Prop Trading Firms have been a very hot topic in the trading industry. It has become evident that this "Challenge" product offers huge opportunities both for traders and props alike. In this article, I will share my opinion on what the industry can expect on how Prop Trading Firms will evolve this year and put all risks and benefits to light.
Before Prop Trading Firms, retail traders were able to only trade their own capital and I would assume that most traders deposit less than 5k USD on traditional broker accounts.
Astonishingly with the new Era of Prop Trading Firms, any talented Trader has the potential to have a 6-figure payout. In return, Prop Trading Firms may now cooperate with traders globally and discover any promising trading talent.
FTMO Leaderboard (2024, 4 April)
Despite all the positive things that you see and hear about Prop Trading Firms, there is also a very dark side to this industry.
Maybe you've heard about FundingTalent, MyForexFunds, TheFundedTrader, or others. These are Prop Trading Firms that at some point were one of the biggest in the industry and were met with an end due to lawsuits or unprofessional conduct of business. These companies have been allegedly accused of:
Unprofessional client handling
Intentional worsening of trading execution (including artificial slippage)
Intentional denial of payouts due to conflict of interest
Recent news about TheFundedTrader left another big scar in the Prop Trading Industry, leaving many traders with unpaid profits of millions of dollars.
TheFundedTrader halted their operations in March 2024
Despite that, I see a positive shift in the Prop Trading Industry. During my time at FTMO, I learned these key points to succeed as a Prop Trading Firm and I believe that FTMO does these things very well. These points are:
Quality Service and Customer Support
Stable Trading Infrastructure
Strong Emphasis on Compliance and Regulation
Building Trust and showing Transparency to clients
It is no wonder that FTMO has withstood the test of time and to this day is the benchmark of all Prop Trading Firms. (https://ftmo.com/en/)
What's coming next?
Recently, I have seen many new Props emerging and I have high hopes, that the average quality of service and reliability will be much higher. What is the main difference you ask? Many brokers and technology providers are now jumping into the market, offering advanced solutions while having a long history of operating a traditional regulated brokerage.
The Prop Trading Industry needs professionals who take compliance and their trading infrastructure seriously!
I am excited to see these new Props emerging and will hopefully raise the standard of what a Prop should be. Some examples of new props:
https://icfunded.com/ (Backed By IC Markets)
https://labstrader.oanda.com/en/ (Backed by Oanda)
https://htrader.com/ (Backed by Hantec Markets)
Conclusion
Generally, I think that the Prop Trading Industry is heading in a good direction. Incompetent Props are coming to an end, and are to be replaced by regulated professional entities who want to take this business seriously.
To Traders: Stick with trustworthy Props like FTMO or test out new Props coming from a regulated background. To Props: Operating a Prop is a great opportunity but regulation and competition will only increase from now on.