One of the most common causes of failure in trading is undercapitalization. Even if a trader becomes consistently profitable, it’s unlikely that he or she can make a living out of it without first having some big capital to trade.
That’s because on average the best traders in the world make say 30% per year, and you can already see that if you have a 10K trading account and make even 50% per year, you can’t live off of it. In fact, many undercapitalized traders end up trading too often and risking too much because they try to achieve impossible gains eventually blowing up.
What Are FX Prop Firms?
Forex prop firms try to fill this gap between good traders and lack of capital by providing their own. These companies look for skilled traders to trade their money and then split the profits that range from 50% to 90% for the trader.
Before getting to trade a live account, generally, a trader needs to pass a challenge on a demo account with a set of rules and profit targets to prove his skills. Once the trader passes the challenge, he or she gets the live account to trade and those can range from 200K to even 2 million dollars.
The Best FX Prop Firms
SurgeTrader
One of the best options for traders in 2023 is SurgeTrader, which functions as a leader for retail traders. Upon completion of a one-step Audition, traders receive a funded account — up to $1 million — and keep up to 90% of the profits thereafter.
SurgeTrader is one of the only funded account programs that funds its traders with a real live money trading account — aligning the interests of the firm and the trader. Other firms keep their funded traders on a demo account and only pay out winners, creating an adversarial relationship and a disincentive for those firms to have winning traders.
In addition, SurgeTrader has a single stage audition with the highest passing percentage in the prop trading industry with simple trading rules and no time limits — as opposed to complicated programs with multiple phases, which seem commonplace everywhere else in the prop firm space.
In addition, if a trader is in profit when the funded account is breached, the company still pays out the profit. This is an account feature that cannot be found with any other capital funding firm.
Of note, SurgeTrader ranks highly in terms of reliability, backed by extensive venture capital. Trading is carried out through broker ThinkMarkets, which is licensed by ASIC.
There are no restrictions on the use of strategies. Any strategy may be applied, subject to the trading rules of the company. Permissible strategies include algorithmic trading, hedging, scalping, and Martingale.
Features:
- One-phase evaluation with no time limits — pass on day one or day 100
- Spreads as low as 1 pip
- As low as $250 to get started
- Nearly 24/7 support
- Traders keep up to 90% of the profit on a funded account
- 10:1 leverage with an upgrade to 20:1 on forex and metals
- No risk — if the maximum loss and/or drawdown are met in a funded account, the loss is covered by SurgeTrader
- More than 1500 tradable assets — FX pairs, indices, stocks, metals, oil and cryptocurrencies
e8 Funding
e8 Funding is a US-based proprietary trading firm that offers talented and undercapitalized traders the opportunity to trade with its capital resources in exchange for a large percentage of the profits earned.
Founded by traders who have a passion for identifying hidden talent in the forex trading community, E8 Funding aims to bridge the gap between retail forex traders and professionals.
The company provides all-in-one analytics and top-tier software solutions from its team of in-house engineers to help improve the forex trading experience and success of traders, meaning everyone's interests are aligned into having the best possible trading experience and creating the perfect pathway to profit. E8 Funding also offers access to Tier-1 liquidity and aspires to be the top proprietary trading firm in the world.
Accounts & Funding
To get funded by E8 Funding, traders need to pay an upfront fee to audition and then qualify for funding by proving that they can trade profitably while managing their risk appropriately. E8 Funding has a user-friendly trading experience with all the essential data required for profitable trading. The company also allows funded traders to use the MT4/5 platforms for forex and CFD trading.
There are three account types that traders can choose from with different funding and characteristics: the E8 Account, the E8 Track, and the ELEV8 Account. The initial upfront cost depends on the account type and the amount of funding requested. The initial fee for the evaluation gets refunded for E8 Account and E8 Track if the evaluation process is completed successfully. However, those traders who fail the evaluation do not receive a refund.
The specifics
To work with E8 Funding’s capital, traders must pass the first step of the evaluation process, which occurs in two phases for the E8 Account and three phases for the E8 Track Account. Each phase has various objectives that traders need to meet to qualify for funding (e.g.: meeting an 8% Profit Target, staying under a 5% Daily Loss, and an 8 to 10% Maximum Loss)
Once traders successfully complete both phases of the evaluation process, they can open one of three different types of E8 Funding accounts with capital amounts of $25,000, $50,000, $100,000, or $250,000. Traders can also fund the account in euro (€20,000, €40,000, €80,000, or €210,000) or in pound sterling (£18,000, £36,000, £72,000, or £180,000).
- The E8 Account requires an upfront audition fee of $228 for a Phase 1 evaluation on a $25,000 account with a $2,000 profit target. If traders pass the Phase 1 evaluation, the Phase 2 evaluation is free and has only a $1,250 profit target in a $25,000 account. Traders who qualify to open a funded account with E8 Funding will enjoy an 80/20 profit split in their favor with no minimum or maximum trading days.
- The E8 Track account requires traders to complete a three-phase evaluation process. Once traders successfully complete it, they can open a funded account with E8 Funding. Traders who qualify to open a funded account with E8 Funding will enjoy an 80/20 profit split in their favor with no minimum or maximum trading days.
