Proprietary Trading
Trading a firm's own capital rather than client money — the model that lets skilled traders earn from size they'd never be able to fund themselves.
Proprietary trading — “prop trading” — means trading a firm’s own money for the firm’s own profit. There are no outside clients, no investors to answer to, and no assets under management. The firm risks its capital, the trader supplies the skill, and the two share the upside.
Institutional prop trading has existed for decades inside banks and trading houses, where desks trade the house account. The retail-facing version you’ll meet today works on the same principle with a simpler entry point: instead of getting hired onto a desk, you demonstrate skill on an evaluation, and the firm allocates you an account.
Why this matters for your bottom line: returns scale with capital, and capital is the one input most retail traders can’t manufacture. A 4% month on a $5,000 personal account is $200. The same 4% skill applied to a $100,000 funded account, at a 90% profit split, is a very different paycheck.
| Account | 4% month | Trader keeps |
|---|---|---|
| $5,000 personal | $200 | $200 (100%) |
| $50,000 funded | $2,000 | $1,800 (90%) |
| $100,000 funded | $4,000 | $3,600 (90%) |
The skill didn’t change. The capital did. That’s the whole thesis of prop trading, and it’s why so many consistent traders route their edge through a firm instead of grinding a small personal account for years.
The firm protects its capital with rules — loss limits, drawdowns, position caps. Learn those cold and the model works beautifully in your favor. Start by comparing firms in our directory.