The beauty of trading with a proprietary trading firm is that it provides funding to traders of different levels, this gives traders the opportunity to trade with bigger account sizes and potentially make bigger profits. However, the question remains: how much do prop firm traders make?
The answer to this question is not straightforward, as prop traders’ earnings can vary depending on a number of factors. Some firms pay traders a base salary, while the majority offer a profit-sharing model where traders receive between 50 to 90 percent of the profits they generate.
Additionally, traders’ earnings can be impacted by experience, trading strategies, or the performance of the markets they are trading. Despite these variables, it is generally accepted that successful prop traders earn a good amount of money yearly.
How Much Do Prop Firm Traders Make on Average
Prop traders can make a whole lot of money from trading if they are successful in passing the challenge or evaluation process, also the earnings can vary widely based on a number of factors that directly impact and determine how much do prop firm traders make.
According toGlassdoor, the average base salary for a proprietary trader in the United States in 2023 is $121,000 per year. However, this can range from $44,000 to $263,000 per year depending on experience, industry, and location.
In addition to the base salary, prop traders can also earn performance-based bonuses. These bonuses can range from a few thousand dollars to several million dollars, depending on the trader’s success and the firm’s profitability. Some firms may also offer profit sharing or equity ownership as part of their compensation packages.
Success Rate of Prop Firm Traders
The success rate of prop traders can be as low as 10%, meaning that only one out of every ten traders is profitable. It is important to note that not all prop traders are successful, and the trader’s success rate can vary widely between prop firms and individual traders.
Furthermore, the average return of a prop trader can also vary widely. While some traders may generate returns of 10,000% or more per year, others may struggle to break even or even lose money.
In terms of how proprietary traders get paid, it can vary between firms. Some firms may pay traders a salary and performance-based bonuses, while others may only offer performance-based compensation. It is important for traders to carefully review and negotiate their compensation packages before joining a firm.
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Factors Influencing How Much Do Prop Firm Traders Make
Proprietary trading firms offer a unique opportunity for traders to earn a living by trading the firm’s capital. When it comes to the question of how much do prop firm traders make or the income of a prop firm trader, this can vary significantly based on several factors, including experience level, firm size, and market conditions.
Experience Level
Experience level is a crucial factor that influences a prop trader’s income. Generally, traders with more experience tend to earn more than those with less experience.
This is because experienced traders better understand the market and can make better trading decisions, so experience levels have an answer in determining how much do prop firm traders make.
According toForbes, experienced traders can earn anywhere from $100,000 to $500,000 or more per year, depending on their performance and the size of the firm they work for.
Prop Firm Account Size
The size of the firm is another factor that influences a prop trader’s income. Larger firms tend to offer higher account sizes and bonuses than smaller firms. This is because larger firms have more capital to invest and can afford to pay their traders more.
Traders working for larger firms can earn anywhere from $100,000 to $500,000 or more per year, while traders working for smaller firms may earn less than $100,000 per year.
Market Conditions
Market conditions also play a significant role in how much money a prop firm trader makes. When the market is volatile, there is more opportunity for traders to make profitable trades, resulting in higher income.
Conversely, when the market is slow or stagnant, there may be fewer opportunities for traders to make profitable trades, resulting in lower income.
According toForbes, prop traders who work for firms that specialize in high-frequency trading can earn significant profits in volatile markets. However, traders who work for firms that focus on longer-term investments may experience lower income during slow market conditions.
5 Highest Prop Firm Earners
- Dariusz from the USA made a profit of $1.2 million from FTMO
- From Payout Daniels Who Manages a $7.2M Prop Firm Account
- Jongruck, a Trader from Thailand made over $300,000 profit in simulated trading from Funded Trading Plus
- Arts, a successful prop firm trader made over $300,000 from Smart Prop Trader
- Claudio from Portugal who lives in the UK earned $169,104.36 from MFF as of November 2022.
Here is the list of the 5 highest prop firm earners. These traders have made hundreds of thousands of dollars trading prop firms within a short period of time.
1. Dariusz from the USA made a profit of $1.2 million from FTMO.
On December 29th, 2022, FTMO announced that Dariusz from the USA exceeded everyone’s expectations by making a whopping profit of $1,206,225, beating his previous record payout of $500,180, as an FTMO Trader with a maximum allocation, this is the biggest payout in the industry. A videoInterview of his previous payout of $500,180 can be found here. To learn how to trade and get payouts from FTMO and other information check the FTMO time limits removal post.