- The ELEV8 Account is a high-end account for traders who have passed the E8 Track evaluation process. Traders who qualify for the ELEV8 Account can receive a higher profit split of up to 85% in their favor.
e8 Funding features:
- High leverage ratios (up to 100:1)
- Innovative scaling and drawdown processes (up to 14%)
- Account sizes ranging from $25,000 to $1,000,000+
- 0 minimum trading days
- Multiple trading platforms, including MT4/MT5 Web trader (+Android and iOS app), MT4/MT5 desktop app, and e8trader
- Low costs with commissions starting at $1 per 100,000 traded
- Extensive education and support resources, including daily webinars, and video tutorials
- Real-time risk monitoring
- Position sizing calculators
- Seamless withdrawals: eligible after 8 days of successful account management
- Stop-loss orders for effective risk management.
FTMO
FTMO was founded in 2015 and can be considered a direct competitor to myForexFunds, but the overall offers are more limited. With FTMO you can’t get to trade an account right away, but you must first go through the evaluation phase consisting of two steps: the challenge and the verification.
Once you pass the evaluation phase you will get to trade the account size you selected in the beginning, which ranges from 10K to 200K and can be scaled to 2 million following a specific plan.
Regarding the profit split, FTMO rewards the trader with 80% of the profits, but there’s also a scaling plan that can get you up to 90% of the profits. The drawdown limits are more rigid with 5% for the daily limit and 10% for the overall drawdown limit.
If you want bigger limits, you can select the aggressive risk level plan and the limits increase to 10% for the daily drawdown and 20% for the overall drawdown, but your profit target also increases from 10% to 20%.
In the first step of the evaluation phase, the trader needs to reach a 10% profit target within 30 days of trading for a minimum of 10 days. The maximum daily loss limit is 5% and the maximum overall drawdown limit is 10%.
Once you pass the first step, you move on to the second one where the risk limits remain the same, but you need to reach a 5% profit target within 60 days this time with a minimum of 10 days of trading.
Features:
- One programme with different plans consisting of a challenge
- Trading account scalable to 2 million
- Profit split scalable to 90%
- MT4, MT5 and cTrader trading platforms
- Up to 1:100 leverage
- 24/7 support
- Registration fee refunded on your first profit split
- CFDs on Forex, Indices, Commodities and Cryptocurrencies
The 5%ers
The 5%ers was launched in 2016 with the goal of providing skilled traders with capital. The 5%ers allow a trader to get instant funding upon paying the registration fee.
Although the instant funding capital is low, which ranges from 6K to 20K, when the trader reaches the first profit target, the account increases by four times and after that doubles every time the trader makes 10% more in profits. The maximum an account can be scaled to is 4 million dollars.
The evaluation phase requires the trader to reach a profit target following a set of rules. The trader can choose between a low-risk and aggressive type of challenge.
The main difference between the two types of challenges lies in the profit target, which is 6% for low risk and 12% for aggressive, and the maximum time in which you must complete the challenge, which is 180 days for low risk and 60 days for aggressive.
The maximum loss a trader can incur is between 4% and 6%, depending on the size of the account, and the profit split is 50% for the trader. The funding program focuses mainly on forex with very limited support for commodities and indices trading. The trading platform is the MetaTrader 5.
Features:
One instant funding program with different plans consists of a challenge.
- Trading account scalable to 4 million
- Profit split 50% to the trader
- MT5 trading platform
- Up to 1:30 leverage
- CFDs on Forex, Commodities, and Indices
T4TCapital
T4TCapital is another prop firm that requires a trader to pass a challenge before giving a funded trading account, which is scalable up to 1 million dollars for those who choose the 100K account plan. The profit split can go up to 80% for the trader if he or she manages to make a 20% profit on the live account.
The challenge is called 'practical assessment' and the trader needs to achieve an 8% profit target with a win rate that is higher than 45%. There’s no time limit to achieve the target, but you will have to pay an 'extension fee' every 6 months. All the trades must also have a stop loss attached to them otherwise the positions will be automatically closed by the system.
The maximum weekly loss limit is 2% and the maximum overall drawdown limit is 5%. A trader also cannot carry positions over the weekend and any open trade will be automatically closed at the end of the trading week on Friday’s New York close.
Features:
- One programme with different plans consisting of a challenge
- Trading account scalable to 1 million
- Profit split up to 80% for the trader
- MT4, MT5 and TradingView trading platforms
- Up to 1:10 leverage
- CFDs on Forex, Indices and Commodities
TopStep
TopStep was founded in 2012 and it focuses on futures trading. The traders keep 90% of the profits but the maximum account size is only 150K. You can trade futures on different asset classes like equities, commodities, and bonds, but in 2022 they decided to remove forex for new users.
The challenge consists of a two-step verification phase called 'trading combine', which has no time limit to complete, but you need to pay a fee each month until you achieve the target. In the first step, you need to reach a 6% profit target with a 2% daily loss limit and a 4% overall drawdown limit. You will also have to trade for a minimum of 5 days.
In the second step everything resets, and you need to achieve a 6% profit target with a 2% daily and weekly loss limit and 4% maximum overall drawdown. In the second step, you cannot trade during major economic releases which makes passing the challenge harder.
Features:
- One program with different plans consisting of a challenge
- Trading account up to 150K
- Profit split at 90% for the trader
- 14 trading platforms including TSTrader, NinjaTrader and TradingView
- Futures on Equities, Commodities and Bonds
