Do you have some money at your disposal and you don’t know what to do with it? Well, one of your options would be to invest it in a prop trading firm. While there are many options for investment such as various financial markets or various financial firms, like a hedge fund, there is still the road less traveled – a prop trading firm.
In this article, we are going to take a deep dive into the world of prop trading, with a special focus on prop trading firms and see some of the justification behind investing with a prop trading firm, and more importantly, present you with a list of the best prop trading firms in 2024.
Why Should Investors Choose Prop Trading Firms?
When it comes to investment there are of course different paths that investors can choose. One of the most conventional steps is to leave your money with a hedge fund. The hedge fund will in turn use your money and the other capital gathered from all the small investors and then invest in other projects. It can even be seen as seed money for newly found projects. In this method the investors will profit from the return on investment that the hedge fund makes.
But another method, as is the focus of this article, is to go with a prop trading firm. In this way the money that is pooled by the firm will not be used as a means of investment, but rather as a means of trading. It means the firm will use your investment and directly trade with it in financial markets.
In this way, there are a couple points of difference between the prop firm and the conventional hedge fund. First of all, the profits are obtained much quicker, as they are the result of direct trading rather than investment. Secondly, the possibility or chance of profits are also much higher. So in this way prop trading can provide faster and higher profits.
But keep in mind that with this aspect of prop trading comes the higher chance of loss as well. It is basically a sort of high risk and high reward approach to investment. With that in mind, let us take a look at the top prop trading firms.
You may like: Developing and Testing Forex Trading Algorithms
Funded Trading Plus
This prop trading firm is one of the most established names in its own industry. And there are reasons for it. First of all, the minimum initial deposit of the firm is $12,500 which is a bit higher than some of the other firms discussed in this article. But the interesting thing is the leverage rate that Funded Trading Plus offers its users. With a leverage rate of 1 to 30, it is one of the highest leverages you can get with a prop trading firm. Having such a high leverage rate, it is not surprise that profit margins can be as high as 90%. But be careful because, as always, a higher leverage rate can mean a higher loss rate as well. Additionally, Funded Trading Plus comes with complex trading algorithms that takes into account numerous technical analysis options, including various expert advisors.
On the plus side, Funded Trading Plus has no time limits in its direct trading processes. In addition, the payments that are made by this prop trading firm are quite regular and quick, so you won’t have to wait much longer for your payday.
Lux Trading Firm
Another prop trading firm headquartered in the UK, Lux Trading Firm also has a leverage rate of 1 to 30. But in addition to leverage, Lux Trading Firm offers funding to traders and can even scale their initial deposit. As such, it offers funding as much as $150,000 to facilitate higher odds of profitability for traders. Lux Trading Firm is also involved in direct trading with various markets including the cryptocurrency market, forex market, stock market, etc.
The Funded Trader
Another new player in the game, The Funded Trader has also been able to make its way to the top of the prop trading firms. The Funded Trader offers direct trading options available across many different financial markets, including the forex market, the stock market, among others. In addition it has a leverage rate of 1 to 200 with an astounding starting account balance which stands at $600,000 surpassing all the other firms on this list.
FTMO
FTMO has been involved in the prop trading industry since 2014. There is an astounding feature to this prop trading firm and that is the ridiculously high leverage rate. In fact, with its leverage rate of 1 to 100, FTMO has the highest leverage rate among all the prop trading firms. This means you will be able to start trading with a high initial capital even if your initial deposit is low. Similar to other prop trading firms, FTMO also offers users a profit margin of 90%.
You may like: What Is a Trailing Stop in Stop Order?
FX2 Funding
This prop trading firm is one of the youngest ones in our list, having been established only in the year 2022. But even in this short time, it has been able to make a name for itself among big players. FX2 Funding offers certain features to its users that have made it stand out. One of them is the high leverage rate that it offers users. In fact their leverage rate is 1 to 10, which is of course really high considering the initial deposit that stands at a minimum of $10,000. So this means you will be able to trade with a maximum of ten times of what you deposited into this firm. And of course similar to most other prop trading firms we also see the high return rate with FX2 Funding as well, with profit margins soaring as high as around 80% to 85%.
In addition there is another feature that makes FX2 Funding rather distinctive. And that is the fact that this prop trading firm offers trading in various financial markets. So in this way users will have a choice of markets for trading. These options include the foreign exchange market or forex, the stock market, also commodities, among others. But there are also small points that stand on the downside for this prop trading firm, including the trailing drawdown policy, which some users have protested against.
Conclusion
Giving your money to a prop trading firm is one of the options that is available to those who are looking to invest their money in a high risk high reward venue. Unlike hedge funds, prop trading firms are able to offer direct trading options to various financial markets with high rates of leverage and also high profit margins.
You may like: Types of Derivatives are in Forex Trading
