Exploring the Top Prop Trading Firms of 2024

Prop trading is one of the many strategies institutions use to participate in the financial markets. Proprietary trading firms use their own money to invest in the markets instead of managing clients’ capital. The best prop trading firms are gaining massive popularity in the retail trading industry, as they provide the opportunity for skilled traders to trade on larger funds.

In this article, we focus on introducing the top prop trading firms. We first begin by explaining a prop firm and how it works. We then provide instructions on how you can become a prop firm trader. Finally, we analyze the factors you must consider before choosing a suitable firm to work with and introduce the best prop trading firms in 2024. We also provide a brief explanation of how you can create your own prop firm using Finestel’s white-label solution.

What Is a Prop Firm?

A proprietary trading firm, or simply a prop firm, is a financial institution that invests its own money in the markets. Some prop firms also offer successful traders the chance to manage the firm’s capital and share the profits with them. We focus on these types of institutions in this article and try to guide traders interested in prop trading to choose the firm that is best suited for their goals.

How Does a Prop Firm Work?

Prop firms raise funds from their own shareholders or borrow from other institutions. They use this money to fund skilled traders in the form of trading accounts registered with partner brokers. The traders would then manage the firm’s capital and trade financial instruments, aiming to earn profits.

The profits are shared between the firm and the trader at the end of each period, which is typically a month. However, you should note that prop firms use challenges to identify deserving traders. These challenges are in the form of demo trading, with different profit targets, maximum drawdown, and time limits.

How Do Proprietary Trading Firms Manage Market Volatility?

Prop firms use various risk management techniques to manage their risk and protect themselves against market volatility. A decent example is the drawdown limit set for funded traders. This rule prohibits traders from going through a drawdown of more than a certain level, and if they do so, their account is taken from them. Another method these firms use is diversifying their income sources.

Arguably, the main revenue stream of prop firms is not from the profits the traders realize, but the cost they charge for their challenges. Regardless of whether the trader passes or fails the challenge, he should pay the challenge price in advance. This income source is totally independent of market volatility.

How Can I Become a Prop Trader?

Similar to copy trading platforms, prop firms have provided an outstanding chance for traders to manage more funds, with the only risk they bear being the price they pay to purchase challenges. However, the first step to using this life-changing opportunity is to learn the skillset and become a professional trader.

By a professional trader, we mean one who can effectively manage risk and consistently extract money from the markets. Yet, you should also train yourself to play by the rules and requirements of the firm you choose to work with. Pay attention to maximum and daily drawdown limits, minimum active days, etc.

With several reputable prop firms available to choose from, traders have one of their main problems solved. That is a lack of trading capital. You only need to master the skills required to become a consistently profitable trader and a professional risk manager.

Factors to Consider When Choosing a Prop Trading Firm

While there are many prop firms currently active in the retail trading industry, you should be careful which firm you choose to work with. Here are some of the most important factors you need to consider when selecting a prop firm:

• Reputation: Try to analyze prop firms by checking their reviews on different trading forums, websites, and social media. Look for possible red flags and strengths users point to before opting to create an account with a firm.
• Regulation: Only consider prop firms that are highly regulated. The best prop trading firms are regulated in the United States and the European Union. Therefore, they are reliable enough and worth your money and time.
• Pricing: Various prop firms offer different prices for their challenges. You should preferably work with firms that have the most reasonable prices.
• Pass/Fail Criteria: Compare profit targets, maximum and daily drawdown limits, minimum trading days, and time limits between the reliable prop firms to identify the one you are most convenient with.
• Payout & Profit Sharing: Check out the ratio of profit splits each prop firm offers to funded traders upon payout. The frequency of payout eligibility is also an important factor that you should keep in mind.
• Partner Brokers: Each prop firm has one or more brokers as partners. Evaluate the brokers by assessing their spreads, commissions, slippage, and available trading platforms.

Top Prop Trading Firms in 2024

In the previous sections, we have thoroughly discussed prop firms, how they work, and the factors you need to consider when choosing one of these companies. Now, we introduce the best prop trading firms in 2024:

FTMO

Being the most household name in the industry, FTMO is arguably the company that made prop trading firms popular in the retail trading space. While lots of prop trading firms have come and gone, FTMO has held its place as the most reliable one over the years.

There is one FTMO challenge type at the moment, but you have the option to change it to a swing account. The FTMO swing account has no restrictions on holding positions over the weekend or trading during macroeconomic releases. This rule applies to both the FTMO funded accounts and challenges.

FTMO, as they claim, aims for long-term business relationships with their funded traders. Their scaling plan is designed for this goal. If you are consistent and profitable, they will increase the balance of your FTMO funded account by 25% every 4 months. This is, of course, after you pass the FTMO challenge.

There is also an FTMO free trial available. It is essentially a demo account with a shortened version of the FTMO challenge. Yet, note that the FTMO free trial has the same trading conditions and rules. You can also select accounts from a $10K balance to $200K.

