Proprietary trading, also called prop trading, occurs when a trader trades stocks, commodities, bonds, currencies, or other financial instruments with the firm’s money and not depositors’ money. Prop traders are not usually paid an hourly/weekly wage or salary and do not receive any benefits such as health care. They are typically only paid when they generate a profit, which should not take too long if you adopt the right trading strategy.
While the concept of a prop trading firm sounds attractive, it requires hard work, knowledge, and discipline to be successful. You need to invest extensive hours in preparing and educating yourself before delving into the market. We can compare trading to sports or athletics. To be the best trader, you need to have some of the characteristics of an athlete or sportsman. Discipline, consistency, competitiveness, and endurance are qualities every successful basketball/football player possesses, as should a day stock trader.
If you desire to be a prop trader, one of the first challenges you will most likely face is finding the right remote prop firm. Your ability to flourish in the industry largely depends on the prop firm you are registered on. That is why it is crucial to research and register with a proprietary trading firm that is ideal for your needs. In this step-by-step guide, we will show you how to find a perfect setup in no time.
What to look for when choosing the right prop firm?
When choosing an ideal prop firm, it is advisable that you know everything the organization offers, as this would help you make an accurate decision. Below are some of the criteria you should look out for when deciding which prop firm to trade with.
Trading restriction
One of the first things you ought to look out for in any prop firm you want to register as a trader on is the amount of flexibility they offer. While most prop firms are flexible, some have more restrictions than others. These restrictions can be so ridiculous that it ends up limiting your earnings.
For example, a trading prop firm may restrict a small amount of margin deployable. Sometimes it can be that the prop firm only allows a small drawdown. Other times it may be that traders can only sustain a small loss.
It is imperative to pay close attention to the restrictions on a prop firm before committing to it. If the limitations do not align with your unique trading strategy, it is recommended not to register with such a prop firm.
However, if your trading plan is adjustable to fit the restrictions of a prop firm with potential, then, by all means, register with them. Because some prop trading firm may let you get an account with $25,000, $50,000, or even $100,000 as the case may be, in reality, you may only have access to a far lesser amount.
While the restrictions of the prop trading firms may seem to limit your actions, they also have their benefits. For example, a day prop trader may be restricted to small trading capital. While this restriction limits how much the trader can turn over, it also limits how much the trader can lose.
Prop firm reputation
It is also essential to choose a reputable firm when searching for an ideal prop firm. So, how can you identify a prop firm with a good reputation? Rating on several platforms is a helpful evaluator of a prop firm’s reputation, as it helps you make an informed decision. Look up the performance of any prop firm on the following platforms.
YouTube
YouTube is a vast vlogging platform where you can find loads of YouTubers with real experience working with any prop firm you are looking to work with. There are reviews on the different aspects of the prop firm on the platform, analyzing their pros and cons.
Forums
There are several forums where you can find real people sharing their experience with several prop firms. If the prop firm you want to join is reputable, then you will find lots of positive reviews about it on the forums. While reading through the reviews on the forum, try to filter the trolls who like to defame the firm.
Support
Notably, a reputable prop firm should have tolerant and quick support. There is a huge sense of relief that accompanies knowing that a support system is in place to help you whenever you need help. Hence, you should always check up on the support system and confirm that they are available all-round the clock before choosing to work with them.
Growth program
Also, when choosing a prop trading firm, it must give you options that allow you to grow. Not many prop firms will not give you a big account as a new trader. Most prop firm wants you to prove yourself as an excellent prop trader before giving you such responsibility.
The more you trade, the higher your trading account should get. So, you should check if the prop firm has a growth plan. If, after checking, you do not find anything substantial, it is best to avoid such prop firm. Trading in a prop firm without any growth program will limit how much you can turn over.
But when the prop firm has a growth plan, it will be in their best interest and the traders. So at the end of the day, both parties can enjoy increased profits. Professional traders will only stay in a prop firm when they see it has the potential of helping them grow.
Target goals
Apart from having a growth plan, the target goals of the firm must align with yours. If your trading goal differs from that of the prop firm, you will have many compatibility issues because every prop firm wants a suitable prop trader for its programs.
Depending on the prop firm, you may be given a demo account as a test. While there is some prop firm that will test you with a real account, which means you get access to real funding instantly. Your performance during the testing phase is paramount to your success in the prop firm in the long run.
