Prop Trading Jobs and Salary Insights For 2023 By Traders Union Team
Proprietary trading firms, often called prop firms, are businesses that give money to traders. In such a way they can trade things like stocks, Forex, futures, and options. If you really like trading and want to work in the fast world of financial markets, prop trading can be an exciting option. Traders Union (TU) experts have provided a comprehensive article. They explained about prop trading jobs and salary.
Finding the best jobs in proprietary trading
TU’s analysts consider that the best prop trading jobs depend on your skills and experience. Prop trading firms look for traders with a strong trading background, often in specific markets.
- Equity traders – they buy and sell stocks and other equity securities using various strategies.
- Forex traders – they focus on trading currencies in the foreign exchange market, using different approaches.
- Futures traders – they trade futures contracts tied to commodities, indices, or interest rates.
- Options traders – they deal with options contracts, which give the right to buy or sell assets at specific prices and dates, using various strategies.
Is prop trading right for me?
To determine if a prop trading job is right for you, it’s essential to understand the key aspects of this role. In prop trading, it’s more like a partnership than a traditional job. You must excel at making profitable trading decisions, and a significant portion of your income is tied to trading success. Experts at Traders Union outline the pros and cons.
- Access to capital
Prop trading firms provide funding for traders, enabling access to more opportunities.
- Trading support
These firms offer advanced tools and support, aiding informed decision-making.
- Profit potential
Profit-sharing arrangements can yield substantial income for successful traders.
Working in a prop firm fosters valuable industry connections and collaboration.
- Risk management
Strict policies may limit risk-taking and trading strategies.
- Profit sharing
Traders share profits with the firm, reducing personal earnings.
- Market restrictions
Some firms limit the markets traders can access.
- Performance pressure
Prop trading can be high-pressure, with constant evaluation and competition.
Steps to start a career as a prop trader
Becoming a prop trader is challenging but achievable with a strategic approach, as recommended by TU’s experts:
- Learn market trading – understand different markets, trends, and influencing factors. Study technical and economic aspects, and develop entry and exit strategies.
- Start personal trading – begin trading with your own account to refine your skills and demonstrate your talent.
- Find a reputable prop firm – research established prop trading firms or respected investment banks. Consider earning a bachelor’s degree if possible. Apply and go through their application process, which may include an internship.
- Apply for funded programs – some remote trading firms offer funded trading programs. Apply by providing your background, education, and trading experience.
- Prepare for interviews – expect interviews about your trading skills, experience, markets of interest, and strategies.
- Consider key factors – evaluate factors like account size, profit-sharing terms, available platforms, tools, and monthly fees charged by the prop firm when deciding to become a proprietary trader.
Earning potential for a proprietary trader
Traders Union analysts noted that in prop trading, earnings depend on profit-sharing agreements, which can vary. Many prop firms offer good profit splits, like 80% for traders. Some have tiered structures, where the trader gets 100% of the first $5,000 in profits and 90% afterwards. Fidelcrest, for instance, offers a 50% split initially, but funded traders can earn up to 90/100. TopStep lets traders withdraw the first $5,000 in winnings and offers a 90% split for later gains. It’s essential to know that profitability can differ between firms, but some, like TopStep and Fidelcrest, offer coaching, large accounts, and profit splits up to 90% for potential profits.
The best prop trading jobs depend on your skills and interests, with various roles like equity traders, Forex traders, futures traders, and options traders to choose from. To determine if prop trading is right for you, understand its pros and cons, including access to capital, trading support, profit potential, networking opportunities, but also risk management, profit sharing, market restrictions, and performance pressure.