FTMO trading terminals include:

• Metatrader 4 (MT4)
• Metatrader 5 (MT5)
• DXTrade
• cTrader

Finally, we can wrap up our brief FTMO review with a look at the prop firm’s pros and cons:

Pros

• FTMO offers high profit splits, starting at 80% and scaling up to 90%.
• FTMO trading firm has a strong reputation for timely payouts and trustworthiness.
• FTMO provides traders with tools for risk management and profit maximization
• Traders can choose from various platforms like cTrader, MT4, MT5, and DXtrade.
• Traders can access up to $400,000 on aggregate on all their FTMO funded accounts.
• The FTMO challenge fee is fully refundable upon passing the evaluation process.
• There is an FTMO free trial available (FTMO demo account)

Cons

• FTMO is not available in the US.
• Traders, even after passing the FTMO challenge, are kept on FTMO demo accounts (simulated environment). Yet, profits are real.
• The FTMO prop firm only offers two-step challenges.
• The 10% profit target in the FTMO challenge can be too high for many.

The Funded Trader

While relatively younger than FTMO, The Funded Trader has done an excellent job over the years. They offer traders from all around the globe the chance to get funded. Of course, some countries are restricted. Meanwhile, an issue occurred a few months ago, and the TFT prop firm was shut down for a short while. Yet, they quickly sorted out the problem.

The TFT prop firm offers five types of funding challenges:

• Standard Challenge
• Royal Challenge
• Rapid Challenge
• Knight Challenge
• Dragon Challenge

The Standard Challenge is the entry-level TFT challenge. It is a two-phase evaluation process with a 10% profit target in Phase 1 and a 5% profit target in Phase 2. You will have unlimited days to pass both and get to the TFT funded account phase. The Royal, Rapid, Knight, and Dragon Challenges are higher-level challenges with varying profit targets and trading conditions.

All challenges are done in a simulated live feed to mimic real market conditions. You can choose from different account sizes ranging from $5,000 to $200,000, with a maximum allocation of $600,000. The platform currently works with the cTrader trading terminal only.

Here is a The Funded Trader review recap, stating both the benefits and drawbacks:

Pros

• The Funded Trader prop firm has the most variety when it comes to challenges and funded account types.
• TFT has a competitive pricing with challenge prices cheaper than FTMO challenges.
• The TFT prop firm’s profit split starts at 80% and scales up to 90%.
• Few minimum trading days are required on The Funded Trader. Some challenges even have no minimum days.
• The TFT challenge is refundable after you pass.
• The Funded Trader offers a one-step challenge evaluation with no minimum days.

Cons

• There are concerns that TFT may be targeted by regulators like the CFTC because of similarities to My Forex Funds, which was shut down.
• TFT Funded accounts remain in demo mode, and traders never experience real market conditions (payouts are real).
• Users have reported some payout delays and issues where when the payment processor Deel stopped working with TFT.
• The TFT prop firm was shut down temporarily a while ago.
• Trading on MetaTrader 4 and 5 are not allowed.

Funding Pips

Funding Pips is yet another relatively new prop trading firm. However, it has quickly gained massive popularity following the disasters of My Forex Funds and True Forex Funds. With several credible trading gurus vouching for it, the Funing Pips prop firm is quickly becoming the second giant in the propriety firm industry.

Funding Pips offers three main types of challenges: 1-step, 2-step, and 3-step. The trading rules get less strict as the number of steps increases. Moreover, Funding Pips provides account sizes ranging from $5K to $100K. The trading period for all challenges is also unlimited. Furthermore, the trading terminals available to Funding Pips traders are as follows:

• cTrader
• MatchTrader
• TradeLocker

Funding Pips is also known as the cheapest prop firm out there. For instance, a $10K 2-step challenge costs only $66, and that is quite cheaper than other alternatives.

Now, let’s take a look at a summarized Funding Pips review and the prop firm’s pros and cons:

Pros

• Funding Pips offers a wide range of account sizes from $5,000 to $100,000 with low entry fees starting at $32.
• The Funding Pips challenge fee is fully refundable once you become funded.
• It allows traders to use EAs, hold trades during news events, and over weekends.
• The scaling plan increases account size, max loss, and max daily loss as you earn Funding Pips payouts.
• You can request a Funding Pips payout every 5 trading days.
• The trading environment is slippage-free.

Cons

• Funding Pips has a relatively limited instrument range compared to some competitors.
• The prop trading firm doesn’t offer the popular MetaTrader trading terminal.
• Martingale and hedging strategies are prohibited on Funding Pips.
• You must set a stop-loss within 30 seconds of entering a trade.
• Trading is simulated (on a demo account) in all stages, but payouts are real.

FundedNext

The fourth prop trading firm we will review is FundedNext. The FundedNext prop firm is based in Ajman, United Arab Emirates. This limits the degree of regulations required right away compared to other US and EU-based firms. This can both be good and bad news for traders, especially considering the MFF regulatory crackdown events.

