Trading Tips & Prop Firm Strategies | Cointracts Learning Hub

In most cases, proprietary (prop) trading firms do not require a “license 52” or a similar broker-dealer license. This is because the majority of modern prop firms operate on a model where traders use simulated accounts and trade the firm's capital. Since they are not managing external client funds or providing financial advice to the public, they typically fall outside the regulatory scope that mandates such licensing.

Generally, proprietary trading firms do not have external investors in the way public companies or hedge funds do. Traditional prop firms trade their own capital, belonging to the firm's partners or private owners. Modern online prop firms operate on a different business model, primarily generating revenue and funding from trader evaluation fees rather than soliciting outside investment capital to trade.

Yes, some proprietary trading firms allow options trading, but it is not common and is almost exclusively limited to futures options rather than stock options. Firms like Topstep and Apex Trader Funding provide access to options on futures contracts through specific platforms, but traders must operate under stringent rules, including restrictions on selling naked options and strict risk management parameters. Finding a prop firm that supports a wide range of stock options strategies remains a significant challenge for traders.

Apex Trader Funding is widely regarded as a good prop firm, particularly for traders who are disciplined enough to manage its specific trailing drawdown rule. Its primary appeal lies in offering large capital accounts through a straightforward one-step evaluation process, often available at significant discounts. This makes it an accessible option for traders seeking to leverage their skills without risking substantial personal capital.

Several leading proprietary trading firms provide free trials, allowing traders to test their skills and strategies in a risk-free environment. Notable firms offering these opportunities include FTMO, Topstep, The Funded Trader, and Fidelcrest. These trials are designed to simulate the conditions of a paid evaluation, giving you a realistic preview of the rules, trading parameters, and platform you would use as a funded trader. They are an invaluable tool for preparation and skill assessment before committing capital.

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Identifying the single cheapest prop firm depends heavily on the account size and evaluation model you choose. For traders seeking the lowest entry fee, firms often offer small $5,000 or $10,000 accounts for under $50. However, the best overall value considers profit targets, drawdown limits, and profit splits. For example, a firm might be cheapest for a $25,000 account but more expensive for a $100,000 account. Always compare the total cost against the potential return and trading conditions.

Starting a white label prop firm involves a strategic process that begins with crafting a solid business plan and choosing a jurisdiction. The next critical step is partnering with a comprehensive technology provider to acquire a trading platform, CRM, and trader's room. Subsequently, you must design your evaluation challenges, set trading rules and profit splits, secure liquidity, and finally, launch a targeted marketing campaign to attract traders. This streamlined approach allows you to leverage existing infrastructure, significantly reducing development time and costs.