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Day Trading Jobs With Proprietary Trading Firms

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What is Proprietary Trading?

Proprietary trading refers to a financial firm or commercial bank that invests for direct market gain rather than earning commission dollars by trading on behalf of clients. Also known as "prop trading," this type of trading activity occurs when a financial firm chooses to profit from market activities rather than thin-margin commissions obtained through client trading activity. Proprietary trading may involve the trading of stocks, bonds, commodities, currencies or other instruments.

Financial firms or commercial banks that engage in proprietary trading believe they have a competitive advantage that will enable them to earn an annual return that exceeds index investing, bond yield appreciation or other investment styles.

SO, is prop firm trading is for you or not ? Let's find out and also you will learn about GOFX Prop Firm and What Is The Best Forex Prop Firm and Forex Funding Program !?

Day Trading With Proprietary Trading Firms

Day trading firms offer traders an opportunity to trade with a pool of capital rather than their own money in an arrangement from which all parties benefit. Proprietary traders have access to sophisticated software and pools of information to help them make critical decisions.

Many proprietary (prop) trading firms set up a structure that allows the trader to receive a cut of the profits they generate through trades. This arrangement used by prop trading firms has the potential to be lucrative, but there are steep challenges that can make it difficult to generate those profits. Most people don't succeed, so they end up paying the fees again and again.

Being a Proprietary Day Trader

A prop day trader typically works as a contractor to a prop trading firm rather than as an employee. Prop traders are not usually paid an hourly wage or salary and do not receive benefits such as health care. They are typically only paid when they generate a profit, which can take months.

The capital that's traded in a prop trading account is usually that of a brokerage firm or hedge fund. Trades made through this account are typically speculative in nature. Products traded are usually derivatives or other complex investment vehicles. Trading activity is usually limited by a risk manager and by the amount of money a firm has.

Prop traders work with equities, currencies, options contracts, or futures on major global exchanges, with the express purpose of producing a profit through their trades. A prop day trader has no clients except for the company by which they are contracted. They do not engage in phone sales or cold calls with prospective customers. A prop trader is not a stockbroker or financial adviser and they do not care where a stock will be next week or next year. Their focus is on immediate trading trends.

The types of proprietary day traders vary. Some only trade a few times a day for bigger gains. Other proprietary day traders make hundreds of small trades a day, jumping in and out of the market. Some trade the entire day, while others only trade certain hours of the day.

Proprietary day traders may work out of an office, where they are initially trained, or some firms allow the trader to work from home. Day traders who are allowed to work from home are typically experienced and have a history of success with the firm, or are hired as experienced traders with a proven track record.


One of the main strategies of trading traditionally associated with banks, is arbitrage. Prop traders use various strategies such as merger arbitrage, index arbitrage, global macro-trading, and volatility arbitrage to maximize returns.

In the most basic sense, arbitrage is defined as taking advantage of a price discrepancy through the purchase or sale of certain combinations of securities to lock in a market-neutral profit. The trade will remain subject to various non-market risks, such as settlement risk and other operational risks. Investment banks, which are often active in many markets around the world, constantly watch for arbitrage opportunities.

Pros of Proprietary Trading

There are a lot of advantages that comes from working for a trading firm:
  • Being surrounded by traders who can help you become profitable.
  • Access to more trading capital than you would have on your own.
  • ​Reduced commissions compared with what retail day traders face.
  • ​Firm trading costs are frequently lower than costs for those trading on their own.
  • ​Access to training from professional day traders. You may have to pay for training, as this helps the firm eliminate traders who aren't serious.
  • ​No need to worry about the $25,000 minimum account balance for day trading stocks.
  • ​If you are new to day trading, then training is important. You want to learn from people who produce successful traders.

Cons of Proprietary Trading

There are downsides too, when working for a firm compared with trading on your own:
  • Many firms have moved online because it is cheaper than having a brick-and-mortar business. This means you might not be sitting physically among experienced traders when you start out. Chat rooms and Skype are useful tools, but might not be as effective as having other in-person traders to answer your questions.
  • ​With more firms online, competition for seats on a physical trading floor is high.
  • ​Retail technology has diminished the advantage of proprietary trading firms once had. Retail traders now have access to trading platforms and internet speeds that rival most proprietary resources.
  • ​While the commissions charged by a prop firm may still be lower, active retail day traders may be able to negotiate better commission rates with their broker.
  • ​Costs charged to traders by some firms include seat rental fees, software access fees, and/or marked-up commissions. A percentage of the profits may also be taken.
  • ​If you are an experienced trader, then training isn't as important. Instead, focus on finding the most competitive structure possible so more of your profits stay in your pocket.
​Notes: If you are an experienced trader, then training isn't as important. Instead, focus on finding the most competitive structure possible so more of your profits stay in your pocket. 

​If you are considering quitting your current job to day trade, understand that it may take several months or more to start generating an income. That income can fluctuate with no guarantees of success.

Typical Proprietary Firm Structure

Proprietary trading firms typically have two model types or a slight variation on them:

The firm takes a cut of your profits, anywhere from 20 to 50 percent. The trader puts up little or no capital, although paying for training may be required. Firms may also require a deposit to offset any losses a trader incurs. Adequate trading capital is provided by the firm based on experience and skill. With this model, trader profits are the main source of income for the firm. Commissions are typically low, as the firm makes little or nothing off commissions, allowing traders to generate more income. The firm may also charge a seat rental or software fee. This model is popular in Canada and other parts of the world.

The firm takes little or none of your profits, paying 90 to 100 percent of your gains. Firms leverage your capital, meaning you typically need to have several thousand dollars or more to get started. You get more capital than you would by trading on your own, but the firm is going to make money off of training fees, higher commissions, seat fees, and software fees. This model is prevalent in the United States.

A trader may also be offered a salary plus possible bonuses and then trained or hired as an employee. This is more common with financial and commodity companies that also have a trading floor. In this case, you are being hired by a company to work on their trading floor, a division that trades company money. Hours for this job are typically long, from eight to 12 hours per day. Comparatively, prop traders typically work less than eight hours, and traders at home may work for less than three hours.



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