The Prop Trading Challenge Made Simple!
Being a professional prop trader does not come easy, but it will be worth it in the end. There are several prop trading challenge that offer endless opportunities for beginners. You might get confused about choosing the right one for you as beginner.
We are here to help you understand what prop firms are, the risks associated with joining one, how you can make money, and which prop firm is right for you.
What Is a The Prop Trading Challenge?
Most people have heard of prop firms, but are not sure what they are. Prop firms offer prop traders the chance to use their skills to trade for them.
Traders can use the company’s capital to trade stocks, commodities, futures, derivatives, and currencies. In other words, as a trader, you can choose what you want to trade.
Prop trading firms can fund trading accounts quickly and easily. Trading with a funded account is available to anyone who is interested in working as a proprietary trader.
How The Prop Trading Challenge Works?
Prop trading firms rarely pay their contractors a base salary. However, some proprietary trading firms pay their prop traders a minimal monthly salary to allow them to concentrate solely on trading.
As a result, you will receive a predetermined share profit from your monthly earnings. Typically, prop trading firms split profits between 25%-50%, although some firms distribute profits up to 75%.
An example of a proprietary trade
The investor wishes to sell 200,000 shares of a stock at $10.00 per share, but cannot find a buyer willing to pay that price.
The proprietary trader offers to buy the entire block of shares from the investor for $10.00. The proprietary trader then analyzes the market to find suitable trades that would enable the shares to sell for more than $10.00.
It’s an example of a market-making trade, which, if successful, would result in profits for the proprietary trader
How Much Do Prop Traders Make?
The big question is, how much can you make as a prop trader? Traders’ salaries vary depending on their location and performance in different countries.
Prop trading is all about bonuses. As prop traders split their profits with the prop firm, their profit potential is theoretically unlimited. Comparably reports that prop traders’ salaries in the United States range from $42,373 to $793,331. Prop traders earn an average salary of $203,679. According to ZipRecruiter, the average proprietary trader salary stands at $90,566 per year.
What Are the Risks with the Prop Trading Challenge?
It is up to you to ensure you make profits when you trade for a proprietary firm. Simply, it is their job to provide capital for trading, but it’s your job to ensure you make profits. As a beginner prop trader, you need to understand that you might face a lot of risks along your way.
Traders are often exposed to market risks. If you are not familiar with how the market moves, you might fail to catch up. And eventually, lose everything that was funded for you. A range of other risks may also be involved. This is including opportunity, concentration, inflation, and slippage.
Becoming a Prop Trader – Pros and Cons
In addition to its advantages and disadvantages, a career as a professional prop trader has both advantages and disadvantages. If you decide to take this route, learning the highs and lows of proprietary trading can help you make a sound decision. This will enable you to make a smooth entry into the field.
Here are some of the major pros and cons you should consider.
Final Thoughts
To conclude, becoming a prop trader is an easy process. You only need to find a reliable prop trading firm offering a funded trading account, and then start your application. Through this process, you need to consider several factors such as the size of the account, the profit split percentage, the trading platforms and tools provided by the firm, and the monthly cost charged by the prop firm.
Trading is hard, and it might take months or even years until you become a consistently profitable prop trader. However, getting access to a funded trading account is possibly the most accessible way to become a professional trader and build a career as a trader. To make your prop trading journey easier, you can take the help of our Telegram Signal Copier. It will provide you with a fully automated prop trading experience where you leave it in the hands of professionals. Just reap the profits!
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