Traders entering the markets are often faced with one hurdle that prevents them from even crossing the starting line: lack of funds. No small wonder then, that the prop trading industry has taken off at such a pace. Undercapitalized traders can finally access the leverage they need to test their potential – and turn strategies into profits. As prop trading popularity reaches ever higher heights, companies are expanding their offers to keep a competitive edge. As a result, traders can choose from an increasing range of funding; from challenges with unlimited time, free trials, and ever more financial assets on the table. A popular and valuable model is prop firms with scaling plans.
The choice on offer can be a double-edged sword: with so many prop firms hustling for space in a crowded industry traders need to assess a growing number of metrics, including the evaluation specifications, the compatibility of the firm with their trading style and preferred strategies, and the tradeable instruments available. Does the prop firm meet its expectations? Do funded traders express satisfaction with the payout methods and regularity? What is the likelihood of passing the evaluation process and sourcing the real funds?
What ambitious traders are particularly keen on, however, are prop firms with scaling plans. In other words, where a successful performance during an evaluation will grant not a one-off trading windfall but an opportunity for career development into ever greater account sizes (with profits scaling accordingly.)
Table Of Contents
Prop Firms Key Takeaways
Before we whip the curtain off the list of prop firms with scaling plans, let’s do a quick recap of prop trading in general. What do prop firms offer traders?
As we have discussed in our previous guides the evaluation process is designed to help traders improve their trading skills and develop their trading strategies. Traders must meet certain minimum trading days and profit targets to progress through the evaluation stage and be eligible for a funded trading account. After all, prop firms need to have a revenue model that works for both parties. By sourcing the traders who are most likely to earn profits through the funded capital, prop firms will make more. Therefore, evaluations need to be able to sort the cream from the crop and find the traders best able to meet profit targets without taking on excessive risk.
Prop firms occasionally offer scaling plans, whereby traders can work their way up through the firm gradually increasing their account sizes (and potential returns) upon successful completion of internal evaluations. If a trader meets the profit target (without taking on excessive risk) then they will be rewarded with more capital and promoted to the next account size. Rapid scaling plans are a highly sought-after feature for their potentially lucrative returns. The better a trader performs in evaluation conditions, the more funding they get and the bigger their share of the resultant profits. Scaling plans are based on a simple set of trading rules designed to train funded traders into accruing consistent profits and being rewarded with a longer funding leash each time.
|Prop Firm||Scaling Plan|
|My Forex Funds||$2,020,000|
|City Traders Imperium||$2,000,000|
|Lux Trading Firm||$10,000,000+|
|The Trading Pit||$5,000,000|
|Alpha Capital Group||$2,000,000|
|Funded Trading Plus||$2,500,000|
|Smart Prop Trader||$2,500,000|
|True Forex Funds||$400,000|
|Bespoke Funding||2x $2,000,000|
|The Funded Trader||$1,500,000|
|Leveled Up Society||$1,000,000|
The question is not why to scale – but why wouldn’t you scale? The higher the starting account size, the greater the cut of any profits earned. Which begs the obvious question: why not simply select the maximum account, pay the attached Challenge fee, and begin trading with maximum profit potential? This can be a drawback or a benefit depending on the trader in question. If an entrant has the experience, expertise and tried and tested strategy, and confidence, then investing in the maximum account size may well be worth a punt. There is an associated risk, however, that if you fail to meet the evaluation criteria including the (higher) profit targets that come with the maximum account size you will lose the entry fee, which is usually nonrefundable. Therefore, for traders new to the prop firm scene then choosing a regular account size and scaling up would be a more efficient and likely more profitable avenue to funding.
Here are some benefits of joining prop firms with scaling plans:
Prop firms with scaling plans gradually increase the buying power of funded traders who manage to hit their profit targets within the firm’s criteria. For each capital increase, the traders will have to meet higher profit targets and remain within the risk management protocols associated with the new account size. The specifications vary widely from firm to firm, some prop trading will require that traders meet their targets within a timeframe, while others implement the consistency rule. The account sizes (and entry fees) will depend on the prop firm in question, with some prop firms offering up to $5 million in funding with a 90% profit split. That said, traders should be wary not to fall for the numbers alone. Especially when it comes to scaling plans, the likelihood of sourcing funding by passing the initial evaluation is the fundamental first step, and therefore it is important traders understand the rules and withdrawal facilities of any prop firm challenge they are considering.
Sometimes the easiest way to understand something is to see it! Let’s imagine a scaling plan in practice. Meet Joe, a day trader looking for funding through a prop firm.
Joe joins a prop trading firm and is given a starting fund of $100,000. He starts trading different financial instruments, mostly stocks. Over time, Joe proves himself as a reliable trader by consistently earning profits for the firm. He diligently follows risk management guidelines, his strategies pay off, and he is disciplined.
Impressed by Joe's performance, the prop trading firm decides to scale up his funding. They increase his share to $250,000, allowing him to take on larger trades and potentially grow his profits. Now Joe has earned more trust with the firm and is given access to trade additional markets, such as futures or options. Joe can now diversify his portfolio and use new trading strategies to suit different market conditions. The firm decides to pair him with an experienced mentor who guides Joe with feedback and insight based on his own professional career.
Joe continues to hit his targets and therefore the prop trading firm scales up his account even further: he is now trading with $500,000 and with the larger positions enabled he amplifies his potential profits. Now Joe is no mere entry trader but a known and respected figure within the prop trading firm. From mentee to mentor, he begins training junior traders and sharing the knowledge and expertise he gained over his time scaling up through the firm. Joe is an example of how prop firms with scaling plans offer more than just an opportunity for larger profits – but the invaluable experience, mentorship opportunities, and collaborative environment also foster career development – making it the perfect choice for ambitious and talented new traders.
Joe could be anyone – you could be Joe. If you are a trader driven by a thirst for growth and increased market opportunities, then scaling up through a prop trading firm is an excellent career choice. Not only do you take on incremental responsibility through a gradual capital increase and timely access to new markets and instruments, but the practice and training throughout mean you are constantly growing in a professional sphere. Many prop firms with scaling plans also have career paths within the company and with the right strategy and mindset, you could walk away with more than just profits but a role within the company. Scale up through the prop firm and you may also rise through the ranks of the company. Remember, do your due diligence and thorough research on any prop firm before making an investment, and happy trading!
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