Begin your trading journey with the best prop firms for beginners, featuring detailed reviews and benefits.
Are you eager to dive into the exhilarating world of trading but feeling a bit overwhelmed by where to begin? It’s completely normal to feel that way. The financial markets can be intricate, and the thought of risking your own money might seem daunting. But fear not! Proprietary trading firms (prop firms) could be your gateway to trading success, especially if you’re just starting out.
Why Prop Firm Might Be Your Best Friend
Imagine this, you have the ambition to test your trading skills, but your starting capital resembles more of a beginner’s allowance than a serious trading fund. That’s where prop firms shine! They provide substantial capital to trade with, allowing you to take larger positions and potentially amplify your profits. It’s like having a financial booster shot for your trading ambitions.
But the benefits don’t stop there. Many of the best prop firms for beginners are more than just fund providers, they’re educational powerhouses. They offer a wealth of resources, from comprehensive tutorials to interactive webinars hosted by seasoned traders. It’s akin to having a personal trading mentor guiding you through the complexities of the market.
And the cherry on top, prop firms operate on a performance-based model. This means they share in your success. When you profit, they profit too, creating a symbiotic relationship where your gains are celebrated and rewarded. It’s a win-win scenario that incentivizes both parties to work together towards trading excellence.
The Challenge of Choosing the Right Prop Firm
Now, let’s address the challenge in the room: with numerous prop firms out there, how do you choose the right one? It’s like picking the best in a sea of options, overwhelming yet crucial. Here’s where understanding a few key factors can make all the difference, especially when looking for the best prop firms for beginners:
Evaluation Process
Each prop firm has its own evaluation process to measure your trading skills. Some firms use simulated accounts or trading challenges. It’s essential to understand the difficulty level of these evaluations, the time frames involved, and any associated costs.
Profit Sharing
This is where you’ll want to pay close attention. How does the firm split profits with its traders? Is the structure transparent and fair? Look for firms that offer competitive profit-sharing agreements that align with your goals.
Educational Resources
A robust education platform can significantly enhance your trading journey. Seek out firms that invest in your development with access to educational materials, mentorship programs, and ongoing support.
Customer Support
Even the most seasoned traders encounter bumps in the road. Reliable customer support is crucial. Look for firms that offer responsive assistance, ensuring you can resolve issues swiftly and continue trading with confidence.
Community Engagement
Trading can be isolating without a supportive community. Find a firm that fosters connections among traders through forums, events, or networking opportunities. Being part of an active community can provide insights, encouragement, and valuable learning experiences.
Fees and Costs
Lastly, transparency matters. Understand the fee structure upfront, including any maintenance fees, evaluation costs, or other charges. Hidden fees can eat into your profits and derail your trading goals.
Best Prop Firms for Beginners in 2024
Now that we have a solid understanding of the key factors to consider when choosing a prop firm, let’s examine some of the top contenders in the market. Each firm offers a unique blend of features, from flexible evaluation processes to comprehensive educational resources. We will explore these differences in detail to help you determine which firm best suits your trading style and aspirations.
1. FTMO
FTMO stands out as a prop firm known for its transparent evaluation process and supportive trading environment. It caters to both beginners and experienced traders, offering a chance to manage real capital of up to $400,000 upon successful completion of their two-step evaluation challenge, making it one of the best prop firms for beginners.
Funding Options
- Account Sizes: FTMO offers a wide range of account sizes, from $10,000 to $200,000. This caters to varying risk tolerances and allows beginners to start with a smaller amount.
- Normal and Aggressive Risk Levels: Beginners can choose between Normal and Aggressive risk levels for their demo accounts. This flexibility allows them to adjust risk parameters based on their comfort level.
- Fees: There are fees associated with the evaluation challenges, but these are refundable if you pass. The fee varies depending on the chosen risk level and account size.
Trading Platform
FTMO provides access to industry-standard platforms like MetaTrader 4, MetaTrader 5, and cTrader. These platforms offer user-friendly interfaces, low latency execution, and access to reliable liquidity providers, ensuring a smooth trading experience.
Performance and Profit Split
FTMO boasts a generous profit-sharing structure, allowing traders to keep up to 90% of their profits. Additionally, their Scaling Plan rewards consistent profitability by increasing account sizes by 25% every four months.
Pros for Beginners
- Affordable Starting Fee: Compared to other prop firms, FTMO’s starting fees are relatively low, making it accessible for beginners.
- Demo Account Flexibility: Beginners can choose a demo account size ranging from $10,000 to $200,000, allowing them to test the waters with an appropriate amount of virtual capital.
