Prop Firm Rules + Tips To Succeed At Prop Trading

Navigating the world of the best proprietary trading firms can feel like trying to crack a secret code. The rules and regulations can be intimidating, but they’re crucial for traders who want to succeed with capital from these firms. This guide will break down everything you need about prop firm rules, making jumpstarting your trading career easier.

To take advantage of these opportunities, Aqua Funded’s funded trading program offers a straightforward path to trading successfully with capital.

How Does A Prop Firm Work

Prop firms are like your trading buddy with a big wallet. They give you access to capital, allowing you to take on more prominent positions and risks. When you’re trading with your cash, you might play it safe. But with a prop firm’s backing, you can go bigger and potentially win bigger. Plus, these firms often provide you with sophisticated trading tools, software, and resources. 

Consider having a high-tech trading setup that makes you feel like a Wall Street pro. And it doesn’t stop there. Prop firms also offer mentorship and training from experienced traders. This support can help you improve your trading skills and confidence. You share a percentage of your profits with the firm in return for all these perks. 

But that’s a small price to pay for the advantages you gain. You’ll find the biggest prop firms in financial hubs like London and New York. However, smaller firms are scattered globally, all with the same mission: to help their traders succeed. Many firms offer incentives and bonuses to keep you motivated and trading at your best.

How Proprietary Trading Works

Proprietary trading, or prop trading, is when a financial institution, like a bank or hedge fund, trades with its own money to make a profit. These trades are usually speculative, meaning they involve taking risks to make a significant return. Prop traders use a variety of complex financial instruments, like derivatives, to execute their trades. It’s like playing a high-stakes poker game but with the firm’s money. And just like in poker, the goal is to win big. This type of trading differs from traditional trading, where firms make money by cutting their clients’ trades. In prop trading, the firm’s success is directly tied to the success of its trades. This creates a strong incentive for the firm to make intelligent, profitable trades.

What Are Prop Firm Rules

Mastering Minimum Profit Targets

Prop firms set minimum profit targets to gauge your abilities. These targets are a percentage of your account size and vary across firms. Funding Traders, for instance, has a 10% target for 1-step evaluations and 10% for phase one of 2-step evaluations, dropping to 5% in phase two. This approach allows traders to work at their own pace without time constraints, which is crucial for consistent and skilled trading.

Navigating Drawdown Rules

Understanding drawdown limits is crucial. These limits protect against excessive losses and ensure traders manage their accounts responsibly. Firms use static or trailing drawdowns and may impose daily and overall limits. Funding Traders, for instance, offers a 5% trailing drawdown for 1-step challenges and a 10% static drawdown for 2-step challenges. Daily drawdowns are set at 4% and 5% respectively. Selecting the proper challenge that aligns with your trading style is essential.

Support for Position Holding

Many firms restrict holding positions overnight, especially for beginners. This mainly protects against market gaps and widened spreads, which can lead to significant losses. However, some firms, like Funding Traders, allow for holding positions over weekends and overnight, particularly for swing traders. It’s important to understand these rules to avoid unexpected losses.

Limitations on Expert Advisors

Prop firms often restrict using expert advisors (EAs) to manage risks. Many firms do not allow EAs that employ hedging, martingale, or grid strategies. Funding Traders, for example, supports EA trading but restricts off-the-shelf EAs, grid trading, and high-frequency trading. Selecting an EA that complies with the firm’s policies and enhances your trading strategy.

Smart Risk Management

Good risk management is essential for successful trading. This includes limiting losses to a certain percentage per trade and maintaining a consistent position size. Funding Traders suggests a maximum loss of 2% per trade and advises traders to use stop-loss limits to avoid large drawdowns. Following these guidelines, traders can protect their accounts and develop a profitable strategy.

Unveiling Hidden Rules

Hidden rules can catch traders off guard. These include maximum lot size limits, risk-per-position rules, and mandatory stop-loss requirements. Consistent rules also expect traders to stick to their original strategy even after meeting profit targets. Understanding these rules before trading can prevent unwanted surprises.

AquaFunded is a Dubai-based funded trading program that allows traders to access large capital accounts and earn up to 95% profit splits. Get started with AquaFunded's funded trading program today!

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8 Tips for Succeeding At Prop Trading

1. Get Funded with AquaFunded

AquaFunded is your go-to platform. This Dubai-based funded trading program gives you access to significant capital accounts with up to 95% profit splits. The 8% profit targets are easy to reach, and with bi-weekly payouts, you might see your first one in just a week. 

AquaFunded is perfect for traders of all levels who want to reduce risk and trade with firm capital instead of their own. It aims to stand out in the crowded prop trading market, offering a trustworthy platform for traders looking to scale their profits. Get started with AquaFunded's funded trading program now.

2. Master the Basics

Invest time in learning the fundamentals of trading. Study technical and fundamental analysis, risk management, and trading strategies. Courses and books can help you build a strong foundation.

3. Practice with Demo Accounts

Before risking natural capital, use demo accounts. These let you practice strategies and get a feel for live market conditions. Some prop firms offer trial accounts to explore trading conditions for 2-4 weeks.

4. Prioritize Risk Management

Proprietary trading firms take risk management very seriously. They often have a strict maximum drawdown limit of 5%, which can be restrictive, especially in leveraged trading. Always prioritize risk management. Define your risk tolerance, set stop-loss orders, and avoid risking more than you can afford to lose on a single trade.

