Entering the Prop Trading Scene: A Guide for Beginner Traders

Prop is a tool to help traders make money

Prop is (Proprietary Trading). Simply put, it means that a company selects skilled traders and provides them with large capital to trade various assets. The profits generated are shared between the trader and the company. This type of fund management has become popular among new traders because it offers the opportunity to earn significant income without needing to invest a large amount of their own capital.

Prop trading companies generally require traders to compete or undergo a “Challenge” before gaining access to real funds. This test verifies whether you have the ability to trade profitably and consistently.

Forex Prop Trading: Different Operating Models

Forex Prop trade involves trading (Forex) currencies through a Prop trade company, with two main formats:

Online (Most Popular Now)

Traders can register online, with a relatively low evaluation fee. After passing the company’s test, you immediately gain access to trading capital from anywhere—home or elsewhere. The reason this format is popular is because it is convenient, flexible, and easily accessible, especially after the 2020 crisis.

Traditional

Traders must go to an office. The company hires full-time employees, pays salaries, bonuses, and provides various benefits. This model is quite rare nowadays.

The key difference is that online traders must manage risk and trading entirely on their own, with no assistance.

How to Join Prop Trade: The Process

Step 1: Find a suitable Prop trade company

Research, compare different companies, check their reputation, platforms, and profit-sharing agreements.

Step 2: Check qualifications

Companies often set requirements such as minimum age, experience level, or education.

Step 3: Apply online

Fill out a form detailing your trading experience, skill level, and goals.

Step 4: Interview

If selected, you will be invited for an interview to discuss strategies and experience.

Step 5: Enter evaluation phase

The company provides a demo account with capital for testing. Most periods last between 30-60 days. During this time, you must demonstrate profitability according to the company’s rules.

Step 6: Receive real funding

If you pass the evaluation, the company will allocate real capital to your account. At this point, you become a Prop Trader.

Benefits of Being a Prop Trader

💪 Freedom to work – No boss, no calendar. You decide when and where to work.

💰 Large capital – You don’t need to raise large amounts of money yourself. The Prop trade company provides it directly, which means the trading capital can be significantly larger.

📈 Unlimited earning potential – If you trade well, there’s no profit cap. The more you profit, the bigger your share.

🛡 Less risk – Most of the risk lies with the company. You only risk the application fee.

👥 Community and support – Join a network of professional traders, get advice and techniques from more experienced traders, with 24/7 support channels.

Challenges and Disadvantages

❌ High discipline required – You need a strong mindset, patience, and resilience against market volatility.

❌ Good trading psychology – Fear, greed, and anger are enemies of traders. If you cannot control your mind, you will lose badly.

❌ Need to pay for the evaluation – The evaluation phase requires a fee. If you fail, that money is lost.

❌ Uncertain income – No fixed salary or social security. You must earn from trading; if you lose, there’s no income.

❌ No days off – The forex market operates 24/5. Sometimes, good trading opportunities occur at night, so you need to wake up at odd hours.

Comparing Hedge Funds and Prop Trading

Successful Trading Strategies for Prop Traders

1. Manage risk well

Aim to risk no more than 1-2% of your account per trade. This helps keep risk under control.

2. Control emotions

Don’t revenge trade after a loss. Don’t be greedy after a win. Cultivate good habits for long-term account longevity.

3. Trade what you know

Avoid chasing trends from other sources. Find setups that work for you and stick to them.

4. Use support and resistance

Identify key levels. Buy near support, sell near resistance. This is a fundamental and effective method.

5. Use RSI indicator

RSI (Relative Strength Index) tells you:

• RSI > 70 = overbought asset (consider selling)
• RSI < 30 = oversold asset (consider buying)

This indicator is very good for beginners.

Advanced Risk Management for Prop Traders

Continuously study the market

Understand the daily movements of each currency pair, analyze charts, learn new strategies. The market never stops changing.

Write a trading plan

Clearly specify where to buy/sell, where to exit, and why. Then stick to the plan, even if you face losses.

Test on a demo account first

Don’t risk real money immediately. Use historical data or a demo account to refine your strategy until confident.

Risk only what you can afford

Don’t risk money needed for living expenses. Only risk a small portion of your capital.

Who is suitable to be a Prop Trader

Prop traders are not for everyone. They are suitable for those who:

• Desire to earn large sums and are willing to take risks
• Have self-discipline and are not lazy
• Accept failure and learn from it
• Have a strong mindset and are not easily shaken
• Seek independence and do not want to work from home or an office

If you fit this profile, it might be time to try Prop trading.

Summary: Opportunities and Challenges

Prop trade is a rare opportunity for skilled traders to generate large income without much paperwork. However, it is a real challenge that requires a strong mind, excellent risk management, and continuous self-training.

Many are attracted to the idea of making huge money but forget that the first one or two years are about learning, nurturing, and building a foundation. If you are ready for this journey, find a reputable Prop trade company, prepare yourself, and start with a good plan, the right strategies, and a resilient mindset. Becoming a successful Prop trader is not impossible.