- Free Trial Account: FTMO offers a free trial account, allowing beginners to get comfortable with the platform and trading environment before committing to the paid evaluation.
- Supportive Community: FTMO fosters a supportive community with responsive customer support. This can be invaluable for beginners seeking guidance and assistance.
Cons to Consider
- Demanding Evaluation Challenges: While transparent, FTMO’s evaluation process can be challenging. It requires specific profitability targets and adherence to certain trading rules.
- Learning Curve: While beginner-friendly, FTMO’s platform is best suited for traders with some basic trading knowledge. A learning curve can be expected as you navigate the evaluation process and trading environment.
FTMO is a reputable prop firm offering a path towards managing substantial trading capital. While the evaluation process can be demanding, the potential rewards and supportive environment make it an attractive option, especially for beginners willing to invest time and effort in honing their skills.
2. Funded Next
Funded Next is a rapidly growing prop firm gaining traction for its accessible funding programs and diverse account options. It caters to beginner, intermediate, and experienced traders by offering various challenge models and account sizes, establishing its reputation as one of the best prop firms for beginners.
Funding Options
- Challenge Models: Funded Next provides a variety of challenge models, including Stellar, Evaluation, and Express. These cater to different trading styles and risk tolerances.
- Account Sizes: Beginners can choose from account sizes ranging from $6,000 to $200,000, allowing them to start with a manageable amount and gradually scale up as their skills develop.
- Fees: Challenge phases incur subscription fees, but these are fully refundable upon successful completion.
Trading Platform
Funded Next offers industry-standard platforms, MetaTrader 4 and MetaTrader 5. These platforms are user-friendly and come equipped with advanced functionalities for comprehensive analysis. Additionally, Funded Next provides a unique Trading Terminal feature, integrating chart analysis and trade execution within a single platform.
Performance and Profit Split
Funded Next boasts a generous profit-sharing model, allowing traders to retain up to 90% of their profits on funded accounts. Notably, some models offer a 15% profit share even during the challenge phase, incentivizing beginners and providing them with an initial taste of potential earnings.
Pros for Beginners
- Multiple Challenge Models: Funded Next offers multiple challenge models with varying difficulty levels and durations. This allows beginners to choose a program that aligns with their experience and comfort level.
- Rapid Account Option: The Rapid Account provides a demo environment for beginners to practice risk-free trading and hone their skills before attempting the evaluation process.
- Refundable Fees: Subscription fees associated with the challenges are refundable upon successful completion, minimizing financial risks for beginners.
- Educational Resources: Funded Next offers educational resources like an economic calendar and market analysis tools, aiding beginners in making informed trading decisions.
Cons to Consider
- Limited Customer Support Hours: Customer support is only available via email and online chat from Monday to Friday, potentially leaving beginners without immediate assistance during non-business hours.
- Relatively New Company: Funded Next is a relatively new firm compared to some competitors, with a shorter track record. This might be a concern for some risk-averse beginners.
Funded Next presents a compelling option for beginners seeking accessible funding and flexible programs. With diverse challenge models, refundable fees, and educational resources, Funded Next caters to beginners while offering the potential for significant growth for experienced traders. However, the limited customer support hours and relatively new company status might be factors to consider for some beginners.
3. E8
E8 Markets, established in 2021, has emerged as a popular prop firm known for its user-friendly platform and diverse funding opportunities. It caters to traders of all experience levels by offering various challenge types, flexible account sizes, and the potential to manage real capital of up to $1 million, positioning it among the best prop firms for beginners.
Funding Options
- Challenge Types: E8 offers a variety of challenge structures to cater to different risk tolerances and trading styles. Beginners can choose from pre-defined challenges or customize their own with specific profit and drawdown targets.
- Account Sizes: E8 provides a wide range of account sizes, from $5,000 to $200,000, allowing beginners to start small and scale up based on their performance.
- Fees: While the fees are higher compared to some competitors, successful completion of the challenges grants access to potentially significant funded accounts.
Trading Platform
E8 Markets utilizes the MatchTrader platform, known for its user-friendly interface and reliability. This platform provides essential tools for executing trades and monitoring market movements. While not as widely recognized as MT4 or MT5, MatchTrader offers a sufficient foundation for trading activities.
Performance and Profit Split
E8 boasts a competitive profit-sharing model, allowing traders to retain up to 80% of their profits on funded accounts. Additionally, a potential 5% initial payout bonus on the first withdrawal incentivizes beginners and provides a taste of potential earnings. The Drawdown Scaling Plan further benefits successful traders by progressively increasing account size and drawdown limits, facilitating sustainable growth.