Additionally, as a prop trader, you need to check what the firm requires. Consider the amount of profit the prop firm expects you to make and the duration. Also, take note of the number of steps during the testing phase. Perhaps there could only be one or two stages you need to pass to scale through the testing phase.
Participation costs
You are essentially trading with a prop firm’s resources as a prop trader, but this may come at a participation cost. Having this in mind, you should look out for the participation cost of a particular prop firm. Note that some prop firms have hidden fees that are not visible at first.
So, it would help if you weighed all the trading restrictions, costs, and model that suits your financial situation in a prop firm. When you find that sweet spot between these three elements, then you are on your way to trading with the best prop firm that is right for you.
Bundling all these elements together, you should be able to find a pretty decent remote prop firm that suits your needs. While researching about a prop firm, you will generally find 4 models regarding subscription cost:
One-time fee
As the name implies, this type of subscription structure is asked once. When you pay this one-time price to join, there will be no further cost as you proceed and progress. Prop firm often takes a one-time fee to ensure minimal risk while you work your way up and prove your trading skills.
Subscription
Another participation fee you will find at some prop firm is the subscription model. This type of payment model requires traders to pay a weekly or monthly fee. This subscription will keep the traders on board and trading with the prop firm.
Proprietary trading fee
Some prop firms, especially old-school ones, ask traders to pay a proprietary trading fee. What this means is that they ask traders to fund their accounts. And when the trader can perform well with their fund, the prop firm will allow them more leverage based on the initial deposit and performance.
Free
Lastly, some prop firms will not ask you for any form of payment to be their trader. This model is often for an experienced trader who can prove a long history of consistent trading with professional funds. However, one big problem with this model is that you have to reach the office itself. Also, you will not have the benefit of flexibility.
Payouts
While researching a prop firm, you should pay attention to the payout options it offers. Some prop firms pay out more often than others. Hence, you should peruse the firm’s terms and conditions to know how often you can make withdrawals. Also, check if withdrawing your profit damages your growth or not.
The split of most day stocks trading firms is mostly 50/50. So, a trader can only withdraw 50% of the profit incurred. And as the trader continues to grow, the split can go up to 65/35. Looking out for all this is essential because every trader is after how much profit they can take home at the end of the day.
The bottom line is that if you are registered to a reputable prop trading firm, you would not have any issue with payment. Provided you can meet up with a prop firm terms of payment, you will always get paid.
Resources
Another thing to look out for when choosing a prop trading firm is its resources. Some prop firms offer more than a funded account. You can access an advanced dashboard to get statistics you will find helpful while trading.
Also, there are prop trading firms that offer their traders one-on-one support. Similarly, prop trading firms actively trade themselves and can be seen in a live trading room. At the same time, some prop firms have an active blog where you can find helpful materials about stock day trading.
Most prop firms have an educational section full of good content for beginners and advanced traders. Nevertheless, it is still essential to see how well and easy their lesson is for you to understand. And whether you enjoy watching its lessons or you get bored and skip them.
New prop firm
If you do a quick search on new prop firms, you will be amazed at the massive number we have today. So, finding a new prop firm should not be a difficult task; the actual challenge is finding a trustworthy new prop firm.
And every day, we see new prop firms popping up online. But most of the time, these new prop firms copy the models of an existing prop firm. However, the job will be much easier since you now understand the several criteria to consider before choosing a proprietary firm.
However, if you are perplexed between two prop firms, one is well-known while the other is relatively new, it is always better to go with the established firm.
Advantages of trading for a remote prop firm
When you want to choose a prop firm to trade for, you have the option to trade in-office or remotely. Many traders often go for the remote choice because it allows them better flexibility. Below are some of the advantages of trading for a small prop firm:
Small participation fee
There are different types of participation fee prop firms ask traders to pay. But most remote prop firms require traders to pay a small participation fee. While these prop firms may put some restrictions on how much funds you get access to; nevertheless, it will still be cheaper. And when you come to think of it, it costs less to pay a participation fee than to invest your funds.
Quick capital increases
Another advantage of trading for a remote prop firm is that it allows you to increase your trading capital. If you are looking to increase how much you can invest in stocks, trading for a prop firm is the easiest way to get more capital. With a prop trading firm, you are essentially trading with their funds. In other words, you have more capital and market buying power. And if you show solid consistency, the prop firm will give you access to more capital.
Take profits home
When you trade with your funds, huge take-home profit is not a certainty, except you have a lot of cash you are willing to invest in trading stocks. Yet, every prop trader wants to increase their take-home profit. Taking advantage of prop firms is the easiest way to achieve this since you have more capital and market buying power. And because you have more capital to invest, your profit will increase. And whatever profit you make with a prop firm fund will be appropriately divided and added to your growing account.
Zero liability for losses
Interestingly, you incur zero liability for losses when you trade with a prop firm. For many people, the ability to trade and have zero liability for losses is one of the reasons they prefer trading for a prop firm.
When you trade with your funds, you will be responsible for any loss or profit you make. However, trading for a prop firm does not require that you account for any loss incurred. Prop firms understand that there will be losses and have allowed traders to take up a predefined loss level.
Trading from home
Also, trading for a remote prop firm gives you the convenience to trade from home. So, you would not have to leave the comfort of your home to earn some extra cash. Also, with such flexibility to trade, some traders can combine trading with their daily jobs.
Responsive Support
Trading is complex, and traders can run into any difficulty. And since you are working from home, you can’t simply work to the tech department to fix whatever challenges you are experiencing. For this reason, remote prop firms invest a lot to provide traders with the best support they can get.
While trading for a remote prop firm, knowing it has responsive support to help in difficult situations comes in very handy.
Advantage of trading for Trade The Pool
Introducing Trade The Pool, the first firm that offers day trading stocks, bringing the real prop firm of New York to remote trading where you get an unlimited buying power, and you set your RPD – risk per day. The rules are simple, and the way to success is paved. Below are some advantages of trading for Trade The Pool.
Trading flexibility
Trade The Pool gives traders the ability to trade with better flexibility continuously. Traders have the option to hold traders through an economic news release, over the weekend or overnight, as the case may be with Trade The Pool. Essentially, with Trade The Pool, traders have more freedom to engage in almost every trading strategy.
Easily reached milestone targets.
When you register with Trade The Pool, you will be given an easy and achievable milestone to target. This will help determine that you are actively trading and making a profit. Since Trade The Pool wants you to grow, the easily reached milestone targets help you progress fasters within the program, not worrying about unattainable goals.
Instant payment guaranteed
With Trade The Pool, you are always guaranteed to get paid when you request it. And the best part about the payment method at Trade The Pool is that you can request payment anytime and as often as you want. Trade The Pool does not limit you with a minimum or maximum threshold.
Non-deductive
While some prop firms deduct payouts from your milestone growth, the reverse is the case with Trade The Pool. If you request a payout, it will not affect your milestone growth. Instead, you get paid for your profits and keep your account growing at the same time.
Fastest growth plan
When you choose to trade for Trade The Pool, you get options that let you grow faster. For example, with an RPD3 program, you get a risk pump anytime you reach 5 consecutive winning days with a profit of 3 times your RPD or end a profitable month with at least 4 times your RPD. Affordable
Unlike other trading prop firms, Trade The Pool offers traders the lowest participation fee in the industry. So, you do not have to break the bank when you want to trade with Trade The Pool. Everything on the platform is affordable, fast, and seamless.
Support
Trade The Pool also provides traders with the best support. The platform uses human support and not a bot. The customer support team is highly skilled, knowledgeable, and experienced. You will not have any problem getting professional help when you need one.
Resources
Trade The Pool is a prop firm owned and operated by experienced stock traders. You can join live trading rooms on its platform to learn and watch them trade. Traders also have the option to schedule a one-on-one appointment with an experienced portfolio manager. Furthermore, Trade The Pool hosts webinars you can participate in, regularly post articles, and give you the best trading strategies to get the most out of the market.
Summary for the best prop trading firms
Conclusively, now that you have gone through this guide, it is expected that you have an outstanding idea on how to choose a remote proprietary trading platform.
So, if remote prop trading sounds right for you, and you want to enjoy all the freedom that a remote prop firm offers, we suggest you take the next step towards joining Trade The Pool – a reliable prop trading firm that allows you to grow without any limit. If you are serious about results and want to get a worthwhile day stocks trading experience, then join Trade The Pool.
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