FTMO is one the fastest-growing proprietary trading firms with funded trading accounts. Funded traders can earn up to 90% of profits. Forex, stocks, commodities, indices, and cryptos are all tradable assets. These FTMO reviews will guide you through the FTMO Challenge, including signup, member dashboard, and trading platforms. We also examine the pricing, evaluation, and trading objectives.
FTMO began its business operations in 2020. It has experienced tremendous growth since then. Today, FTMO is home to over 180 registered traders. Each month, more than 6 million trades are opened. $23 million has been paid out to date in 2021. The average payout processing time is 8 hours.
Forbes has featured FTMO, and they have won the Deloitte Technology Fast50 award three years running. The FTMO Challenge is part of their evaluation, as well as the verification. Traders who pass the evaluation process are offered a place in the FTMO Proprietary Trading Firm, where they can manage an account balance of up to $400,000.
The offer includes a comprehensive trading journal that allows for account analysis and excellent educational resources. Let’s read about what is a prop.
What is Prop Trading?
Proprietary trading, also known as Prop trading, is when a financial institution like a commercial bank or brokerage firm directly trades or invests on the stock market. These institutions can trade currencies, stocks, and commodities.
These institutions invest in the stock market using their funds, not clients’ money. They can also earn profits by engaging in trades on top of the commission they receive from processing trades for clients.
Prop trading Pros
Prop trading offers a few advantages that we will highlight in this section.
1. Profits Increased
Prop trading allows institutions to make higher profits than if they were brokers and only earn commissions.
2. Stockpile of Securities
Prop trading allows firms to accumulate shares/securities. You can sell these stocks to clients if the market becomes liquid or it becomes difficult to buy or sell securities on an open market.
3. Brokerage Rebates for Proprietary Trading Firms
When you add liquidity into the market, rebates are considered compensation. You are unlikely to receive a rebate as a retail customer if you trade in props.
4. Proprietary trading firms offer good support:
Prop trading firms are often tightly-knit businesses that only a few people because of their nature. Client support is fast and can be reached by phone. Contrary to trading with a retail broker with thousands, if not millions, of clients.
Prop trading Cons
Prop trading, like all things in life, has its disadvantages. We will highlight these in this section.
1. Proprietary firms are less regulated than retail brokers:
Remote trading is not required for most prop trading companies. This is a double-edged coin, as it can be both a good thing and a bad thing. There are fewer operating costs if you don’t have to be regulated. However, you risk losing all your capital, especially if the principals are fraudsters.
It would be best to do extensive background checks and research on the company and its managers. You should also check for honesty and integrity issues. Then, consider whether it is worth the risk. Unregulated also means that one rogue trader could risk all of your firms.
2. There is a risk of losing your money
Prop trader deposits are not insured. They can be subject to fraud and other business risks. This is mainly due to the absence of or minimal regulation. It is advisable only to deposit the amount you can afford to lose. Retail clients have their money insured by strict regulations of retail firms.
The good news is that the initial deposit can be small, and an experienced trader can earn a 100% return per month on equity.
3. The fees for proprietary trading are high:
Prop trading companies charge fees for software, especially if you trade from a remote location. Software fees are usually around 200 USD per month. The prop trading fees are pretty high compared to what retail clients pay.
4. Prop trading is mostly day trading:
Although proprietary trading can offer high leverage, it is usually limited to day trading. You will get less leverage if you hold an overnight position. Moreover, most prop companies only offer day trading.