It also highlights the benefits of broker-backed prop firms in the still new industry.

In a recent interview with Prop For Match, David Varga, CEO and Co-Founder of Fintokei, shed light on why traders often fail. He attributed their struggles to emotional decision-making and inconsistent approaches, which frequently lead to financial losses.

Emotional Pitfalls and Risky Strategies Challenge Traders

"We can see in the data that many traders are trading in a very nice way. It looks like they really have discipline and some edge over the market. Then we see one, two, three trades that are kind of out of the concept or strategy," Varga said.

"The most common reason why something like this happens is that they lost their nerves or saw some opportunity of a lifetime that they didn’t want to miss."

Fintokei is a broker-backed prop firm owned by Purple Trading, which handles over 400,000 transactions daily. The company reports a 175% increase in active traders in 2024 and claims to have paid out €4 million to clients in the first eight months of the year.

According to Varga, the most important thing is to maintain discipline and manage emotions to ensure long-term trading success.

"Take your emotions under control. That’s, like I said, the most important part of trading," he said. "Focus on this part because not every trader, especially the beginning trader, is aware of this."

For those entering the prop trading space, Varga also emphasized the importance of choosing reliable firms and understanding the specific rules of prop trading.

Broker-Backed Prop Firms Provide Stability and Trust

Varga also discussed the advantages of broker-backed proprietary trading firms, which he believes offer greater reliability and security compared to traditional prop firms.

"The safety, reliability, and, in the end, trust into the prop firm is one of the core features that prop traders should seek," he explained. "The level of experience, including risk management , finance management, and the network that comes along with the brokerage business, is very, very important in the life of a prop firm."

This aligns with a recent survey conducted by PipFarm among 3,500 respondents. The study revealed that 60% of traders consider broker-backed prop firms to be more trustworthy.

He noted that the extensive infrastructure and experience of broker-backed firms, such as partnerships with payment providers and technology vendors, contribute to a more stable trading environment for their clients.

Thus, it's no surprise that an increasing number of brokers are entering the prop trading market. This week, Finance Magnates exclusively reported that Somesh Kapuria, the former Head of Business Development at AAAFx Global, has become the latest executive from the FX and CFD industry to launch his own prop trading platform .

ATFX also confirmed its entry into the prop trading industry, joining other established brokers such as OANDA, Axi, Hantec, and Trade.com. Additionally, Andreas Andreou, the former Chief Revenue Officer at BDSwiss, launched his own proprietary trading brand following his departure from the brokerage.

Education as a Key Differentiator

Education is a central focus for Fintokei, particularly in the company’s core markets like Japan, where financial literacy and access to trading resources are limited. Varga stressed the importance of localized educational materials to support traders.

"Especially here in Japan, financial literacy and education about trading are not so much present. There is not that much publicly available information," Varga explained. "Having the educational materials in the local language is something we try to differentiate from other competitors."

According to Varga, providing accessible educational content helps traders better understand the market and improve their skills. This is particularly significant, given that three out of five traders in this market lose money, with an average investment of $4,300. According to a separate study by FPFX Tech, the statistics are even less encouraging: out of 300,000 prop trading accounts, only 7% have made at least one withdrawal.

Rewarding Consistent Trading with Scaling Plans

To encourage sustainable trading, Fintokei offers a scaling plan that rewards traders who demonstrate consistent profitability and disciplined risk management. This approach aligns with the firm’s emphasis on long-term success.

"The scaling plan that we have at the moment can actually bring you up to €4 million," Varga said. "There’s not any client reaching that amount at the moment yet, but hopefully, there will be some getting towards that goal over the next year."

Varga added that consistency is a priority for the company, as it seeks to promote trading behaviors that avoid excessive risk-taking or chasing short-term profits.

Fintokei’s Plans for the Future

Reliability, transparency, and innovation are key pillars of Fintokei’s mission, according to Varga. The firm is also working on new initiatives aimed at improving trader experience and industry standards.

"We are working on several very interesting initiatives that I think could reshape or add a very nice touch to the industry next year," he said. "There’s definitely a lot to look forward to."

Varga expressed optimism about the future of the prop trading industry, noting that while challenges remain, firms like his are focused on creating opportunities for traders.