5. Find a Mentor

Consider finding a mentor or joining a trading community. Learning from experienced traders can be invaluable. Some proprietary trading firms offer mentorship programs and dedicated risk managers to assist traders.

6. Stick to Your Trading Plan

Develop a well-defined trading plan outlining your objectives, entry and exit points, and risk management strategies. Stick to it and avoid impulsive decisions.

7. Master Your Emotions

Emotions can cloud judgment. Learn to control fear and greed, which can lead to impulsive actions. Stick to your plan and avoid overtrading.

8. Review Your Performance

Assess your trading performance regularly. Analyze winning and losing trades to identify areas for improvement and adjust your strategies accordingly.

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10 Best Prop Firms with Easy Rules

1. AquaFunded

AquaFunded is a trailblazer in the world of proprietary trading. Based in Dubai, this firm offers a unique funded trading program that allows traders to access significant capital accounts and keep up to 95% of profits. With achievable 8% profit targets and quick payouts, AquaFunded provides a competitive edge in the prop trading industry.

2. FTMO

FTMO has been a cornerstone in the prop trading industry since 2015. With a structured evaluation process consisting of an initial challenge and a subsequent verification phase, FTMO seeks to find talented traders and support their growth.

Pros

• Transparent fee structure
• Reimbursement of joining fees upon achieving first profit
• Up to 90% profit split

Cons

• Strict trading restrictions
• Steep 10% profit target during the challenge
• Traders operate on demo accounts, not real money

3. TakeProfit Trader

TakeProfit Trader excels at providing immediate profit withdrawals and an impressive 80% profit split. With three account resets for PRO accounts, this firm offers a cushion for traders looking to hone their skills.

Pros

• Instant withdrawals
• High-profit split for both standard and PRO+ members
• Flexible account resets

Cons

• Monthly fees, in addition to the initial fee

4. IC Funded

IC Funded stands out due to its flexible evaluation process, which allows traders to focus on strategy rather than time constraints. IC Funded provides traders with a robust platform, a profit split of up to 80%, and access to over 150 trading instruments.

Pros

• No time limits on evaluations
• Profit split up to 80%
• Bi-weekly profit withdrawals

Cons

• Not regulated by central financial authorities
• The initial fee is non-refundable
• Limited asset selection

5. The Forex Funder

The Forex Funder offers a choice between a one-step and two-step evaluation process, allowing traders to select based on their experience and strategy. With a profit split of up to 95%, the Forex Funder is a popular choice among prop firms.

Pros

• Up to $2.5 million in funding
• Less restrictive trading rules
• There is no time limit for passing the evaluation phase

Cons

• Relatively expensive to join
• Challenging profit target for new traders
• All trading is done on demo accounts

6. Funded Prime

Funded Prime requires traders to pass a two-step evaluation challenge on the DXtrade platform with a 10%-5% profit target. The evaluation process has no time limit, providing flexibility to traders.

Pros

• Cryptocurrency withdrawals
• There is no time limit during the evaluation
• Maximum profit share up to 80%

Cons

• Limited operational history

7. Apex Trader Funding

Apex Trader Funding is a top-rated futures funding provider. It offers traders the ability to trade on holidays and 24/7 customer support. With no daily drawdown, Apex Trader Funding provides a supportive environment for traders.

Pros

• Trade on holidays
• 24/7 customer support
• No daily drawdown

Cons

• Limited trading hours

8. E8 Markets

E8 Markets provides traders with a preset 2- or 3-step evaluation program, with the option to customize evaluation objectives. With a lower joining fee, E8 Markets is accessible to most traders.

Pros

• Low joining fee
• Conservative profit target
• No time limit

Cons

• Lower drawdown limit compared to competitors
• Steep entry fee for the custom evaluation program
• Maximum profit share of 80%

9. FidelCrest

FidelCrest offers traders who pass its 2-phase evaluation challenge a funded trading account of up to $2 million. FidelCrest is a strong contender in the prop trading industry because of its competitive trading rules and low subscription fee.

Pros

• Partnered with a related broker
• Low subscription fee
• Rewards and bonuses

Cons

• No copy trading
• Rigorous evaluation process

10. FXIFY

Established in 2023, FXIFY is highly regarded for its transparent rules and performance-based trading model. With four levels of performance accounts and support from top liquidity providers, FXIFY is an attractive option for traders.

Pros

• There are no time limits at any stage
• Works with reputable liquidity providers
• No monthly fees

Cons

• Expensive fee for traders who fail the evaluation
• Slightly low-profit splits

Join Our Funded Trading Program Today - Trade with our Capital and Keep 90% of the Profit.

AquaFunded is shaking things up in the proprietary trading sphere. It offers traders a platform to access hefty capital accounts with the promise of profit splits reaching up to 95 percent. Operating out of Dubai, this firm introduces a fresh funding model that sets itself apart with attainable profit targets and a rapid payout system. 

Consider hitting an 8 percent target and receiving your first payout in seven days. AquaFunded’s appeal is broad, catering to beginners and those with some experience who are eager to trade with less personal risk. With its competitive features and UAE-based operations, AquaFunded intends to carve out a unique space in the prop trading market, providing a credible platform for traders to elevate their profits.

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