If you are actively trading in the stock market in 2023, chances are you’ve heard a new buzzword flying around: Prop Trading, short for Proprietary Trading. Whether you’ve tried prop trading or not – or have even heard of it at all – its popularity is quickly growing because it provides everyday traders with a very enticing opportunity: prove you can trade and prop firms will give you their money to trade with.
In this article, we’ll cover a little bit about prop trading as a whole and provide a review of one firm that we believe takes the crown as Best Prop Trading Firm in 2023: Funder Trading. While many prop firms will only fund their traders with Forex or Futures accounts, Funder Trading is emerging as a ‘groundbreaking’ firm because they are currently the ONLY firm to offer options funding without certification or upfront capital.
Before we dive into our review of Funder Trading, let’s go through a few prop trading basics first…
Introduction To Prop Trading
Prop trading, short for proprietary trading, is a type of trading where financial institutions or firms recruit and fund individual traders with their own capital. Unlike ‘traditional’ trading, where individuals trade with their personal funds, prop traders trade with the firm’s money.
The main objective of prop trading is to generate profits for the firm by taking advantage of market fluctuations and price movements. Funded traders are given access to advanced tools and technologies that enable them to execute trades quickly and efficiently.
This form of trading has gained popularity in recent years due to its potential benefits and opportunities for both novice and advanced traders. With prop trading, traders have the opportunity to leverage advanced technology, work in a flexible environment, and generate trading profits without having to risk their own money.
Why Would You Want to Be a Prop Trader?
Let’s take a look at the two types of people who might be interested in prop trading and would want to get funded:
- People with small accounts (or beginners) who do not have enough capital to generate the returns they want (remember, when you’re trading with more money, you can potentially generate bigger profits)
- People with larger accounts that want to trade, but don’t want to risk their own money. The stock market is a volatile place and some traders (even the most advanced ones) do not want to risk their own money.
Prop trading allows both of these types of people to gain access to large amounts of capital without having to risk their own. Prop firms offer varying levels of funding so it’s important that traders look at typical “starter” funding amounts, and determine if there is growth potential in the amount of funding that is accessible to them. Prop traders who are successful may want access to additional capital as they become more profitable.
How Does Funder Trading Compare? Funder Trading offers funded accounts starting at $100,000. This is a much higher base funding level than what is typically seen at other firms, which tend to start in the $65k – $75k range.
Advantages & Disadvantages of Prop Trading
There are several advantages and disadvantages for the everyday retail trader when it comes to trading with a prop trading firm:
Advantages of Prop Trading
- Potential to Earn Substantial Profits – Unlike traditional trading where individuals rely solely on their personal funds, prop traders have access to upfront capital provided by the firm. This enables them to take larger positions and potentially generate higher returns.
- Continuous learning opportunities – Prop firms often provide extensive education and training programs to help traders develop their skills and stay updated with market trends. Additionally, prop trading firms invest in advanced technology and tools that can enhance a trader’s decision-making process and execution speed.
- Flexibility – Traders have the freedom to choose when and where they work, allowing for a better work-life balance. This flexibility can be particularly appealing for those who value autonomy and prefer not to be tied down by rigid schedules.
Disadvantages of Prop Trading
- High Barrier to Entry – Prop trading firms make most of their money when their traders make money, so becoming a funded trader often requires passing rigorous challenges or applications that are designed to ensure traders can actually trade profitably. This has created a high barrier to entry for retail traders, who may just be interested in trading without having to risk their own money.
- High Pressure and Stress – Some firms set challenging risk parameters and profit targets during your “testing” period and even after you get funded. This can make the prop trading experience highly stressful due to the fast-paced nature of the markets and the pressure to generate profits consistently.
- Limited Job Security – Prop trading firms may have strict performance metrics and targets that traders must meet. Failure to meet these targets could result in termination or loss of trading privileges. The lack of job security is a significant disadvantage for individuals who prefer stability and predictability in their career.
- Lack of Traditional Benefits and Guarantees – Unlike traditional traders who may receive benefits such as healthcare, retirement plans, and paid time off, prop traders are often considered independent contractors or self-employed individuals. This means they are responsible for their own benefits and do not have the same level of job security or guarantees.
Key Considerations for Choosing a Prop Firm
When it comes to prop trading, choosing the right firm is crucial for your success in the industry. With numerous prop trading firms available, it can be overwhelming to make a decision. However, by considering the following factors, you can find a prop trading firm that aligns with your goals and preferences.
- Reputation – Assess the reputation and track record of the prop trading firms you are considering. Look for firms that have actually funded traders and have a solid reputation in the industry. Research thoroughly and consider reading reviews and testimonials from current or former traders who have worked with these firms to gain insights into their experiences.
- Education – Review the resources, tools and materials that each prop firms provides on the path to getting funded. Look for firms that offer continuous opportunities to learn and improve your skills in the markets.
- Strategies & Instruments to Trade – Different firms specialize in different markets or asset classes, so it’s essential to choose one that aligns with your expertise or interests. For example, if you have experience in stock and options trading, look for a firm that offers funding for those asset classes. Additionally, prospective traders should make sure the trading strategies and indicators they regularly use are permitted for use within the prop firm’s trading software.
