Greetings traders and welcome back.
Thank you for joining me again for another In-Depth with Chris episode. In today's discussion,
we're going to talk about how you can become a prop trader.
If you are here at Earn2Trade, you are already on your way
to potentially becoming a prop trader.
We're going to talk about what a prop trader is, how they
make money how the entire process works, and all of the steps
that you need to take if you desire a prop trading future
for yourself. Without further ado, let's dive on into
the material, that way you can get on going to the Gauntlet Mini.
Prop trading, or proprietary trading, is one of the fastest growing professions online today.
There is a strong online demand for it due to the potential
that it offers if you have the ability to become a proprietary
trader, but what is a prop trader?
Well, a prop trader is somebody that uses capital provided
by a company to conduct trades involved in asset classes like
futures, stocks, currencies, and commodities.
We summarize what a proprietary trader is as a trader
that is trading using someone else's money.
That's the easiest way to do it. Right off of the bat,
you might already understand some of the potential benefits
to being a proprietary trader if you're not risking your own money.
What does a prop trader's job entail? What does a prop trader actually do?
Well, a prop trader is someone who conducts trades on the
behalf of the firm using the firm's capital, and a prop trader
usually has the flexibility to do this from wherever or whenever
he or she wants to, and generally will pick the own asset
class of which they want to trade. Because this is, by nature,
a profession that doesn't require a specific location, only
internet access, this is one of the very appealing aspects
to becoming a prop trader. There is no minimum limit on
the number of hours that a trader would need to work either.
Once again, the job is going to be how efficient you can be with it,
so you're only limited by yourself.
This is, once again, a very appealing nature, not like having
a overseeing boss figure over the head, but instead really
you're your own boss when you are a prop trader, to a degree.
The trades are generally conducted using appropriate
strategies with fundamental and technical analysis
just like you may be doing, or looking to do yourself as you
watch this video. Prop trading is not an overly complicated
scenario to understand if we just think of it as a mutually
symbiotic relationship where money is being provided with
the catch being, the trader is generally expected to share
a small portion of those winnings with the firm to make it
worthwhile for the firm as well.
Both the firm and the prop trader have incentive to do
well because if the trader is doing well, the trader's making
money, and if the trader is doing well, also the firm is making money. Now,
let's talk about the steps to actually becoming a prop trader.
The first step is almost too obvious, and often times overlooked
by overzealous potential traders, and that is learn to trade the market.
This is number one, numero uno, we need to understand how to trade the market.
This is the core of what our job will be if we are to become a prop trader,
so we need to be able to understand and trade the market
before we pursue and apply for a job in understanding and
trading the market. Number two is going to be, follow the rules.
Every market has its rules that go along with it that need
to be adhered to, for even potentially legal reasons. An example
of this is being aware that you can't use inside information
while trading, which is material that is not publicly available,
in order to make an investment choice that will potentially
benefit yourself. That is, in the essence, going to be insider
trading and that is illegal.
If you aren't aware of that, you might accidentally do
it, so we want to be aware of all of the individual rules
of whatever markets that we're going to be investing in. Then,
we have the build a trading strategy section, and this is
obviously going to revolve around having a systematic approach
to executing positions. You want to have a systematic approach
to executing positions because it will allow you to make
sure that your results are measurable and relatable, and can
be systematically changed one step at a time. Number four
is going to be practice money and risk management. Money and
risk management. This is the difference between a profitable trader, and a
not profitable trader. the majority of the time. If you have
strong money management skills, if you have strong risk management skills, you're
already 50% of the way done with being a successful trader.
That is the majority of the battle in most traders' eyes, is
being able to control your risk appropriately, not getting
caught up in a greedy manner, and not getting caught up in
a FOMO manner either. We're not done yet.
We need to keep climbing, and the next important step is to
practice with paper trading. This is one that is just a "duh" statement.
We absolutely should practice and be aware of how good we
are, where we're at, and all of this is stuff that is told to us with practice.
There is no limitation to how much we should practice,
and even once we become prop traders, it always helps to keep
ourselves practicing. If we're going to be trading hundreds
of thousands of dollars potentially of a firm's money, we
should still respect it, even though it's not our own money.
That's a given. We want to keep that healthy relationship
between the two of us because that is our ability to make
money is as a prop trader. If we have no capital, if there
is no successful firm, there is no place of employment.
Then, number six is going to be subscribe for a prop trading
program. After obtaining the necessary skills to become a prop trader,
you can register on an online platform to go ahead and take
that process, which will vary from place to place.