Pros for Beginners
- Structured Challenge Types: E8 provides three well-defined challenge types (E8 Account, E8 Track, and E8 Custom Evolution) with varying difficulty levels and durations. This allows beginners to choose a program that aligns with their skillset and comfort level.
- Flexible Account Sizes: Beginners can start with smaller account sizes (as low as $5,000 in custom challenges) and gradually scale up as they gain experience.
- No Minimum Trading Days: There’s no requirement for a minimum number of trading days during the challenges, offering beginners more flexibility to manage their time commitment.
Cons to Consider
- Customer Support: While responsive, some user reviews mention occasional difficulties with customer support, potentially hindering beginner assistance.
- Platform Transparency: There might be room for improvement in terms of transparency and communication regarding platform updates, potentially creating uncertainty for beginners.
Overall, E8 Markets offers a well-structured and potentially rewarding path for beginners in prop trading. The customizable options, diverse challenges, and scalability make it a compelling option for those starting their prop trading journey.
4. Topstep
Topstep stands out as a well-established prop firm renowned for its rigorous evaluation process and commitment to trader development. It caters primarily to aspiring futures traders by offering access to substantial funding, industry-leading training resources, and a supportive community, making it among the best prop firms for beginners.
Funding Options
- Limited Account Sizes: While substantial, Topstep only offers fixed funding options of $50,000, $100,000, and $150,000. This might be a limiting factor for some beginners seeking more flexibility.
- Non-Refundable Fee: The registration fee associated with the evaluation process is non-refundable, potentially deterring some beginners hesitant about the upfront cost.
Trading Platform
Topstep uses the MetaTrader 4 platform for its forex trading, a highly popular choice known for its user-friendly interface and comprehensive trading tools. For futures trading, Topstep provides access to various professional trading platforms that support detailed analytics and efficient trade execution.
Performance and Profit Split
- Generous Profit Sharing: Topstep boasts a competitive profit-sharing model, allowing traders to retain a significant portion (80%) of their profits on funded accounts.
- Fast Payouts: Topstep facilitates prompt payouts, ensuring traders have quick access to their earnings.
- Topstep Payout Club: This loyalty program rewards successful traders with additional capital incentives, further boosting potential profits.
Pros for Beginners
- Expert Mentorship: Topstep provides access to dedicated coaches who can guide beginners through the evaluation process and refine their trading strategies.
- Comprehensive Training: A wide range of educational resources equips beginners with the necessary knowledge and skills to navigate the futures market effectively.
- Supportive Community: Topstep fosters a vibrant community of traders, providing beginners with a platform to connect and learn from experienced peers.
Cons to Consider
- Rigorous Evaluation: Topstep’s evaluation process is known for its demanding nature, potentially discouraging some beginners.
- Limited Transparency: Information regarding funded account options might not be readily available on the website, requiring additional effort from beginners to find details.
- Costly Monthly Fees: The recurring monthly fees for the Trading Combine can accumulate, especially if beginners struggle to pass the evaluation process quickly.
Topstep provides a well-structured and supportive environment, ideal for those specifically interested in futures trading. The expert guidance, training, and community create a strong foundation for your trading journey. Just be sure to factor in the limited account sizes, non-refundable fee, and demanding evaluation before making your decision.
5. Lux Trading Firm
Lux Trading Firm is a premier proprietary trading firm that provides traders with substantial capital, achievable profit targets, and personalized mentoring. This firm stands out for its quick scaling plans, variety of assets, and reliable customer support. While it has some cons, such as higher fees for those who don’t pass and challenging drawdown limits, it remains an excellent choice for traders seeking large account sizes and comprehensive support.
Funding Options
- Multiple Account Sizes: Lux Trading Firm caters to diverse financial backgrounds by offering a choice of account sizes, allowing beginners to find a suitable starting point.
- Transparent Scaling Plan: The well-defined scaling plan outlining profit targets and drawdown limits provides beginners with a clear roadmap for progression towards larger accounts.
- 75/25 Profit Split: While not the highest in the industry, the 75% profit share for funded accounts incentivizes beginners to achieve profitability.
Trading Platform
- Multiple Platform Choices: Lux Trading Firm offers access to well-established platforms like MetaTrader 4, TradingView, and Trader Evolution, catering to different platform preferences.