- Pricing & Fees – Every firm will have sign up fees and the potential for ongoing fees for software or support. It’s important that you take note of all these potential fees during the sign up process and ensure there are no “hidden” fees that get added later on.
- Earnings Potential – Quite possibly the most important factor of them all: how much can you earn with the firm and how does their profit split compare with other firms? Traders should make sure the firm’s profit split is aligned with their financial goals.
How Does Funder Trading Compare? Like we mentioned before, the industry average profit split sits around 70/30 but Funder Trading currently offers an 80/20 split with their funded traders.
The Official Funder Trading Review
Now that we covered all the basics of prop trading, let’s dive right into our top prop trading firm for 2023: Funder Trading.
Benefits of Funder Trading
While we covered a number of benefits of prop trading, Funder Trading offers a a plethora of “extra” benefits that separate them from the rest of the prop firms out there. These benefits include:
Funded Options Accounts – Funder Trading is the FIRST and ONLY prop trading firm to offer options funding without certification or upfront capital. This feature alone shows the superiority that Funder Trading has among the top prop trading firms in the nation.
Funded Stocks Accounts – Of course, Funder provides funded stock trading accounts in addition to Options. Another aspect that sets Funder apart from the rest is the ability for prospective traders to gain access to both stocks and options accounts and unlock up to $200,000 in funding!
Enhanced Trader Education – Funder Trading truly goes above and beyond to ensure their traders are learning and improving on the path to getting funded. While a content library filled with educational videos and resources is standard at most prop firms, Funder takes it to a whole other level:
- 80+ hours of video lessons from their Professional Prop Trading coach, Michael Patton
- VIP Chicago-Based Help Desk so traders can talk to real humans when they need support
- Daily Live Trading Room with Coach Michael Patton where you can learn from a real, Professional Prop Trader, live and in real time. Patton regularly reviews his own watchlist, news that may impact certain names or industries, as well as providing in-depth answers to questions from prop traders.
- Custom Built Dashboard for personalized analytics and trade feedback so you don’t just win or lose a trade, you get automated feedback so you can better understand why it was a win or a loss. Funder Trading believes that when traders learn the WHY, they can elevate their skills exponentially
Pricing & Fees – Funder Trading tries to simplify their fee structure as best they can. Funder offers a number of plans that coincide with the amount of attempts you get for their challenge. After you apply, you will meet with a Funder Advisor who will work with you to figure out the best plan for you and when the best time is to start your challenge. During this session, prospective traders will be provided with a breakdown of pricing and fees so they know exactly what will be required of them. As we highlighted before, Funder traders get to keep 100% of their generated profits up until they pay themselves back for the startup fees, then you enter into a favorable 80-20 profit split.
Drawbacks of Funder Trading
A quick Google search of ‘Best Prop Trading Firms’ will yield an extensive list of prop trading firms that only offer Forex and Futures trading. For that reason, we have included this as the lone drawback of Funder Trading: they do not offer funding for Forex or Futures trading.
While this is a drawback relative to other firms that do offer Forex and Futures, these are asset classes that can be extremely volatile, risky and confusing for new traders. With such a focus on education and building sustainable skills in the stock market, Funder Trading limits their program offerings to Stocks and Options.
How To Become a Prop Trader and Get a $100,000 Funded Stocks or Options Account
Becoming a prop trader often requires passing rigorous challenges or applications. Prop trading firms make most of their money when their traders make money, so these are designed to ensure traders can actually trade profitably. Funder Trading, however, streamlines this process to ensure a lower barrier to entry for all traders.
So how do you become a Prop Trader at Funder Trading? They have broken it down into 4 straightforward steps:
- Apply – Take their quick online application (which has a 98% acceptance rate).
- Enroll – Enroll in the Funder Trading Challenge, where you will need to prove your skills by being profitable.
- Learn & Improve – In the challenge, traders are LEARNING as they go so they are getting better as they are on the path to getting funded. Funder’s advanced proprietary technology helps their traders understand their strengths and weaknesses so they can continually get better.
- Conquer the Challenge – Meet the requirements of the challenge and you PASS and get access to a $100,000 funded stocks or options account (or both).
Our Choice For Best Prop Trading Firm of 2023: Funder Trading
Why Funder Trading Stands Out: Funder Trading ticks all the right boxes. They have a stellar reputation, a strong emphasis on education, and offer both stocks and options accounts. Their fee structure is transparent, and their profit split is among the best in the industry.
Location: Chicago, USA
What they do: Commodities, Crypto, Forex, Indices, Stocks.
Initial Balance: Funding up to $100,000 and a scaling program up to $200,000.
Profit-sharing: Up to 100% until startup fees are recouped, then 80/20 split
Profit Target: 5%
- State Of The Art TrueEdge Trading Platform
- Full Analytics Suite & Dashboard
- Personal Risk Manager & Platform
- Library Of Educational Videos
- VIP Chicago-Based Help Desk
- Live Daily Professional Trading Coach To Help You Pass Your Challenge
In conclusion, while prop trading offers immense opportunities, the firm you choose can make all the difference. Funder Trading, with its unique offerings and trader-centric approach, is undoubtedly a firm to consider for those looking to dive into the world of prop trading.