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Oct 4, 2023
In 2023, there is no better way to scale your trading capital and profits from the markets than by using online prop firms.
Prop firms save traders years of compounding their profits or the need to find and secure high net worth investors for their trading.
Forex prop firms have taken the industry by storm but there is an emerging market of prop firms specifically catering for stock traders looking to obtain funding.
In this article we’ll be exploring the 5 best stock trading prop firms in 2023, with everything you need to know before signing up and getting funded! So, let’s get into it…
What Are Stock Prop Firms?
The concept of stock prop firms is very simple. Stock prop firms have a pool of capital, either self funded or from a pool of investors, usually.
They are looking for profitable traders that can generate consistent returns over the long term, to trade their capital.
These prop firms will offer traders a ‘funding challenge’, in which the trader needs to prove their profitability within the markets. If the trader manages to pass the trading rules (usually in relation to a profit target and risk management’, then the prop firm will give the trader access to a large sum of capital.
The trader will then trade the large account and be able to request withdrawals from the profit generated. Usually, the profit is split between the prop firm and the trader, usually greatly in favor of the trader!
Many prop firms give profitable traders more capital over time, allowing both parties to increase their earnings from the arrangement!
The Top 5 Stock Trading Prop Firms
These are the 5 best stock trading prop firms, funding traders around the world:
1. Trade The Pool
Trade The Pool is the world’s leading stock trading prop firm, with over 12,000 stocks and ETF’s totrade. They’re the only prop firms allowing traders to swing trade stocks too, and short any penny stock, providing huge opportunities for traders! TTP powered by The5ers that established in 2016 and are one of the most reputative prop firms in the world
2. Fidelcrest
Fidelcrest is a prop firm with a large user base in the forex industry, however, they also offer funding for stock traders too! But not like Trade The Pool, they only have Dozens of to trade
3. FTMO
FTMO is one of the largest forex trading prop firms but also has a range of options for stock traders looking to become funded traders too!
4. SMB Capital
SMB was funded in 2005. SMB offers education, mentorship and guidance to traders to develop their edge to the stage where they can manage real trading capital for the firm!
5. Surge Traders
Surge Traders is another prop firm with a large user base in the forex industry, however, they also offer funding for stock traders too!
Why Stock Prop Firms Are A Better Choice Than Brokers
Brokers have always been the most popular way to connect traders to the stock markets but this is quickly becoming redundant due to the perks of working with a prop firm instead.
Here are the main reasons why working with a stock prop firm is a better move than just working with a standard stock trading broker:
1. Buying Power (Leverage)
Prop firms are usually able to offer traders more buying power than brokers do, which is a great advantage for traders.
It’s worth mentioning, however, that leverage is a double edged sword and traders should always be very cautious when trading with leverage as losses can be large.
2. Risk Free
When trading with a broker, any money lost is your money – this results in obviously a financial burden but also a huge burden on traders emotions.
However, as a prop firm funded trader, you don’t bear any of the losses on your own capital – so you will not be held responsible for any losses.
Of course, you may lose your funded trading account if you lost above the maximum loss threshold, but you will not be financially responsible for this money.
3. Low Entry Cost
Most stock trading brokers online require a large deposit from traders in order to fund their account. This is usually upwards of $10,000, which isn’t possible for many beginner traders with low amounts of capital.
Most prop firms offer trading challenges for just a few hundred dollars, making it much more affordable to trade!
4. Community
When trading with a stock broker, you’re all alone in the markets and there is no community around you to learn from, to support you and to provide trading/analysis ideas.
When trading with a prop firm, there are usually communities of engaged traders looking to work together collaboratively, sharing lessons learned, analysis and much more!
This is invaluable for traders, especially in the first few years of your trading journey.
5. Scaling Program
The majority of the stock trading prop firms offer a scaling program for profitable traders. This means that once you’re hitting specific milestones in terms of profit, the prop firms will usually increase your capital under management.
This results in traders being able to receive larger profits from the market and in a much faster manner than if they just compounded their trading accounts with brokers!
What Makes A Good Stock Trading Prop Firm?
In the same way in which not all forex prop firms are great, you’ll find this also rings true with the stock trading industry. There are various things you need to look for when choosing a stock trading prop firm to work with.
These include:
1. Reputation
The reputation of a stock prop firm is incredibly important as the experience other traders have will no doubt mirror the experience you have too.
It’s recommended to look on third party sites like Trustpilot, as there are no affiliate links nor incentives for traders to create a positive narrative. This can usually help you filter out which prop firms you don’t want to be working with!
2. Buying Power
When it comes to stock trading, buying power within the markets is incredibly important. If a prop firm has an incredibly low amount of buying power on offer for traders, you should consider whether this would work for your trading strategies.
Likewise, if there is a substantial amount of buying power being offered, perhaps this is too dangerous or detrimental to your trading.
A middle ground is usually best!
3. Scaling Program
A prop firm with a scaling program is much more useful for traders than a prop firm that offers no potential to increase your capital under management.
The majority of prop firms offer some kind of capital scaling program these days, so it’s best to check that your chosen firm does before signing up!
4. Support For Traders
The support offered by a stock trading prop firm is also an incredibly important factor to consider. Whether the support comes in the form of educational resources, phone support, mentorship or any of the above, it’s crucial that you are able to have contact with the prop firm whenever you need!
When you’re a funded trader taking large withdrawals, this will be even more crucial for your peace of mind!
In Summary – What Is The Best Stock Prop Firm For Traders In 2023
In conclusion, Trade The Pool is the best stock trading prop firm, with the highest rating amongst traders and the best offering for traders seeking funded trading accounts!
With that being said, there are a huge amount of factors to consider when choosing a prop firm to work with, so ensure that you’re taking all necessary due diligence steps and ensuring that the prop firm is the right fit for you as a trader!
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Jem Benny
I am a senior stock trader. I think it is really important to share the knowledge and the experience with rookies. "Must know" and education content creator. I have been following the events of the crypto industry since 2011. I joined Walletinvestor as a content creator providing technical analysis and overviews on the current market situation.
