If you’ve ever wanted to make it big as a financial markets trader but had little idea about how to get started, take a closer look at forex trading and how a proprietary trading firm may give you the opportunity to hit it big. While forex trading can be complex and competitive, realize that prop firms give their traders plenty of tools for success. If you want to learn about the approach firms take with their traders and company profits, here’s all you need to know.
You’re Playing with House Money
To some degree, when you start out as a prop trader, you are playing with house money. Instead of using your own money to fund your trading, the prop trading firm will give you a certain amount of working capital to use when trading various types of foreign exchanges, stocks, commodities, and other financial instruments.
However, don’t assume that you can make one poor decision after another and continue as a prop trader. If you lose large amounts of money on your trades and not be a trader who turns a substantial profit, the firm will probably send you packing.
It’s an Audition
Even though you won’t be hired as an actual employee of the prop firm, you are still auditioning for an exclusive spot as a trader for the firm. Should you pass your evaluation period and show you have what it takes to make money as a forex trader, the firm will sign you to a contract as an independent contractor.
Your contract will state the firm’s expectations for how much money you should make and clearly spell out how the profits you make will be split. While some firms will do an even 50-50 profit split, some may choose to do a 70-30 or even a 90-10 split, so read your contract carefully before signing.
Expect Stiff Competition
Once you are working for Forex prop firms and making a profit daily, don’t get complacent and decide to rest on your laurels. Since trader jobs are highly coveted, you can expect to have stiff competition on a daily basis. In a typical forex firm, there are 100 or more day traders all trying to show the firm they are the best traders. Because of this, you will need to prove yourself to the firm each day by using the best strategies for trading and maximizing profits for you and the company. The firm will carefully track your progress or lack thereof, so learn all you can and make smart trading decisions.
You’re Given Plenty of Resources
Along with a substantial amount of working capital you can use for trading, the forex firm will also give you access to state-of-the-art technology to make you a better trader. This will include the ultimate in prop trading software, access to experienced brokers, and various educational materials you can use to learn more about risk management, technical analysis, market research, trading strategies, and much more. You can also expect the firm to have experienced traders on staff who can give you tips for success as well, so don’t assume you are in it alone as a prop trader.
Potential for Long-Term Growth
Forex trading firms are not only focused on making immediate short-term gains but also on laying the groundwork for long-term growth for both the company and its traders. If a company has a revolving door of traders who are always coming and going, the firm will likely not realize its full profit potential.
Because of this, forex firms will provide traders like you plenty of ways to make money in this financial market that is well-known for its liquidity. When you combine your trading skills with the firm’s leverage and experience, your chances for successful trading and high profits increase substantially.
The goal of any forex firm is to make maximum profits each and every day. Should you be given one of these coveted trading jobs, the firm’s approach will be to give you the tools needed to ensure you and the firm have a very profitable relationship in the years ahead.