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Best proprietary trading firms and forex prop firms

Education /
Milan Cutkovic

Table of contents

 

What is prop trading?

Prop trading, short for proprietary trading, describes the practice where traders engage in trading activities using the capital of a prop firm or financial institution rather than their own capital. These traders participate in a range of financial markets and use a variety of financial instruments, including shares, options, futures, and contracts for difference (CFDs). The traders benefit from having access to funding and resources, while the firm gets access to talent and a share of the profits generated.

 

What is a prop trading firm?

A prop firm is a company that provides its traders with access to capital. In return, the traders share a percentage of the profits they generate with the company.

Aspiring traders face numerous challenges in their pursuit of professional success. Capital constraints are a prevalent hurdle, but access to advanced technology, real-time market data, and sophisticated trading tools can also hinder progress. Prop firms can bridge this gap for qualified individuals by providing the necessary capital, comprehensive training programmes, and ongoing support to propel their trading careers.

The operational structure of prop firms varies considerably. Certain proprietary trading houses maintain physical locations and dedicated desks for their traders, promoting a collaborative work environment. Conversely, other firms leverage remote work models, enabling them to recruit talented individuals from a global pool.

 

What makes a prop trading firm good?

  1. Due diligence regarding the firm’s reputation: Aspiring traders should prioritise firms with a well-established track record of honouring profit-sharing agreements. Online reviews and testimonials from current and former prop firm traders can provide valuable insights into a firm's business practices and payout history.
  2. Adequate client support: While online reviews might be helpful to gauge the quality of client support, it is easy for traders to test it out for themselves during a trial or the early stage of the allocation programme.
  3. Educational materials: Leading prop firms will ideally provide their traders with educational resources for traders of all stages. Some firms go beyond simple video tutorials and articles and offer live webinars, mentorships, and a community where fellow traders can exchange views.
  4. Access to advanced trading platforms: Prop firms should provide access to industry-leading trading platforms that offer the functionality and stability necessary for the successful execution of trading strategies.
  5. Performance-based profit sharing: A desirable profit-sharing model incentivizes strong performance by allocating a higher percentage of profits to traders with a demonstrably successful track record.
  6. Upfront fee disclosure: Transparency regarding all associated costs is essential when evaluating prop firm programs. A clear fee structure avoids potential surprises down the road.

 

What makes a prop trading firm bad?

  1. Unrealistic promises: Success in financial markets requires significant dedication, skill, and risk management expertise. Traders should be wary of prop firms that make it seem easy.
  2. Excessive fees: A critical factor in prop firm selection is a thorough evaluation of the associated fee structure. Excessive or opaque fee structures may suggest a business model prioritising revenue generation over trader success. Prop firms with a commitment to client development will offer transparent fee structures and potentially offset costs through educational resources or profit-sharing models.
  3. Restrictive rules: While prop firms incentivize profitable trading through performance-based rewards, excessively restrictive trading parameters can hinder a trader's ability to implement their strategies effectively.
  4. Lack of transparency: Prop firm selection necessitates a comprehensive understanding of all associated costs. Firms that obfuscate fees or engage in surprise billing practices demonstrate a lack of transparency, which may raise questions about their general business ethics.
  5. Delayed or disputed profit payouts: Profit payouts should be prompt and transparent. Any indication of delays, discrepancies, or disputes regarding profit disbursements should be considered a significant red flag.

 

The most popular prop trading firms and funded programmes

  1. Axi Select
  2. FTMO
  3. The Forex Funder
  4. E8 Markets
  5. The 5%ers
  6. Funded Next
  7. Funded Trading Plus

 

1. Axi Select*

Axi Select

Axi Select is a capital allocation programme for traders that provides up to $1 million USD in funding and a profit share of up to 90%. Joining the programme is free, and it consists of six stages. Traders will start in the seed stage, which requires a live account with a deposit of at least $500. After 30 days, traders can progress to the next stage if they meet the necessary requirements.

Axi Select differentiates itself from competitors through several key features. Firstly, the programme is free to join, eliminating financial barriers for aspiring traders. Secondly, the program utilises live trading accounts, providing a realistic market environment for participants, in contrast to many prop firms that rely solely on demo accounts. Furthermore, the programme's 5% profit target is comparatively lower than many competitors, potentially reducing pressure on participants and allowing them to focus on developing their skills. Finally, Axi Select boasts a reputation as one of the leading CFD brokers globally.

Pros

  • The programme is 100% free; there are no joining or membership fees**.
    ** Other fees and minimum deposit apply.
  • Unique capital allocation programme with up to $1 million in funding.
  • Up to a 90% profit share.
  • Traders use live trading accounts instead of demo accounts.
  • There are six stages, and the process is clear and transparent.
  • Access to advanced trading tools, technical analysis, and live educational content.

Cons

  • The Edge score formula, which determines funding eligibility, is not available to the public.
  • A minimum deposit of $500 USD might represent a hurdle for some traders, although participating with a live trading account is a major advantage.

How is Axi Select different from other prop firms?

