NYC Proprietary Trading Firms (2024)

FAQs

Why is it hard to pass the prop firm challenge? ›

Many traders fail the challenge because they try to meet the profit target too quickly and end up taking unnecessary risks. Remember, the prop firm is looking for traders who can consistently make profits over an extended period. Take your time to analyze the market and only take trades that align with your strategy.

The article from Lux Trading Firm provides slightly different results. According to it, 4% of traders, on average, pass prop firm challenges. But only 1% of traders kept their funded accounts for a reasonable amount of time.

A legitimate prop trading company normally follows a set of rules and regulations that give the traders a certain level of accountability and transparency. Everyone wants to avoid getting scammed, and that is always a possibility when money is involved, so it is always a good idea to conduct a due diligence.

Legit prop funding firms also offer a transparent, fair, and competitive profit-sharing model. Transparent profit shares are foundational to a dependable and trustworthy prop trading firm. Prioritize firms that are clear about how their profit-splitting agreement works.

Overview: MyFundedFutures is the best futures prop trading firm on this list for a variety of reasons, but most notably because it boasts one of the highest pass rate for its evaluation program out of all the futures prop firms on this list.

Statistics on Average Trader Payouts

Profit Split: The average prop firm will offer a 80-20 profit split once you become a funded trader. TFT, on the other hand, gives up to a 90% split, — even as high as 95% in some promotions — the highest in the industry.

Proprietary trading firms often provide evaluation accounts where you prove your trading skills. Usually, you pay a one-time fee to enter this “challenge.” If you lose money during this evaluation, you won't owe anything beyond the initial fee.

3.1 Classic proprietary trading

This almost always involves taking market risk, which is the risk that changes in the market prices of financial instruments or commodities may create a loss for the firm.

Among many other potential factors, the main disadvantages of prop trading arise from being classified as a market professional, unfavorable profit sharing, and whether your net trading profits are taxed as capital gains or ordinary personal income.

How long does it take to pass a prop firm? ›

It typically takes around 4-5 months to become a prop firm funded trader, if you're a consistently profitable trader. Some traders can achieve this much faster by using increased risk. However, the likelihood of failing the trading challenges would be increased.

For most funded trading accounts, it takes around four to five months to pass the screening process or prop firm trading challenge, before funding will be allocated to a trader.

Psychological Barriers in Trading

Many traders fail to control the emotional urge to keep pushing for higher returns, often ignoring the prudent step of taking profits at planned levels or adjusting stop losses to protect against market reversals.

Understanding the Prop Firm Challenge

At its core, the prop firm challenge can be a way for prop firms to make money from failed challenges. This is because some sources have the failure rate of prop trading challenges at 90%. So for every 10 traders that buy a challenge, 9 will fail.

There is estimated to be a 90% fail rate of traders that take the FTMO challenge. The reason behind this is due to traders chasing the profit target with a time restriction in place. A trader doesnt know when a winning streak might occur, or when they may take a string of drawdowns.