What Is Proprietary Trading?

prop trading

Proprietary trading (also "prop trading") is a form of participation in trading on the exchange at which the trader sells no own funds, and money to the company that hired him. Often, these companies not only hire a percentage of traders obtained their profits, but also carried out his training as they have a direct interest in the success of exchange operations.

Commerce prop-trading company has a number of advantages for both beginners and professionals. Members only entering the market, do not have the correct understanding of the trading process, so the probability of success is very low self. When a newcomer comes to prop-group, it provides maximum opportunities for a successful start. He gets a trading place, training, capital, support large traders, the possibility of parsing errors, analysis of successes and failures, etc. Experienced traders who trade in prop companies, get in control of the capital, many times larger than its own. They also have the opportunity to trade in the market with low fees, as the prop of any company established relationships with brokers and favorable conditions (including due to the large trading volume, which is generated by traders prop company).

The successful prop company has a staff of permanent traders who bring the lion's share of revenue. Their fee is a percentage of the profits earned during the month. The level of compensation depends on the percentage of profits that generates the trader. The successful trader, the smaller percentage of the profit he gives us, and the more picks itself. Prop trading is especially popular in Western countries, but in Russia there are companies that offer interesting conditions for traders.

Prop trading is a strong alternative to the usual brokers as commission prop firm is significantly lower, and the purchasing power (equity trader + Leverage) are much higher. Thus, the trader, working through prop-group may have better results than those traders who trade through classical brokers.