Programme

Axi Select

Industry Standard

Registration Fee No Yes
Pass Evaluation No Yes
Restrictive Trading Conditions No Varies
Number of Attempts 3 1
Leverage 100:1 Varies, majority less than 100:1
Account Type Real Trading Account Demo
Additional Tools Dashboard/Leaderboard,
Edge Score, Trading Room
Varies

 

2. FTMO

FTMO is a prop trading firm based in Prague, Czechia, and has been operating since 2015. The company is looking to identify and educate talented traders and provide them with funding if they fulfil the necessary requirements.

The FTMO Challenge offers traders a demo account for trading, along with educational materials. If a trader passes the FTMO Challenge, the programme continues with the Evaluation Process, after which the trader could receive access to an FTMO count. While that account is still a demo account, the trader will receive real payouts based on the profits realised on that demo account.

Pros

  • This is a well-established and respected prop firm that has been operating for several years.
  • Positive feedback from the trading community.
  • Fees are transparent and disclosed upfront.
  • If a trader passes the FTMO Challenge and Verification after the first profit split, they get their joining fee reimbursed.
  • Up to a 90% profit share.

Cons

  • Specific trading restrictions, such as limitations on news-based trading, overnight holding of positions, or weekend carry.
  • The 10% profit target during the FTMO Challenge is steep.
  • FTMO doesn't provide access to live markets with real money. Even after completing their evaluation process, traders continue practicing in a simulated environment using demo accounts.

 

3. The Forex Funder

The Forex Funder is among the most popular prop trading firms globally. The UK-based prop firm offers a 1-step and 2-step evaluation process, which allows traders to choose the most suitable one based on their experience and strategy. The Forex Funder uses MetaTrader 4 and 5, and while there is an evaluation fee, there is no recurring membership fee.

All traders start with the evaluation phase, where they must meet the profit target while not exceeding the drawdown limit. A trader that successfully completes the evaluation phase receives a The Forex Funder account, where they retain up to 95% of the profits earned.

Pros

  • Up to $2.5 million in funding.
  • Up to 95% profit share, amongst the highest in the industry.
  • Less restrictive than other programmes, it allows EAs and news-based trading.
  • The choice between a faster and slower evaluation phase.
  • There is no time limit for passing the evaluation phase.

Cons

  • Relatively expensive to join.
  • The profit target in the initial phase could be challenging for new traders.
  • The drawdown limit is based on equity, so it may not suit all traders.
  • All trading is done on demo accounts, even when reaching the funding phase.

 

4. E8 Markets

E8 Markets, previously known as E8 Funding, is a US-based prop trading firm that has been operating since 2021.

It offers traders a preset 2- or 3-step evaluation programme depending on their strategy and preferences. Traders also have the option to set custom evaluation objectives such as initial balance, initial balance drawdown, and payout share, although this comes at a higher joining fee.

Traders opting for the preset 2-step evaluation will have a profit target of 8% during phase 1 and 4% during phase 2, with a maximum allowed drawdown of 8% during both phases.

Pros

  • Low joining fee, which makes it accessible to the majority of traders.
  • Conservative profit target.
  • No time limit.
  • Option to customise the evaluation objectives (set the preferred drawdown limit and payout share).

Cons

  • The conservative profit target comes with a lower drawdown limit compared to its competitors.
  • The custom evaluation programme has a steep entry fee.
  • The preset evaluation programmes have a maximum profit share of 80%.
  • The company is relatively new on the market.
  • All trading is done on demo accounts, even when reaching the funding phase.

 

5. The 5%ers

Established in 2016, The 5ers is an Israeli-based prop trading firm. It offers three different funding journeys: Hyper Growth (1-step programme), High Stakes (2-step programme) and Bootcamp (low-cost programme).

The company utilises the MetaTrader 5 platform and allows all types of trading, including algo trading, news-based trading, and holding positions overnight or over the weekend.

The 5ers charge a one-time fee, with no recurring costs. Funding can grow up to $4 million with a profit share of 100%. The profit target is 10% with a maximum allowed drawdown of 6% for Hyper Growth, while the High Stakes programme allows a maximum loss of 10% with a profit target of 8% in Stage 1.

Pros

  • Funding up to $4 million.
  • Profit share of up to 100%.
  • Some of the programmes offer a live trading account, according to the company, but for a higher fee.
  • Flexibility and few restrictions on trading style.
  • Transparent pricing structure and the choice of more affordable programmes (Bootcamp).
  • Educational materials are available.

Cons

  • The structure of the different programmes could be complex for beginners.
  • High Stakes programme, which offers higher leverage (100:1), has a steep joining fee.
  • Bootcamp is based on demo trading.
  • Low leverage in some of the programmes (10:1 for Bootcamp and 30:1 for Hyper Growth), which could be a limitation for some traders.

 

6. Funded Next

Founded in 2021, FundedNext is a prop trading firm based in the UAE. The company offers three different challenges called Stellar, Express, and Evaluation, all with different targets and structures.

Pros

  • Up to $4 million in funding.
  • Up to a 90% profit share.
  • Profit sharing is already available during the challenge phase, which is unique in the industry.
  • No time limits on challenges.
  • Balance-based drawdown calculation.
  • The company promises a 24-hour payout guarantee.