On Funded Next, you have a maximum allocation of $300,000, and the scaling plan allows you to keep up to 95% of the profits made on the funded account. There are 4 different challenge types available on the Funded Next prop firm: Evaluation, Express, Stellar, and Stellar Lite. The trading rules for each challenge type are different.

The FundedNext prop firm has competitive pricing for its challenges, with a $10K Stellar Lite account costing around $60. It also allows you to trade on the following trading terminals:

• MetaTrader 4 (MT4)
• MetaTrader 5 (MT5)
• cTrader

Here are the key pros and cons of the prop trading firm, based on our FundedNext review:

Pros

• Offers various funding models with flexible profit-sharing reaching up to 95%.
• Funded Next has a maximum allocation of $300,000 to each trader.
•  It offers low costs with refundable challenge fees and high leverage.

Cons

• Relatively high prices for standard two-phase challenges
• Significant slippage issues on large accounts

Breakout Prop

Breakout Prop is a new entry in the prop firm industry. It is the best crypto prop firm, trading on the liquidity of Bybit. Therefore, it ensures traders that there will be no liquidity-related issues like slippage. The crypto prop trading firm provides access to over 100 crypto assets using the tight spreads and deep liquidity of Bybit.

Moreover, Breakout Prop offers a built-in crypto trading terminal, which is available on both web and mobile devices. Breakout Prop provides two types of challenges: 1-step or 2-step. Like other prop firms, there are no time limits in challenges. Funded traders can reach a profit split of up to 90%.

Based in Dubai, United Arab Emirates, Breakout Prop was established in 2023. It has minimal regulatory requirements due to it being in the UAE. These characteristics make it arguably the best prop firm for crypto traders.

We will recap our Breakout Prop review by taking a look at the advantages and disadvantages of the crypto prop firm:

Pros

• Breakout Prop provides funded accounts with up to 90% profit split for successful traders.
• It has a custom trading platform with advanced features like one-click trading and built-in risk management.
• The Breakout Prop firm Integrates directly with Bybit exchange for tight spreads, minimal slippage, and deep liquidity.

Cons

• The evaluation process can be challenging and time-consuming.
• It is a new prop firm, making it relatively untested compared to more established ones.

Are Prop Firms Ponzi Schemes?

One of the allegations that prop firms have faced recently is that they operate very similarly to a Ponzi scheme. Most prop firms claim that they profit from traders who are profitable via profit sharing and therefore try their best to provide a helpful environment for their clients. Yet, some of them rely on challenge purchases as their primary revenue source.

My Forex Funds, one of the largest prop firms in the world has recently been accused of using software to work against their own funded traders and make them lose their funded accounts. In fact, CFTC has publicly stated that most funded traders are trading on a simulated account, instead of being connected to the markets.

Therefore, MFF has seemingly committed fraud by stating that their success is tied to that of their traders but has been trying to make traders lose behind the scenes. This business model, which is primarily based on revenue from individuals who buy challenges, and the profit payouts of the minority of profitable funded traders are paid from this income source is very similar to Ponzi schemes; sharing profits with the money invested by other investors.

How to Start a Prop Trading Firm of Your Own?

Using Finestel’s white-label solutions, you can create your own prop trading firm. Yes, you read it right, and it is very easy. All you need to do is link your accounts to traders you deem suitable, letting them manage your capital, and you can split the profits at the end of each period. Therefore, you can let several professional traders manage your capital.

We are also working on supporting demo accounts from popular exchanges like Binance and OKX. This way, you would be able to test the traders interested in getting funded with your money. You can do it just like other prop firms, setting rules and objectives for them to evaluate their expertise on a demo account before allowing them to trade on real funds. 

Take a look at our comprehensive Finestel review to find out more about our services.

Conclusion

In this article, we started out by explaining what prop firms are and how they work. We also offered a guide on how you can get funded by a prop firm. However, our main objective was to describe the factors and criteria you should look for when choosing a prop firm to work with and introduce the best prop trading firms in 2024.

We analyzed the current top 5 prop firms by comparing their prices, rules, and features to each other. We also evaluated them individually and stated the pros and cons of each. Moreover, we ranked FTMO as the best and most reliable prop firm in the world, with the best track record of them all. Yet, the prop firm industry is rapidly growing, and many competitors are entering the market, making it easier for traders as they have more options.

FAQ

What Is The Best Prop Trading Firm?

While the best prop trading firm depends on your preferences, FTMO is widely considered the best prop firm in the industry.

Are there any risks associated with proprietary trading?

Yes. Just like any form of trading, prop trading is also associated with substantial risks, both financial and legal.

How do I choose the right prop trading firm for my trading goals and style?

You should consider factors like minimum trading days, drawdown limit, profit targets and whether they have time limits or not, to choose the right prop firm for yourself.

How much do prop traders make?

Prop traders’ income varies depending on their skill, trading style, and their account size.

Can I trade remotely with prop trading firms, or is it location-dependent?

Prop firm trading is mostly remote, thanks to the advent of the internet and technology. You only need to have access to an electronic device and the internet.