- Diverse Asset Classes: Lux Trading Firm allows trading in a wide range of assets, including Forex, Indices, Commodities, and Cryptocurrencies, giving beginners the opportunity to explore different markets.
Performance and Profit Split
- Attainable Profit Targets: The evaluation process requires reaching achievable profit targets (ranging from $3,000 to $6,000) depending on the account size, making it less daunting for beginners.
- No Time Limits: The absence of time constraints on the evaluation process allows beginners to focus on sound trading practices without pressure.
- Potential to Grow Up to $10,000,000: Successful traders can scale their accounts to manage significantly larger capital, offering substantial earning potential.
Pros for Beginners
- Scalable Account Options: Lux offers various account sizes ($25,000 – $200,000), allowing beginners to start small and gradually scale up as they gain experience.
- Refundable Fees: Partial refunds are available after passing the first two stages of the evaluation process, mitigating risks for beginners.
- Free Trials: Lux provides free trials for all account sizes, enabling beginners to test the platform and trading conditions before committing.
- One-on-One Mentorship: Lux offers personalized coaching to help traders refine their strategies and accelerate their growth.
- Potential for Massive Growth: Traders can scale their accounts up to $10,000,000, providing significant opportunities for long-term financial success.
Cons to Consider
- Potentially High Fees: The one-time fees for evaluation can be significant, especially for beginners who struggle to pass the initial stages.
- Strict Risk Management: The 5% maximum relative drawdown limit might restrict beginners who prefer a more aggressive trading style.
- Optional Mentorship: The valuable one-on-one mentorship comes at an additional cost, potentially adding to the initial investment for beginners.
Lux Trading Firm offers a structured path to substantial funding with customizable options and a clear growth plan. The optional mentorship program provides additional support, but comes with an extra cost. Carefully consider the evaluation fees, risk management requirements, and potential mentorship cost to ensure Lux aligns with your financial resources and trading style.
6. The 5ers
The 5ers is a well-established prop firm offering instant funding, a supportive community, and multiple programs catering to traders of varying skill levels. While the initial profit split might seem lower compared to some competitors, The 5%ers provides opportunities to reach 100% profit share, substantial account scaling, and even a monthly salary.
Funding Options
- Tiered System: The5ers caters to diverse needs with multiple funding programs featuring different account sizes (ranging from $24,000 to $80,000) and participation fees.
- Scalability: The Hyper-Growth program allows rapid account scaling, enabling successful traders to manage up to $4,000,000 with competitive spreads, execution speeds, and trading rules.
- Profit Share Progression: Traders have the potential to reach a 100% profit share and unlock additional benefits like a monthly salary through consistent performance.
Trading Platform
- MetaTrader 5 (MT5): The5ers utilizes the popular MT5 platform, offering advanced charting tools and extensive market analysis capabilities.
- Flexible Trading Conditions: The platform allows news trading, holding positions overnight and over weekends, and caters to various trading styles.
Pros for Beginners
- Instant Funding: The5ers eliminates the need for lengthy evaluation phases, allowing beginners to access real capital quickly.
- Bootcamp Program: This affordable program provides a low-risk entry point for beginners (account sizes: $100,000 or $250,000) to test their skills and gain experience with a demo account before risking real money.
- Extensive Educational Resources: The5ers offers a wealth of educational content, including webinars, workshops, and courses, to help beginners develop their trading knowledge.
- Supportive Community: A thriving Discord community managed by a successful funded trader offers valuable peer-to-peer learning and support for beginners.
Cons to Consider
- Initial Profit Split: The starting profit split of 50% might be lower than what other prop firms offer.
- No Futures Trading: Those interested in trading futures contracts need to look elsewhere.
The5ers is a versatile prop firm appealing to both novice and experienced traders. Instant funding options, a structured learning environment, and the potential for significant growth make it an attractive choice for those seeking a supportive environment to develop their trading skills and potentially transition to full-time trading. However, beginners should be aware of the initial profit split and the limitations regarding futures trading before making a decision.
7. City Traders Imperium
City Traders Imperium (CTI) is a prop firm known for its generous profit splits, diverse funding programs, and high-quality educational resources. While fees are slightly higher than some competitors, CTI offers the potential for significant account scaling and 100% profit share for top performers.
Funding Options
- CTI Challenge: Ideal for aggressive traders with a 10% profit target and two-phase evaluation (45 days each) for account sizes ranging from $10,000 to $100,000.
- Standard Evaluation: Offers more flexibility with no daily or relative drawdown limitations. Account sizes range from $10,000 to $70,000, requiring a 9% profit target within six months.