Cons

  • The structure of the challenges might appear complicated to beginners, although the firm also offers a challenge with simplified rules.
  • Short history of operating.
  • All trading is done on demo accounts, even when reaching the funding phase.

 

7. Funded Trading Plus

Funded Trading Plus is a UK-based prop trading firm. It evolved from Trade Rooms Plus, which was founded in 2013 and has catered to retail traders looking for a live trade room.

Funded Trading Plus offers a variety of trader programs, making it suitable for beginners, intermediate and advanced traders.

The Experienced Trader Program consists of one assessment phase with a 10% profit target and a 6% maximum loss limit. After successfully passing this stage, you can advance to the "FT+ Trader" stage with a profit split of 80/20.

The cost of the program varies according to the funding size — costing as little as $119 for $12,500 in funding and as much as $949 for $200,000 in funding.

The Advanced Trader Program consists of two assessment phases, after which you can progress to the "FT+ Trader" stage. Phase 1 has a 10% profit target and allows a maximum loss of 10%, while phase 2 has a 5% profit target while still allowing a maximum loss of 10%.

For traders looking to get instant funding without an evaluation phase, FTP offers the Master Trader Program costing between $225 and $4,500 depending on the size of funding received.

Pros

  • Variety of trading programs catering to different needs.
  • Large number of trading instruments eligible.
  • No restrictions on the minimum and maximum number of trading days.
  • Weekly payouts.
  • Profit sharing ranging from 80% to 100%.

Cons

  • No holding of positions over the weekend in the Advanced Trader Program.
  • Relatively high-profit targets considering the available leverage.
  • All trading is done on demo accounts.
  • Maximum leverage of 30:1, which could be a limitation for some traders.

 

Conclusion

The prop trading business is booming, despite recent regulatory challenges. With the number of operators rising, it is even more crucial for traders to conduct thorough research before choosing a prop trading programme.

Traders should consider the firm´s reputation and how long it has been operating, as well as the online reviews and feedback from fellow traders.

The pricing structure of the programme should be clear and transparent from the beginning. Traders must also carefully go through the programme´s terms and conditions, as some challenges have stricter rules. Not being aware of the rules and not adhering to them could result in dropping out of a challenge and losing the joining fee.

Finally, ask yourself the question: does the programme leave the impression that it is investing in the success of its traders, or does it sound like a money-grabbing operation focused on generating subscription fees?

 

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*The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available to AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.

This information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. It has been prepared without taking your objectives, financial situation, or needs into account. Any references to past performance and forecasts are not reliable indicators of future results. Axi makes no representation and assumes no liability regarding the accuracy and completeness of the content in this publication. Readers should seek their own advice.

FAQ


What is prop trading?

Prop trading involves using the capital of a prop firm or financial institution rather than traders’ own capital for trading activities.


What is a prop trading firm?

A prop firm is a company that provides its traders with access to capital. In return, the traders share a percentage of the profits they generate with the company.


How can I find out if a prop trading firm is good?

Search the internet for reviews, browse through trading forums and communities for feedback from fellow traders, and do some research on the company behind the programme (history, regulation, and management).


What are the most popular prop trading firms?

Axi Select, FTMO, The Forex Funder, E8 Markets, True Forex Funds, The 5%ers, Funded Next.


What is a challenge?

A challenge is an evaluation process that allows the prop firm to assess your trading skills. Some funding programmes will consist of multiple challenges, while others will consist of only one.


What should I expect as a profit share once I get funding?

It is common to receive a profit share of 80-90% once you have reached the advanced stages of a prop trading programme.


Is prop trading always done on a demo account?

Many prop trading firms operate purely with demo accounts, even when traders reach the funding stage. Axi Select is an exception, as traders use live accounts from the beginning.


What is the maximum amount of drawdown I can have?

Most prop trading firms allow traders to have a drawdown of up to 10%, although some have stricter requirements.


How much funding can I get as a prop trader?

It varies from programme to programme, but the most popular programmes will provide their best traders with 7-figure funding amounts.


What trading platforms are used for prop trading?

MetaTrader 4 and 5 remain popular, but with the recent regulatory crackdown, cTrader and DXtrade are emerging as alternatives or additional options.



Milan Cutkovic

Milan Cutkovic

Milan Cutkovic has over eight years of experience in trading and market analysis across forex, indices, commodities, and stocks. He was one of the first traders accepted into the Axi Select programme which identifies highly talented traders and assists them with professional development.

As well as being a trader, Milan writes daily analysis for the Axi community, using his extensive knowledge of financial markets to provide unique insights and commentary. He is passionate about helping others become more successful in their trading and shares his skills by contributing to comprehensive trading eBooks and regularly publishing educational articles on the Axi blog, His work is frequently quoted in leading international newspapers and media portals.

Milan is frequently quoted and mentioned in many financial publications, including Yahoo Finance, Business Insider, Barrons, CNN, Reuters, New York Post, and MarketWatch.

Find him on: LinkedIn


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