If you are like more and more people today, you must begin to have more control over your financial future. If you are interested in financial markets and economics, you can use these to your advantage by becoming a prop trader. 

By working with a prop firm, you can take advantage of such features as low-fee structures, state-of-the-art training programs, and large amounts of trading capital. If you’re ready to take your finances to the next level, here are some key steps you’ll want to remember.

Prop Firms Have No Clients

Unlike almost all other financial trading companies, prop firms are the exception in that they have no clients. Instead, they recruit people like yourself to become prop traders and offer the training needed so that you and other prop traders can use the firm’s capital to make a profit and increase the company’s revenues. When you trade with such a firm, the arrangement is that you can use the firm’s capital to trade in exchange for letting the firm take a cut of your profits. In most cases, the split is 50/50.

You’re a Contractor, Not an Employee

When prop trading firms hire traders, they hire them as independent contractors rather than as employees of the firm. Should you be hired, you will be given a contract stating your account size, how the profits will be split, and how to use the firm’s capital. 

Since you will be acting as a day trader, you will move in and out of various financial markets hundreds of times daily. Since this job is not for the faint of heart, you must be very focused, pay attention to details, and be decisive under stressful conditions.

Developing a Trading Strategy

As a prop trader, you will need to develop a trading strategy that is comfortable for you and allows you to make the most of your profits. Many prop traders today like to use what is known as the news strategy, which lets you base your trades on various economic news reports that come out at certain times each month, such as the consumer price index, rate of inflation, and Federal Reserve interest rate reports. 

If you use this strategy, you will make hundreds of trades per day and place your trades based on what you anticipate the reports will say. Thus, you could suffer significant losses if you guess wrong on a certain report.

Choosing Your Financial Market

Along with choosing a trading strategy that will let you generate maximum profits for the prop firm, you will also need to decide which financial markets you’ll want to trade in and out of each day. These can include stocks, currencies, futures, and almost any other type of financial instrument you can imagine. 

Forex trading, which is short for foreign exchange trading, is very appealing to many prop traders due to the market’s high liquidity, low trading fees, and lack of regulations regarding foreign currency trading. Once you learn how to use this market’s high leverage ratios to your advantage, it may be possible for you to earn very large profits by making as few as five successful trades each day.

A Very Competitive Industry

If you thrive on competition and are never satisfied unless you come out as the winner, prop trading may be a great fit for your personality. Yet once you get on the trading floor of a prop firm, keep in mind that there may be as many as 100 other prop traders who are just as skilled or even a bit more skilled at prop trading than yourself. 

Because of this, you’ll need to prove yourself daily in order to make high profits and let the prop firm see that you are a trader who’s worth keeping around a while longer.

Once you are ready to take control of your financial future, being a trader for a prop firm can satisfy your competitive juices while also making your bank account much bigger.