capital.

Why are you pursuing proprietary trading? ›

Also known as “prop trading,” it offers higher earnings potential much earlier in your career than jobs like investment banking or private equity. It's arguably the most merit-based industry within finance: if you make millions of dollars for your firm, you'll earn some percentage of it.

How do proprietary traders make money? ›

Hedge funds invest in the financial markets using their clients' money. They are paid to generate gains on these investments. Proprietary traders use their firm's own money to invest in the financial markets, and they retain 100% of the returns generated.

What are the downsides of prop trading? ›

- Traders in prop firms often have limited control over the firm's capital. They may need to deposit their own money as collateral or risk management. - Additionally, payouts are subject to the firm's rules, which may restrict a trader's access to profits.

Is proprietary trading worth it? ›

The most obvious and potentially largest advantage is the potential for significantly higher profits. As we have explained, as firms trade their own capital when prop trading, they take 100% of the gains generated from their investments, not just a commission fee.

Do prop firms use real money? ›

As prop firms use their own funds in order to trade, rather than using their clients, it is often a safer option for clients who do not want to directly risk their own money, but are instead willing to pay for the services of a prop firm.

Where do prop firms get their money? ›

Commission: Prop firms may charge a commission on each trade made by their traders. Profit Split: In some cases, prop firms may take a percentage of the profits earned by their traders as a form of compensation. Training Fees: Some prop firms offer training programs for new traders, which may come at a cost.

What happens if you lose prop firm money? ›

Proprietary trading firms often provide evaluation accounts where you prove your trading skills. Usually, you pay a one-time fee to enter this "challenge." If you lose money during this evaluation, you won't owe anything beyond the initial fee.

What is the average salary of a proprietary trader? ›

Proprietary Trading Firms Salary
Annual SalaryHourly Wage
Top Earners$101,500$49
75th Percentile$96,000$46
Average$76,005$37
25th Percentile$46,500$22

How many prop firm traders are successful? ›

The article from Lux Trading Firm provides slightly different results. According to it, 4% of traders, on average, pass prop firm challenges. But only 1% of traders kept their funded accounts for a reasonable amount of time.

Do prop traders make a lot of money? ›

The salary of a prop trader can vary greatly depending on several factors such as experience, performance, and the size of the firm. On average, a junior prop trader can expect to earn anywhere between $50,000 to $100,000 per year, while a senior trader can make upwards of $500,000 annually.

Is proprietary trading illegal? ›

Prohibition on Proprietary Trading

The prohibition against proprietary trading applies not only to banks themselves but also to bank holding companies. Proprietary trading here is very broad, including almost all securities, derivatives, and futures.

What is proprietary trading advantages and disadvantages? ›

However, if you understand the risk and trust the management and its operations, proprietary trading offers many advantages, although it mostly involves day trading. At the end of the day, the main advantage of proprietary trading is leverage, and the main disadvantage of proprietary trading is fraud.

What happens if you lose money in prop trading? ›

Proprietary trading firms often provide evaluation accounts where you prove your trading skills. Usually, you pay a one-time fee to enter this "challenge." If you lose money during this evaluation, you won't owe anything beyond the initial fee.

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