- Classic Evaluation: Similar to Standard but with a one-year timeframe for evaluation, catering to those who prefer a more relaxed pace.
- Direct Funding: Skip the evaluation for immediate access to a funded account ($20,000 – $70,000).
Trading Platform
- MetaTrader 5 (MT5): CTI utilizes the popular MT5 platform, offering advanced charting tools and extensive market analysis capabilities.
- Flexible Trading: CTI allows news trading, holding positions overnight and over weekends, catering to various trading styles.
Pros for Beginners
- Scaling Profit Shares: CTI boasts a tiered profit-sharing system, allowing traders to climb to a remarkable 100% profit share! This incentivizes consistent profitability and skill development.
- Educational Powerhouse: CTI provides a wealth of learning materials, including courses on Forex basics, trading strategies, and psychological aspects of trading.
- Multiple Funding Options: CTI caters to various trading styles and risk tolerance levels through diverse challenges with different rules and timeframes. You can choose from instant funding or evaluation phases with extended timeframes.
- Vibrant Community: CTI fosters a supportive community through Discord access, allowing interaction with other funded traders and knowledge exchange.
Cons to Consider
- Slightly Higher Fees: CTI’s fees are a bit higher compared to some prop firms.
- No Crypto Trading: Those seeking to trade cryptocurrencies need to look elsewhere.
- Limited Customer Support: Customer support isn’t available 24/7.
For ambitious traders seeking a high-reward environment with exceptional learning opportunities, City Traders Imperium is a compelling choice. However, factor in the fees, lack of crypto trading, and limited support availability to ensure it aligns perfectly with your goals and needs.
A Beginner’s Guide to Prop Trading
Many beginners jump in headfirst without proper preparation, leading them straight into common traps. Let’s break down these pitfalls and equip you with the knowledge to avoid them, turning prop trading from a dream into a reality with the best prop firms for beginners.
Common Mistakes and How to Dodge Them
1. Insufficient Preparation
Prop trading is highly selective, demanding not just talent but also dedication. Some dive in without a clear strategy or risk management plan, which are the two pillars of success in this field. This often results in losing your “risk contribution” (entry fee) when you fail to make the cut at the firm.
Prop Smart Tip: Before even applying, decide what type of prop trader you want to be (day trader, swing trader, etc.) and develop your trading strategy accordingly. Backtest it using historical data and demo accounts to see how it would’ve performed in the past. Finally, create a rock-solid risk management plan. Learn about stop-loss and take-profit levels beforehand, and stick to them religiously once you start trading.
2. Trading on a Feeling
Prop trading thrives on a high-pressure environment that can easily trigger emotional decisions. The most talented prop traders don’t let their emotions cloud their judgement, they rely on clear strategies and plans.
Stay Calm, Stay Focused: Stick to your plan no matter what. Having a solid foundation of trading strategy and risk management plan is key to many successful trades. Take regular breaks to avoid mental fatigue. Stay informed about market news, but don’t let it make you react impulsively. Seek accountability by sharing your trading plan and goals with colleagues, and be disciplined in following them.
3. Overtrading
Trading in a fast-paced environment with a lot of capital can be tempting, leading many prop traders to open more positions than they can effectively handle. This translates to increased costs and risks.
Avoid the Greed Trap: Establish daily and weekly limits on your trades. Remember, it’s not the number of trades but the quality of your results that matter. Prioritize high-quality trades with optimal entry and exit points. Focus on long-term goals rather than short-term gains. Keep a trading journal to track your activity and identify any past overtrading patterns so you can adjust your approach.
4. Chasing the Trends
Reacting to market trends instead of anticipating them is a recipe for losses. The best prop traders can foresee what’s coming in weeks, months, even a year in advance. But not everyone puts in the effort, and instead, they just chase the trend. This is why FOMO (fear of missing out) is such a powerful force, even for experienced prop traders.
Don’t Let FOMO Control You: Master technical and fundamental analysis, they’re the foundation of successful trading. Know your numbers and statistics, and base your decisions on that knowledge. Move on quickly from missed opportunities. Successful prop traders don’t dwell on the past.
Final Thoughts
Prop trading can be challenging, but with the right preparation and mindset, you can avoid pitfalls like poor preparation, emotional trading, overtrading, and chasing trends. Develop a solid trading plan, stay calm and stick to your strategy, focus on quality over quantity, and anticipate market movements. Prop firms offer valuable support to guide you towards success. So, are you ready to launch your prop trading career with confidence?