How to Become a Pro in Prop Trading?

For decades, banks and financial firms have made money from the commissions earned by facilitating market trades for customer investors. Decade after decade, these market access facilitators have been watching astute customers collectively make billions while the facilitators have been limited to making small commissions. The concept of prop trading has changed banks and financial firms from being facilitators to actual market trading participants.

If you want to become a pro proprietary or prop trader, you can do that. However, doing so involves following a process that will help you get into the game. Here are some tips you can use to get started.

Acquire Adequate Working Knowledge About the Prop Trading Concept

The prop trading concept is somewhat complicated. It involves a quasi “investment partnership” between an investor (you) and a financial firm. It works like this.

Note: These types of financial firms include Forex Prop firms.

You deposit money with the financial firm. The financial firm adds some of its capital into your trading account, which increases your available trading resources. You make the trades and share the profits with the financial firm. BTW: THey still claim their commissions and fees.

Study About Market Trading

If you want to become a pro prop trader, you can’t approach trading like an amateur. Before jumping head-on into the market trading pool, you need to learn about trading and market concepts. You should also focus on learning about trading strategies.

Take Serious Your Trading Responsibilities

When a financial firm gives you some of its capital, they invest in you. You owe it to them to be very serious about your trading responsibilities. That includes making prudent profit-taking decisions and not taking extraordinary and unnecessary risks.

Find Your Motivation in the Love of Market Trading

Being a professional prop reader means making a living by trading markets. It’s going to require more than money. It’s also going to require a lot of time, effort, and focus. If you don’t love being a trader, the time will come when the drudgery of constant trading sets in, and you start making costly mistakes. This is not a get-rich scheme. You have to be motivated to DO THE WORK!

Find the Right Partner

While proprietary trading is still a reasonably new concept, many investment firms are getting involved in the process. They like the fact they can create revenue from two sources simultaneously.

Your job is to find the financial partner that best matches your expectations. At a minimum, you will want to limit your choices to fully registered and regulated firms. You will also want to limit your choices to Prop trading firms with a lot of experience in the prop trading realm.

Remember: If all things are good and equal, your best option would be the firm or firms that are offering the best capital infusions and profit-sharing terms.

Prepare to Meet the Firm’s Requirements

Since this is going to be a trading partnership of sorts, both parties have to be willing to work together. You’ll pick the firm or firms you want to work with, but you’ll have to meet a firm’s stringent requirements before they will bring you into the fold.

Most firms will ask you about your trading background and experience, your strengths and weaknesses as an individual, and details about your personal life. They won’t invest in you if they don’t feel comfortable about doing so.

Secure Your License

If you want to be a licensed prop trader, you will have to pass your state’s licensing exam. You should start studying for that exam the moment you decide to become a professional prop trader. You’ll likely have to pass the SIE and the Series 57 Top-Off Exams.

Find a Mentor

Financial firms prefer prop traders with experience. You can gain experience immediately by aligning yourself with an experienced prop trader willing to mentor you and show you the ropes.

If you invest your time and effort and follow these tips, it won’t be that long before you can count yourself as part of a new generation of market traders, a pro prop trader.

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