If you have a $100,000 trading account and make a 10% gain, you've beaten the odds and outperformed the market—an impressive feat!
However, achieving the same 10% on a $1,000 account is less impactful. In fact, you are better off working at Costco for a minimum wage salary.
Sure, the skillset—risk management, trading psychology, and all that—matters, but what truly differentiates a trader who makes good money from one who just gets by is capital.
So, the real question is: How do you access a $100,000 trading account while working a minimum-wage job?
The good news is that we're in a unique time in the trading space. There’s easy access to data, and more importantly, easier access to capital.
With prop firms like <optimal traders> —you can get north of $400,000 in trading capital, provided you have the skills to back it up.
But what exactly is Optimal Traders? What are prop firms, and how do they work?
Let’s get into it.
What is a Prop Firm?
A prop firm (or proprietary trading firm) provides traders access to a sizable amount of capital, allowing them to trade various financial instruments like stocks, forex, commodities, and cryptocurrencies.
In this arrangement, prop traders use the firm’s capital instead of client funds to trade and profit. In return, the firm shares in these profits, creating a mutually beneficial relationship.
This setup is advantageous for aspiring traders because they don’t need to risk their own money. This means they can trade large positions and take on more opportunities than they could with personal accounts.
Beyond just capital, many prop firms, like Optimal Traders, offer valuable resources that help traders sharpen their skills. This can include access to advanced tools, educational materials, and mentorship from experienced traders.
You’ll come across these terms as you learn more about prop firms.
- Prop Trader: This is a person who trades financial markets using capital provided by proprietary trading.
- Prop Trading: It’s short for proprietary trading. It refers to trading financial assets using a prop firm’s capital.
How Do Prop Firms Work?
Proper firms operate straightforwardly. Anyone can join at any time. You start by buying a prop firm challenge.
The challenge typically consists of several steps:
Step 1–Evaluation
This is the first phase. During this stage, Optimal Traders assesses your trading skills based on performance, risk management, and ability to follow rules.
Step 2–Verification
For two-step challenges, after you pass the prop firm challenge, you must verify that your success wasn’t just luck. This additional step ensures you can consistently perform well under various market conditions.
Step 3–Live Prop Account
Once you complete the evaluation and verification, the prop firm gives you access to a live prop account. In most cases, this is a simulated account that allows the firm to copy your trades. You earn the agreed percentage from the profits generated.
Pros and Cons of Trading With a Prop Firm
Pros:
- Access to substantial trading capital that allows you to take larger positions and amplify your earnings.
- The prop firms' strict risk management rules can improve your trading psychology minimising losses.
- The environment opens up various avenues for career growth, for example, you can scale up your accounts as you demonstrate consistent profitability.
- You interact with like-minded traders through prop communities like the Optimal Discord channel. This fosters a supportive environment and mentorship.
Cons:
- The profit-sharing model may be unfavourable to some traders.
- Prop firms have strict trading rules that can limit your trading flexibility and some trading strategies.
- The competitive atmosphere may create pressure to consistently perform well, potentially leading to stress if not managed properly.
- The responsibility of trading with the firm's capital is not suitable for everyone; some traders prefer the autonomy of using their funds rather than following a firm's guidelines.
How to Choose the Right Prop Firm
When selecting a prop firm, several factors deserve careful consideration before committing.
- Reliability and trustworthiness should be a priority.
Most prop firms rely on challenge fees for funding and liquidity. This can be risky because if their liquidity pool dries up–and it’s bound to happen, they may liquidate and close shop quickly to avoid bankruptcy.
These are not prop firms you should be trading with.
Optimal Traders, for example, is a hedge fund and quant firm backed to ensure locked-in liquidity at all times so that you can rest assured you’re trading in a safe platform with guaranteed payouts.
- Consider the fees associated with different firms.
Some may offer “no challenge” or “instant funding” options, which can seem appealing but might come with hidden risks, especially with non-regulated firms. Understanding the pricing models will help you avoid unexpected costs.
Optimal Traders challenge fee starts at $59 for a $5000 account.
- Find a firm that aligns with your personality and trading style.
Do thorough research on various prop firms to ensure effective communication and mutual understanding. This can also give you insights into their reputations and practices.
- Don't hesitate to ask questions during the application process.
Clarifying any uncertainties regarding rules and expectations can smoothen your start. Optimal Traders live chat support is available during business hours and you can also contact us through our support email: support@optimal-traders.com
- Ensure your goals and trading strategy align with the firm’s objectives.
It would be a good idea to familiarise yourself with the terms and conditions, such as withdrawal processes and trading limits, to ensure they fit your trading needs without being overly restrictive.
Prop Firm Accounts FAQ
What is a prop firm account?
A prop firm account is the funded account you receive after you pass the evaluation. It has the same trading features as the prop challenge account.
Who can open a prop firm account?
Technically, anyone can open a prop firm account. However, some prop firms restrict certain countries where regulation requirements are favourable. You can check your favourite prop firm acceptance criteria in your country through their customer support.
At Optimal Traders, our Challenge Accounts start at $59 and are available for all traders with the talent to succeed.
Do I need to be an experienced trader to join?
Technically, yes, you need experience to be a successful prop trader. That said, many prop firms welcome traders at various skill levels as they offer support and resources to help you improve your trading skills.
Is prop trading risky?
Yes, like any form of trading, prop trading has its risks. However, working with a prop firm often includes risk management training and support to help minimise these risks.
What happens if you lose prop firm money?
If you lose money while trading with a prop firm's capital, it typically won’t affect your finances. However, if you incur repeated losses beyond the prop firms’s set threshold, you will lose your funded account. Prop firms set these risk management measures to protect their capital.
How do prop firms make money?
Prop firms primarily make money by taking a percentage of the profits generated by their traders. On top of that, they charge fees for assessments, challenges, or training programs.
The Bottom Line: You Can Be A Successful Prop Trader With Optimal
Prop firms use a trading model where they carry out transactions using their own capital rather than trading on behalf of their clients, as hedge funds do. This method allows them to earn substantial profits while sharing portions of those earnings with traders.
Although brokerage firms, investment banks, and hedge funds typically maintain proprietary trading desks, most countries limit them from participating in prop trading activities to reduce speculative investments like the 2007-2008 financial crisis.
Nonetheless, if you’re committed to becoming a full-time professional trader, check out Optimal Traders Trustpilot reviews. To get your foot in the door, check out our trading rules to learn how we operate. For more info on your queries, check out our FAQ section or contact us through email, chat support or discord channel.
