Wanting to start trading and earning, but not sure how? Trading on the open markets offers significant earning potential, but it also comes with financial risk and capital requirements that can be challenging for new and experienced traders alike.
Proprietary trading firms (prop firms) provide a solution by offering traders access to firm capital, allowing them to trade without using their own funds — meaning the risk to your personal funds is kept to a minimum and you can trade safely.
Prop traders can participate in stocks, forex, futures, commodities, and other financial instruments, depending on the firm’s structure. Some prop firms operate as investment banks, hedge funds, or algorithmic trading firms, while others focus on funded trading accounts that allow retail traders to prove their skills and earn capital.
In this article, Falcon explains the ins and outs of proprietary trading, and why choosing a prop firm is the best way to start.
How Does Prop Trading Work?
Instead of using client funds or personal investments, prop traders like Falcon Funded work with capital provided by the firm. In return, profits are shared between the trader and the firm, with each prop firm offering different profit split percentages.
To get started with a prop firm, traders are often required to pass an evaluation process—this is known as a prop firm challenge. To pass the challenge, traders are asked to demonstrate risk management skills and consistent profitability before gaining access to a fully funded account. Falcon Funded’s two-phase evaluation model makes this process clear and fair, ensuring traders have realistic profit targets and structured risk parameters
To prevent excessive losses, prop firms set drawdown limits, restricting how much a trader can lose before their account is suspended. For example, Falcon Funded has an 11% maximum drawdown, allowing traders room to manage risk effectively while maintaining firm capital.
What Are the Benefits of Prop Firms?
One of the biggest advantages of working with a prop firm is the ability to trade with larger capital than an individual might otherwise afford. This provides opportunities for higher earnings, especially with favorable profit splits.
Additionally, many prop firms offer trading technology, educational resources, and support networks to help traders succeed, as well as access to a choice of trade platforms. Falcon Funded provides traders with industry-leading platforms like cTrader, ensuring a seamless and efficient trading experience
Prop firms also help reduce personal risk with strong risk management strategies. Rather than investing their own savings, traders pay a one-time evaluation fee to attempt to qualify for funding. Once funded, traders only risk losing access to the account rather than incurring personal financial losses.
Many firms also foster mentorship and community support, giving traders access to experienced professionals, Discord groups, and collaborative discussions on market trends and strategy development. A strong prop trading community can be highly beneficial for new and experienced traders alike.
How Do You Start Prop Trading?
To begin prop trading, you need to start by finding a firm that matches your trading style and risk tolerance. Most firms require traders to pass an evaluation process, which involves trading within a simulated environment under real market conditions.
Developing a consistent trading strategy that aligns with a firm’s risk management guidelines is crucial for securing a funded account. Without this, not only will it be hard for you to pass the challenge, but you’ll also find it difficult to maintain your funded account for the long term.
Here at Falcon Funded, we look for traders who can deliver steady profits without reckless risk-taking, making us one of the best prop trading firms to choose from.
Final Thoughts
Prop trading offers an excellent opportunity for traders to earn without risking their own capital, but choosing the right firm is key. The best prop firms provide fair evaluations, strong support, and transparent payout structures to help traders succeed.
Falcon Funded stands out as a top choice, offering high profit splits, biweekly payouts, and an easy-to-follow evaluation process. If you’re looking for a trusted prop firm to take your trading to the next level, sign up for a prop firm challenge today and start your journey with Falcon Funded.