Here at Earn2Trade, the Gauntlet Mini is one of those platforms that
is offered here, and it is going to examine the capabilities
of you as a trader for the intraday futures market.
That's the goal. To be a successful futures trader.
There are a number of advantages that this test potentially
will offer you, and it's absorbed up the prop trading firm as well the prop trading firm as well,
so not only does it allow you to prove your skills to yourself,
but it allows you to prove your skills to a funding situation to where
if you are good enough, you're going to be given some money.
Then number seven is exactly that. It is get funded.
After you complete something like the Gauntlet Mini, they
will then give you an offer from Helios Trading Partners,
which is going to be that big old payday that you're looking for to
trade with, and the trader can actually go ahead and make
real trades with the money because it is real money, and there you go.
It is a profit-sharing situation, I believe of 80% to the trader. That is a gigantic amount
for the trader in favor, and only 20% of the profits go to the firm itself,
so pretty good situation. You as the trader keep 80% of all
of the money made with money that isn't even yours.
There are some things to bear in mind if your goal is to become a prop trader.
The first one is be aware of the costs and taxes.
There are costs and taxes that are associated with being
a prop trader that the trader themselves will have to bear.
Many brokers will charge a platform fee, or a monthly subscription
fee for accessing the account, or additional fees potentially
levied for the data itself because the broker themselves is charged
these fees to begin with, and oftentimes the broker's charged
a great deal and they need to recoup the cost in order to be able to be profitable and stay open.
These are things to be aware of as a potential prop trader.
Just take a look at the numbers and be aware of all of it.
Most sites will list that all in plain information for you.
Number two is going to be, how does a prop trader make
money? This is an important one to understand as well.
Most prop traders make money by taking a share of the profit
that is generated by the trades that they are making, and
usually the trader will be taking the vast majority
of that profit generated by the trades. Here at Earn2Trade,
I believe it is 80% currently for the trader, so very
heavy favor for the trader, and only 20% goes to the firm,
but the performance obviously needs to be there.
Then, number three we have, how much money do you need to become a prop trader?
Well, technically it could be zero, but once again, there are costs and taxes that are associated
with being a prop trader. The availability of money to actually trade with is technically
zero for the executing of the positions, but in order to access that money, there are fees like the
taxes, the data fees, etc. that you may have to pay in order to be given that opportunity.
Number four is, what is the average salary of a prop trader?
Well, according to a survey that was conducted by PayScale,
the median salary of a prop trader is somewhere around 81,000. 80% of the salaries were within the
range of 50,000 to 151,000, and about 50% of all the salary
was in the form of bonuses, or commission's, or profit-sharing.
Prop traders generally can choose between benefits that a firm might potentially
offer them. Number five is, what is the routine of a prop
trader? Well, this is going to be specific to each individual
prop trader because the end of the day, how you get to the
results, the firm doesn't care about, they just care that you get there.
Whether it's starting your day with a cup of coffee, or
starting your day with a morning run before starting to analyze
some charts, it doesn't matter as long as you find something
that works for you. Number six is, is it worth it?
Well, once again, this is a job where you are only limited
by yourself. It is as valuable as you choose to make it. There is no ceiling for you as a prop trader.
The advantages of prop trading really could go on, and on,
and on because the advantages really are truly what you're
going to make of them. By participating in a profit sharing
mechanism, there's no cap on the earnings that you can make.
Unlike a typical job, there's no defined working limit either.
There's no obligation for you to work at any specific time
as long as you're achieving the goals that you need to be
achieving. That means if there's an important meeting with
your child that you want to attend, like a baseball game or a
ballerina dance, you'll be able to do such a thing and potentially
make up that time spent there with some more time spent trading later on, or you get the idea.
The disadvantages in being a prop trader is the fact that it's a highly competitive job.
It's a job that is going to require a skill set in order to be able to get hired.
You have to be good enough. Not everybody is going to be good enough and that's just the truth.
But the only way you'll ever find out is if you try, and if you're not good enough today, that doesn't mean you can't be
good enough tomorrow. Often times., it's not the most intelligent trader that becomes the most
profitable trader, but instead, it's the hardest working trader.
To sum it all up, being a prop trader, honestly, it's pretty cool. I enjoy it myself.
It may not be for everybody. It may not be for you,
but if you are good enough, it's a very cool opportunity
that provides you the ability to hang out with your dog while you work, and who doesn't want to do that.
Other than that folks, I appreciate you hanging around and talking about something with me everyday.
It's a nice way to make the time pass, but please click that like and subscribe
button below if you haven't, and the next time I come out with some information, I'll be sure to let you know.
Thank you very much guys. I'll see you soon.