A prop firm is a company offering prop traders an opportunity to use their skills to trade for them. The company provides traders capital that they can use to trade stocks, commodities, futures, derivatives, and currencies.
Proprietary trading is legal. The approach can be applied by companies, financial institutions, groups, and brokerage firms. The concept is legal also for individuals but only in case they operate on the firm's behalf. Just make sure your regional jurisdiction officially allows prop trading.
According to experts, joining a prop firm can be worth it as it provides access to significant trading capital and can help traders learn risk management skills. However, it also has some drawbacks such as limiting trading strategies and profit sharing that must be considered.
Proprietary Trading: Full Career and Recruiting Guide Base salaries are slightly over $100K, and bonuses are usually 50-100% of base salaries. Some top firms might even offer total compensation north of $200K, but it depends on the market environment and your performance. If you lose money, you receive no bonus and will eventually be fired if you keep underperforming
What Does a Proprietary Trading Firm Look For In a Trader: Strong risk management skills. Proven track record of success. Good understanding of the financial markets. Excellent analytical skills. Ability to work under pressure