Prop trading gives aspiring traders a unique opportunity to practice trading while managing risk and gaining real-world experience. This article explores how using a prop firm account can help traders build confidence, develop discipline, and transition into consistent profitability, with a lower risk to personal funds upfront.
New traders usually start practising trading in a demo account with virtual funds. However, at some point, they need to get real trading experience outside of the demo environment. The change from demo trading to trading with real money can be exciting and scary for new traders. Wouldn’t it be nice if you could get real trading experience with a lower risk of losing your own funds?
Prop trading companies may just offer a smart middle ground that lets you continue polishing your trading while lowering your risk.
1. What is prop trading
Proprietary or prop trading is a practice where traders engage in trading activities using the capital of a prop trading firm rather than their own financial resources. The trades done and capital used can be either virtual or real, depending on the operations of the prop firm. To learn more about prop trading, read our previous article “An introduction to proprietary trading”.
2. You get a profit share
Proprietary (Prop) trading companies not only give you funds to trade, but also let you keep a share of the profits. You have to show how skilled and responsible you are during a challenge or review phase. After passing the challenge, you get to keep a part of the profit that you make. Different firms have different profit splits, find out more about OANDA Prop Trader’s profit split structures here.
3. Build confidence and discipline
When you trade with a prop firm, you may have to follow rules like daily loss limits and required risk management procedures. Different prop firms have their own specific trading regulations, which include maximum daily losses (fixed vs dynamic), drawdown limitations (static vs trailing), and prohibitions on news trading. If you are interested in taking up one of our Challenges, you may refer to our Challenge Rules and examples of how to apply the rules here: FAQs
Working within clear boundaries teaches traders discipline and the value of keeping their capital safe, both of which are important for long-term success.
4. Test your strategies without pressure
Most prop firms use the evaluation or "Challenge" phase to see your consistency. As traders get better at not just making money, they learn to stick to their plans. The emotional stakes are lower since your capital outlay is only the price you paid for the Challenge. This helps you think more clearly and evaluate yourself more critically. Instead of relying only on demo account results, this structure gives traders more realistic feedback over time to help them improve their method.
5. What to expect when trading with a prop firm
Challenge or evaluation
Show that you can handle danger and stick to financial goals and rules. For OANDA Prop Trader, to successfully complete the Phase 1 Challenge, you’ll need to achieve an 8% or 10% profit target. For Phase 2 of the Challenge, it’s a 5% profit target. You may find out more about our targets here. For more details of our Challenge rules, you may visit this link.
Funded account
Trade the company's capital and get a cut of the profits.
Support and tools
In addition to the opportunity to earn a profit share, prop traders also typically have access to the firm’s technologies and market data, which can help them navigate the challenges of trading. OANDA Prop Trader offers a variety of tools and educational resources in our blog; do check them out here.
6. What you can get out of prop trading
A prop account is one of the fastest and safest ways to level up if you want to become a skilled trader. It lets you practise, learn, and improve without risking your capital. It bridges the gap between practising in a demo environment and success.
No matter how knowledgeable a trader you are, prop trading could be a step up towards your long-term success. This model is the perfect way for new traders or traders who want to level up their trading skills.
7. Why OANDA Prop Trader
After learning about the advantages of using a prop firm, it is important that you choose a reliable prop trading firm. OANDA Prop Trader is broker-owned, setting us apart from many other prop trading firms. This helps to reduce risks and makes the OANDA Prop Trader Challenges an excellent choice for smart traders. We offer industry-beating core pricing with spreads starting from just 0.1 in gold.
If you’re new to trading or prop trading, you’ll find value and support within the OANDA Prop Trader Community. Our trading community is designed for traders of all levels. It is a dynamic prop trading network where traders connect, learn, and succeed together. Whether you want to improve your trading strategies, share insights, or earn rewards, this community is designed for you.
What are you waiting for? Take up one of our Challenges today and head over to our Community to join the conversation.
