Proprietary Trader is a trading profession that requires iron discipline and excellent mental awareness.

New traders often ask: “What is a Proprietary Trader?” What kind of trading is this, and how should I prepare? If you’re new to investing, you might have heard of proprietary trading but not fully understand what companies in this field do or how it can help you develop. In this article, we’ll explain the details and share tips for those interested in entering this profession.

Who Can Become a Proprietary Trader?

The idea that “only talented people can be proprietary traders” is a misconception. Today, proprietary trading firms offer opportunities to online traders who can work from anywhere, with clear evaluation processes.

Basic requirements most companies look for include:

• Minimum age (usually 18+)
• Interest and willingness to learn trading
• Readiness to pass skill assessments (30-60 days)
• Relatively low capital for application and evaluation fees

Proprietary trading isn’t a career that’s hard to get into; it requires strong determination and mental resilience.

What Is a Proprietary Trader, and How Is It Different from Regular Trading?

A proprietary trader is someone who trades with a company’s funds, using their skills to trade assets like stocks, commodities, futures, or currencies in financial markets. Instead of using a demo account, the company “hires” the trader by providing real trading capital, which depends on their skill and experience.

When traders generate profits, the company takes a pre-agreed share—often 50/50, 70/30, or even 75/25—depending on the firm and the trader’s skill.

Main differences between proprietary trading and regular trading:

• Less personal capital investment: The company provides the funds; you only pay for assessments.
• Requires passing evaluations: More challenging than personal trading.
• Lower risk for the trader: Since most risk is borne by the company; your only expense is the application fee.
• High profit potential: If you succeed in the evaluation.

Proprietary Trading and Forex: Relationship and Differences

Forex proprietary trading is a subset focusing solely on currency trading in the forex market. There are two main models:

• Traditional: Physical trading centers that employ traders as staff, offering salaries, bonuses, and career growth.
• Online: Applicants can trade from anywhere, paying a fee to join, and after evaluation, access trading capital. Over the past 3-5 years, online forex proprietary firms have grown, especially after 2020.

Online forex proprietary firms no longer act as intermediaries but as platforms enabling traders to access markets and capital directly. This means traders are responsible for their own trading, risk management, trading psychology, and market understanding.

How to Enter a Proprietary Trading Firm: Steps You Need to Know

Becoming a proprietary trader involves several steps:

1. Select a firm: Research reputable companies, check trading platforms, profit-sharing ratios, and credibility.
2. Verify qualifications: Ensure you meet criteria like age, experience, and education.
3. Apply online: Fill out forms and provide trading experience info.
4. Interview: If shortlisted, you’ll discuss your skills and trading strategies.
5. Evaluation phase: The firm provides a demo trading period (30-60 days) to see if you can generate profits, following their rules.
6. Receive real capital: Upon passing, the firm grants actual funds for live trading.

Pros and Cons of Being a Proprietary Trader

Advantages

✅ Freedom of decision-making: Set your own schedule and trade independently.

✅ High profit potential: Success can lead to substantial income, with low initial costs for entry.

✅ Lower risk: The company bears most of the risk; your only expense is the assessment fee.

✅ Access to large capital: No need to risk your own money; forex proprietary firms provide significant trading funds.

✅ Supportive community: Many firms have trader communities sharing strategies and providing support via chat or calls.

Disadvantages

❌ Discipline required: Success demands strict discipline, mental strength, and sacrifice.

❌ Psychological risks: Emotional trading, revenge trading, or overtrading can be dangerous; emotional control is essential.

❌ Evaluation fees: If earnings are low, multiple attempts may be costly.

❌ Unsteady income: Unlike a fixed salary, there are no paid sick leave, social security, or predictable income.

❌ Self-reliance: No one will guide you; you must manage yourself to succeed.

5 Trading Strategies Every Proprietary Trader Should Know

1. Strict Risk Management

Control risk from the start—never risk losing your entire capital on a single trade. A common rule is risking only 1-2% of your total capital per trade.

2. Maintain Emotional Stability

Market volatility can affect your emotions. Avoid revenge trading or risking high amounts to recover losses. When things go off-plan, pause and reassess.

3. Stick to Proven Strategies

If your strategy works well, stick with it. Continue learning and improving, but don’t abandon what works.

4. Trade Support and Resistance Levels

Identify support (lower boundary) and resistance (upper boundary) levels. Buy near support, sell near resistance. This approach is beginner-friendly and helps manage risk.

5. Use RSI (Relative Strength Index)

RSI indicates whether an asset is overbought (>70) or oversold (<30). It helps identify entry points and market conditions, improving decision-making.

Risk Management in Proprietary Trading: Specific Guidelines

Effective risk management is key to success. Follow these principles:

• Understand markets and assets: Know how to trade different instruments, associated risks, and tools.
• Create a clear trading plan: Include strategies, risk rules, and exit criteria. Stick to it regardless of short-term results.
• Test strategies on demo accounts: Use simulated trading or backtesting to identify risks and refine your approach before live trading.
• Risk only what you can afford to lose: Never risk essential funds like rent, food, or savings.

Proprietary Trading vs. Hedge Funds: Key Differences

Summary: Proprietary Trading Is a Challenging but Rewarding Career

Proprietary trading offers excellent opportunities for skilled traders to trade with large capital and potentially earn life-changing rewards. Success requires discipline, dedication, advanced risk management, and mental resilience.

Before entering, you should:

• Study thoroughly
• Choose reputable firms
• Prepare mentally
• Develop a solid trading plan
• Learn risk management and trading psychology

If you are passionate about trading, eager to learn, and disciplined, becoming a proprietary trader can lead to great results. Remember, success in financial markets isn’t luck; it’s about preparation, planning, and consistent execution.