Best proprietary trading firms and forex prop firms

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. True Forex Funds
6. The 5%ers
7. Funded Next

1. 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.
• 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.
• It is operated by a regulated broker.

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?

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. True Forex Funds

Founded in 2021, True Forex Funds is a prop trading firm based in Hungary. The company has a two-stage evaluation process. After successfully progressing through stage 2, traders can receive up to $2.5 million in funding with an 80% profit split.

Phase 1 has an 8% profit target and a 10% maximum drawdown limit. The profit target goes down to 5% in phase 2, while the maximum allowed drawdown remains at 10%.

For traders seeking a faster evaluation, True Forex Funds offers a one-phase option. This expedited track requires achieving a 10% profit goal within at least 5 trading days, all completed within a 30-day window.

Traders that have successfully passed both stages will enter the funded trader programme and are eligible for an 80% profit share.

Pros

• Bi-weekly payouts, exceeding the industry standard.
• Simple trading rules, less restrictive compared to some competitors.
• A more conservative profit target for traders who opt for the 2-stage evaluation process.
• Low entry cost.

Cons

• The firm had to temporarily suspend operations in February 2024 due to issues with MetaQuotes. It has now migrated to cTrader.
• The profit share of 80% is less competitive.
• Time limits still exist.
• All trading is done on demo accounts, even when reaching the funding phase.

6. 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

• Low leverage in some of the programmes (10:1 for Bootcamp and 30:1 for Hyper Growth).
• 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.

7. 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.

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.