How to Evaluate a Prop Firm for Side Hustle Trading Goals

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Looking for prop firm for side hustles? Find out what factors to consider when choosing the perfect one in this article

With financial freedom being the ultimate goal, more Millennials and Gen Z are relying on side hustles to ensure the future they want. Wide options range from freelancing to prop trading. The issue is not with side hustles themselves. Prop trading, especially via a well-known prop firm, has increasingly become a favorite option for some extra bucks.

How are you going to find a prop firm  for side hustles that works?

In this guide, we will be diving into the nitty-gritty of how to properly evaluate your options when it comes to prop firms to consider for your side hustle and outline what you should consider when weighing success vs. failure in your decision-making process.

The Rise of Side Hustles

Having a secondary source of income, often called a side hustle, is not a new concept. While it originated as far back as the 1950s, it has blossomed into a contemporary movement motivated by a quest for financial independence. About 59 million Americans currently work independently, and that number is even higher among Millennials and Gen Z. Why?

Low pay, disenchantment with the 9-to-5 grind, and the need to work from home have combined to create the ideal climate for side hustling.

Yup, prop trading is one of those side hustles that I want to touch on. Unlike freelancing, which often necessitates developing a client base and managing unpredictable revenue, prop trading provides organized support, available funding, and possibly large returns.

What Is a Prop Trading Firm?

A proprietary trading (or “prop”) firm is a company that invests with its own capital and trades in the firm’s name rather than on behalf of a client. Prop trading also takes away the risk of losing your own money because, rather than trading your own capital, the company provides all the capital, and the losses count toward the firm.

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This is a huge win for side hustlers. Prop firms for side hustles provide access to markets that would otherwise be out of reach, with lower financial barriers to entry and access to sophisticated technology.

Top 5 Things to Check When Choosing a Prop Firm for Side Hustles

It is worth spending the time to make sure you vet the firm you decide to become a part of prior to establishing a career in prop trading. These are the top things to keep in mind:

1. Transparency and Reputation

An established prop firm makes it clear to its traders what its terms and fees are, and what is expected from them. Look for firms with:

  • Positive user reviews.
  • Awards and other recognitions from the industry.
  • A proven track record of helping traders succeed.

Steer clear of companies with substantial hidden fees or ambiguous policies. If prop trading is supposed to empower you, it should not sap your resources through unexpected charges.

2. Training and Support

Trading is no easy feat. Top prop firms are a trader’s best friend by providing in-depth training programs. Look for:

  • Full-fledged courses for beginners, often for free.
  • Opportunities to interact with seasoned mentors or trading groups.
  • Simulated accounts to practice before using real capital.

This is especially important for side hustlers who have no prior trading experience.

3. Profit Split and Costs

One of the best things about prop trading is the profit-share model. The business gives you the money, and you get a cut of the profits.

  • Seek firms with a good profit split, 80% or higher.
  • Look for upfront pricing, such as deposits or subscription fees, and balance that against the firm’s total package.
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4. Technology and Tools

The “prop” in prop trading refers to proprietary technology, which can be a significant benefit. This often includes cutting-edge analytics and trading platforms. Ask yourself:

  • Is the platform suitable for your trading objectives?
  • Does it offer tools to visualize your trades and track your performance?

As side hustlers often have other responsibilities, your trading experience depends on having a convenient and trustworthy platform.

5. Risk Management Policies

Above all, a good prop firm is focused on managing risk. Look for firms that:

  • Provide traders with clear guidelines on handling losses.
  • Include features such as drawdown limits.

This way, even if a trade goes south, your personal finances—and the firm’s—are shielded from harm.

What Makes Prop Trading the Perfect Side Hustle

Prop trading is unique among side hustle choices for several reasons:

  • Accessibility: You don’t need a lot of money to get started.
  • Flexibility: You can work around your primary job’s hours.
  • Scalability: As you become more successful, your prop firm is likely to scale your funding, increasing your income potential.
  • Networking: Unlike freelancing (which can feel isolating), prop trading offers an environment where you can network with peers and mentors.

This makes prop firms ideal for side hustlers because they allow you to diversify your income streams without the time-intensive operational components of running a business (invoicing, client management, etc.).

Common Pitfalls to Avoid

Although the advantages are great, prop trading is not without its downsides. Here are a few warning signs to watch out for when assessing a firm:

  • False Promises: Be cautious of companies that promise big money for little work. Trading is a skill and an art that requires continuous learning, perseverance, and diligence.
  • Lack of Regulation: Ensure the firm operates within legal and ethical boundaries.
  • High Charges: Avoid firms with high entry fees or hidden costs that could outweigh your potential profits.
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Taking the time to do your research and ask the right questions can help you avoid these pitfalls and choose a firm aligned with your goals.

Taking the Plunge: From Side Gig to Mainstay

A prop trading side hustle can turn into a full career for those who excel at it. Many traders start small, practicing in their free time, and eventually transition to trading as their primary source of income.

The key is consistency. With discipline, continuous improvement, and the ability to navigate market conditions, prop trading can yield significant results. And the possibilities are limitless if you have the right firm behind you.

Wrap-Up: What’s the Right Side Gig for You?

With the rise of the gig economy, more people are seeking alternatives to the traditional job market. While some may find success in freelancing, others might prefer the financial freedom that prop trading provides when done right.

Focus on transparency and training when considering prop firms for advanced side hustles. The right firm can connect you to a great side hustle, part-time gig, and possibly even a full-time career down the line.

 

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