Prop trading firms have become pivotal in the finance sector, providing traders with capital, training, and a platform to trade while sharing in the profits. The profit split is heavily dependent on each trader’s trade prowess but usually ranges from 50:50 to 90:10 in favor of the trader.
In this article, we are going to examine the best prop trading platforms and look into their respective offerings, including pricing plans, initial account balances, profit splits, and more.
How does prop trading work?
Proprietary trading, commonly known as prop trading, involves a financial firm or commercial bank investing for direct market gain rather than earning commission dollars by trading on behalf of clients. This type of trading activity is carried out by specialized prop traders who use the firm’s own capital to make trades. Here’s how it typically works:
- Capital allocation: The firm allocates a portion of its own capital to a trader or a team of traders. This capital comes from the firm’s balance sheet, and the profits or losses from the trading activities directly affect the firm’s earnings.
- Strategy development: Prop traders develop trading strategies based on various methodologies like quantitative analysis, fundamental analysis, or technical analysis. These strategies can be diverse, ranging from day trading to long-term investments in various asset classes, including stocks, bonds, forex, commodities, cryptocurrencies, and derivatives.
- Risk management: Since the firm is trading with its own money, risk management is a critical component. Prop trading desks have strict risk management rules (usually in the form of a 4-10% maximum drawdown and daily loss limits) to ensure that a single trade or series of trades does not expose the firm to excessive risk.
- Profit and Loss (P&L) responsibility: Prop traders are accountable for the profits and losses generated from their trading activities. Their compensation, which comes in terms of a profit share split, is often heavily tied to the performance of their trades.
Prop trading can be highly profitable but also carries significant risks. The success of prop trading depends on the skill of the traders, the effectiveness of their strategies, and their ability to manage risk.
The 5 best prop trading firms: Examining top platform for 2024
In the following sections, we are going to compare the best prop trading offerings in the market right now and examine their profit splits, leverage levels, pricing structures, and more.
1. Top One Trader – The best forex prop trading firm overall
Top One Trader is a leading prop trading platform, allowing users to get access to extra capital and trade forex, stocks, and other supported asset types with up to 90 to 10 profit split in favor of the trader. To get started, you need to pass a challenge to prove your trading proficiency. There are several different challenge types you can choose from, as well as various add-ons that determine which platform you’ll use for trading (Metatrader 4 or Metatrader 5), profit split, max leverage, and more.
The least expensive option is the 1-step challenge, which is currently discounted and costs $82 (down from the original price of $137). The gain target is set at 10%, while the max trailing drawdown is 8%. There’s no time limit for challenge completion, as well as no minimum or maximum trading days, which is especially beneficial for new traders who are not as versed in quickly finding good trading opportunities. The default profit split starts at 75% but can be elevated to 90% with the purchase of an add-on package. It’s worth noting that traders who successfully pass the beginner challenge and demonstrate a high degree of trading prowess have the ability to scale their accounts all the way to $5 million.
| Initial Account Balance | $12,500 to $250,000 |
|---|---|
| Challenge Price | $82 to $724 (discounted price without add-ons) |
| Leverage | Up to 50:1 |
| Profit Split | Up to 90:10 |
Visit Top One Trader
2. Apex Trader Funding – A leading proprietary trading firm
Apex Trader Funding is a prop trading firm focused on providing access to capital to traders engaging in futures investing. There are several trading plans available – the cheapest starts at $147 per month with a starting capital of $25,000. The most expensive option costs $657/month and comes with $300,000 in starting capital. Each option has a distinct profit goal, with traders needing to clear a profit goal of $1,500 for the cheapest option and $20,000 for the most expensive option.
In addition, each plan comes with a respective trailing threshold, ranging from $1,500 for the starter plan and scaling up to $7,500 for the most expensive plan. Each plan comes with a NinjaTrader license (worth $75) and real-time data fees (worth $55 value). It’s worth noting that users can trade with up to 20 different accounts simultaneously, which means that a trader can manage as much as $6 million in capital.
| Initial Account Balance | $25,000 to $300,000 |
|---|---|
| Challenge Price | $147/month to $657/month |
| Leverage | None |
| Profit Split | Up to 90:10 |
Visit Apex Trader Funding
3. MyFundedFutures – One of the best futures prop trading firms
Launched in 2023, MyFundedFutures is one of the newcomers in the proprietary trading scene. Despite its recent launch, the platform offers a very attractive package for prop traders, which starts at a very reasonable $100/month for an account with $50,000 in capital. In addition, the split for the first $10,000 in profit is 100% in favor of the user.
Each plan comes with a 6-8% profit target and a 3-4% max trailing drawdown. However, there’s no daily loss limit, which means that traders can pursue their trading strategy even if it turns out unprofitable at the start. MyFundedFutures works natively with some of the most popular trading platforms, including Tradovate, TradingView, NinjaTrader, and Quantower.
| Initial Account Balance | $30,000 to $150,000 |
|---|---|
| Challenge Price | $100/month to $375/month |
| Leverage | None |
| Profit Split | 100% of the first $10,000 in profit, then 90:10 |
Visit MyFundedFutures
4. The 5%Ers – The best for beginners
The 5%Ers is one of the best prop trading firms for traders who want to trade a variety of financial products. The platform supports forex, metals, indices, commodities, and even cryptocurrencies. The 5%Ers provides a range of resources for beginner traders, including free video courses, blog posts, and more. Once you pass the demo account challenge, you can quickly progress both in terms of account capital (all the way to $4 million) and profit split (up to 100% for the best prop traders).
In addition to learning resources, there’s a dedicated bootcamp program that starts at an account balance of $25,000 and can be increased all the way to $100,000. It’s worth noting that the profit target lowers as you progress through the bootcamp stages. The time for reaching each account milestone is unlimited, which means that you can complete them at your own pace.
| Initial Account Balance | $20,000 to $200,000 |
|---|---|
| Challenge Price | $95 to $350 |
| Leverage | 10:1 |
| Profit Split | Starts at 50:50 and can be increased up to 100:0 |
Visit The 5%Ers
5. FXIFY – The best for experienced traders
FXIFY features one of the best packages for experienced traders around. While the platform is suitable for beginners, where it truly shines is its expert offering. The initial account balance ranges from as low as $15,000 all the way up to $400,000, which is more than any other prop trading platform features on our list. The daily loss limit is fixed at 5% for each plan, while the max drawdown is set at 10%. The profit split for each plan can be increased up to 90% in favor of the trader, while the maximum leverage is 50x.
The least expensive plan starts at a one-time fee of $99 and ranges up to $1,999 for the plan with an initial account balance of $400,000. It’s worth noting that each plan can be completed in one, two, or three steps. For example, if you pay $99 for a three-phase program and start out with an account balance of $15,000, you will first have to reach a profit target of $750 three consecutive times.
| Initial Account Balance | $15,000 to $400,000 |
|---|---|
| Challenge Price | $99 to $1,999 |
| Leverage | Up to 50:1 |
| Profit Split | Up to 90:10 |
Visit FXIFY
The bottom line
Prop trading firms can be a great outlet for up-and-coming traders who might possess robust trading skills but lack the capital to get started on their journey. Prop trading platforms provide capital in exchange for a profit split with a trader who trades with them, usually in the range of 75% to 90%.
If you want to explore conventional trading platforms, where you need to deposit your own funds to trade, check the following articles:
