January 31, 2023

Prop Traders Vs Broker Traders

Table of content

    Looking for a broker?

    Here are 5 GREAT reasons why you should STOP trading with a broker!

    Pro Traders with Prop Trading Firms

    If you are as passionate about trading as we are, you can’t help but notice how impressively fast the Prop Trading industry has evolved and how fast it has come. In the last few years alone, Trading Prop Firms competing in their continuous search for talent have come to offer increasingly higher trading capital, lower barriers to entry and a diversified number of programs that can accommodate most trading styles and needs. Then, as if it still wasn’t enough, they have gone and topped it all up with outstanding quality tutorials in the form of blogs, videos, interviews and much more.

    Now, since most brokers do not offer any of that, one could say that any competition with Prop firms would be lost before it even starts and that Retail Brokers have become obsolete. However, that wouldn’t be completely true. The best brokers often offer a free demo account which is great to learn and practice before getting serious and joining a Prop Trading Firm but… yes, apart from that, Retail Brokers actually have become pretty much obsolete.
    Let’s see why, shall we?

    5 Reasons why Prop Firms are so much better than Retail Brokers.

    The Trading Capital

    A.K.A. “the money”!
    That’s right – the money – we’ll start by going straight to the Brokers’ jugular with this one.

    Once the decision to invest in themselves and improve their lives is made, retail traders are able to gain at least a basic level of trading knowledge and education from the insane quantity of online content and material. However, funding an account with enough money to make it worth trading is not always as easy and as immediate.
    Prop Firms came, saw and solved the problem.

    Nowadays, just a few hundred dollars of investment on your part can give you access to trading capitals 100s times larger and more. Literally!
    If you trade Forex, you’ll know that once you passed The5ers’ challenge, for example, you’ll have effectively transformed your $95 investment into a $100K trading account! Whilst if you are more of a stock trader, you’ll know that you could enjoy virtually uncapped purchasing power and up to $3900 risk allowance for your $475 initial investment and trade with more than $160K of buying power whenBECK you trade for TradeThePool.

    The best thing about Prop Firms’ trading capital is that it increases much more easily and faster than it would otherwise.
    Let’s put it this way: a 10% gain on your standard Retail Broker account would mean your trading account has now grown by 10%. And that, by all means, is not bad at all. That is until you realize that a 10% gain with the right Prop Firm would probably mean that your trading account has just doubled and… you know, a hundred per cent is better than 10.

    The Risk

    Unfortunately, it’s a known fact that a great number of aspiring retail traders rely on their emotions and gut feelings as part of their trading strategy – with unsurprisingly catastrophic consequences.
    Part of the emotional turmoil that beginning traders go through is due to the stress of having their own money at risk. Then again, the mere possibility of losing a large sum of one’s own money would be sufficient reason to cause stress to even the more experienced traders.

    So… what if, in addition to a super large trading capital and a fair share of your trading profit, you could also have no risk to your own money, no legal liabilities and none of the downside if things should go sour?

    Well, that’s exactly one of the advantages that trading for a Prop Trading Firm presents and one heck of a reason why it’s much better than going at it solo with a Retail Broker.

    The Discipline

    As reasons go, this is another big one.

    Discipline – or better, the lack of it – is considered to be the primary reason why beginning Retail Traders lose money and blow up their accounts. For Prop Traders it’s not different. It requires discipline, focus, commitment and consistency to be accepted and welcomed as a funded trader by a Prop Firm you’ll need all four.

    Through the implementation of a few simple and clear trading rules, Prop Firms also ensure that their traders stick to that same discipline throughout their trading experience and this, in turn, translates to more traders remaining consistently profitable and, eventually, becoming successful.
    This could probably explain why statistics show a higher rate of success among Prop Traders than among retail ones.

    Prop Firms Are on Your Side

    It is true, some brokers do offer some tutorial content which is free and accessible to everyone. That’s better than nothing, sure, but it’s only really basic stuff and mainly focused on bringing more customers in. There is no added value when compared to everything else that can be found online for free. And… there is a reason for that.

    Retail Brokers do not care if you are consistent and successful or not; in fact – let’s face it – they don’t really care if any of their customers make money or lose. And why should they care? The nature of their business means brokers earn commissions on your trades whether they are winning or losing once. I should imagine that a retail broker would earn very similar commissions whether you make a million dollars or you lose it.

    On the other hand, Prop Firms earn a share of their traders’ profit and are, therefore, more motivated to root for your success, offer more prompt customer support, better tips & advice and great quality educational content. And that, of course, is what everybody likes.

    The Community

    Retail Trading is mostly a “solo game” and can be a lonely experience sometimes. Most retail traders work from home or small offices and, more often than not, they are alone and isolated whilst doing so.

    Trading for a Prop Firm also means being part of a closely knitted trading community that shares opinions, advice and ideas through social media discussion groups and periodic video conferences and interviews.
    Prop Traders can confront their ideas with their peers and learn from one another while progressing towards the next “doubling” of their accounts.

    In Conclusion…

    Practicing your strategy on a Retail Broker’s demo account should always be part of your learning process and opening an account with a limited size capital can improve your confidence with real money management that will surely help you when the figures become significantly higher. But the advantages that Prop Firms can offer are unparalleled and Retail brokers have long stopped being a match.

    Under all aspects considered, it is clear that Prop Firms are by far the best option to maximize capital, profit and experience while also accelerating one’s trading career process.


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