2. From Payout Daniels Who Manages a $7.2M Prop Firm Account.
This trader accumulated a total of $7.2 million account, in the Youtube video interview, he revealed that he makes 10% of the account.
3. Jongruck, a Trader from Thailand Made Over $300,000 in Simulated Profit
In a video interview with Funded Trading Plus, Jongruck revealed that she has been trading for over 10 years. She revealed her strategy for making over $300k with a prop firm account in a simulated environment. There is also another trader by the name, Kyle with a simulated profit of $248,000 in 10 trading days with Funded Trading Plus, a Youtube video. Read more about Funded Trading Plus prop firm here.
4. Arts, a successful prop firm trader with Smart Prop Trader
In a video interview with Smart Prop Trader, Arts revealed how he made over $300,000 in profits trading prop firm accounts. He explained the journey so far, his strategy, and his experiences with different prop firms. Check this post about the Smart Prop Trader 8% discount.
5. Claudio from Portugal who lives in the UK
The trader who goes by the name – Claudio was featured in MFF “Successful Trader Interview” series. Claudio is a funded trader with MyForexFunds and has earned a total of $169,104.36 as of November 2022.
How Much Do Prop Traders Make vs Other Trading Jobs
Proprietary trading is a lucrative career choice that offers higher earnings potential much earlier in a trader’s career than jobs like investment banking or private equity. While the earnings for a prop trader vary depending on the firm, the trader’s experience, and the trader’s performance, it is generally higher than that of other trading jobs.
For instance, according to Glassdoor, the average earnings of a proprietary trader in the United States as of 2023 is around $125,000 per year.
In comparison, the average earning of a day trader is $80,000 per year, while the average salary for a stockbroker is $63,000 per year. It’s worth noting that these averages can vary widely depending on various factors, including location, years of experience, and the size of the firm account.
Proprietary traders also have the potential to earn a higher income than other traders because they are trading with the firm’s capital, rather than their own. This means that they can take on larger positions and potentially earn more money per trade.
What is The Average Earning of a Prop Trader
When it comes to the average earning of a prop trader, it’s somewhat difficult to give a precise figure as earnings widely depend on the prop trader’s experience, performance, and the prop firm they work for. However, successful prop traders earn hundreds of thousands to millions of dollars per year.
Prop traders get a combination of earnings as well as bonuses. The earnings can vary depending on the prop firm and the trader’s experience, the bonus is typically a percentage of the profits the trader generated.
It’s important to note that not all prop traders are successful. The success rate of prop traders is not the same, some traders earn significantly higher profits while others are losing money. According to a report by The Balance, the majority of prop trading firms set a structure that allows traders to receive a certain percentage of the profits they make through trades, which can incentivize the trader to take on more risk.
Potential Risks & Rewards
Proprietary trading is a lucrative career path for people that have a strong aptitude for managing risk and a passion for finance. However, it is advisable for interested traders to first understand the potential risks and rewards that are associated with this type of profession before pursuing it as a career.
Potential Risks
- High Risk: Proprietary trading comes with significant risk, since traders use the prop company’s money to trade. If a trader makes bad trades, the company can suffer losses.
- Pressure: Prop traders are sometimes under pressure to perform, as their compensation is based on the number of trading profits. This can be stressful.
- Limited Security: Proprietary trading firms do not have immunity to market volatility, and if the firm encounters significant losses, it may need to reduce its traders.
Potential Rewards
- Potentials to Earn Big: Traders working with prop firms can earn big amounts of money, and their profit share is tied to their generated profits. Proprietary traders can earn between $50,000 and $500,000 or even more yearly, although this depends on their level of experience and success.
- Flexibility: Proprietary traders enjoy more flexibility in their work schedule when compared to traditional finance jobs since they are not limited to the traditional 9-to-5 work day.
- Growth Opportunity: Proprietary trading firms give traders opportunities to grow and advance within the firm, traders can move up the ranks and become portfolio managers or even open their own prop trading firms.
Conclusion.
Overall, proprietary trading can be both a challenging and rewarding career path for traders with the right skill set and mindset. However, it is vital to carefully consider the potential risks and rewards before pursuing this career path.
To get knowledge, there are countless YouTube videos on different types of trading strategies to learn. Start with these videos and gradually upgrade to premium services.
