Proprietary trading firm vs retail trading
We regularly get requests from prop firms for CRM integration. Let's discuss the difference between a Proprietary Trading Firm and Retail Trading.
What exactly is a proprietary trading firm also known as a "prop shop"?
Proprietary trading happens when a prop firm hires a prop trader to trade company funds. That is, a prop firm is a type of financial company that hires a trader who will capitalize on the company's money acting on its behalf. Such companies became widely known after the financial crisis of 2008 when their speculations with huge sums on the market of such derivatives as CDOs (collateralized debt obligations), credit default swaps and other synthetic instruments had quite a serious effect on the mortgage market which eventually collapsed and led several major banks to bankruptcy. Back then, almost any competent trader could become a proprietary trader and get access to big money management.
The key difference between retail trading and proprietary trading is that a retail trader trades with their own funds, while a prop trader trades with the funds of a company which specifically hired such a person to capitalize on the firm's assets and make even more money. In this case, the prop trader takes up to 70% of the profits for their speculations, while the company itself gets 30%, even though it provides the money and takes the risk.
Prop traders working for prop firms are usually subcontractors, as opposed to traditional brokers hired by the company. Funding in such companies is shared among all the prop traders who trade with the firm.
Who to trade with: retail or prop firms?
When trading with a retail broker, the trader transfers their own funds to a trading account. The broker in this case provides leverage, thus increasing the trader’s turnover, a platform, and access to the trading instruments, normally charging commission for it. The trader is still limited by their own capital, but on the plus side, they don’t have to follow trading rules set by the firm, since they own the funds they trade with.
As for prop trading, it has wide prospects of managing huge amounts of company's capital and thus receiving potential profit, but the trader must observe strict rules.
Getting into trading
Here, everything is simple: retail trading is open to all. The broker sets the minimum deposit amount, the trader deposits the account and starts trading. A prop trader, unless they have a reputation, needs to prove their abilities. To do that, the trader is given a trading account, usually with demo funds, where they trade for a certain period of time. At the end of this period, the result is evaluated and a decision to provide real capital for management is made.
Brokerage and prop firms often earn their money by training newcomers. There is nothing inherently bad in it if the company does not try and trick you by promising a fortune for depositing your account, but simply provides a training service for a fixed fee.
Prop trading market is full of scams, as well as the retail trading market. So before you decide to fund your account, you should weigh the pros and cons and research the company’s background online. Do not fall for marketing campaigns that require you to make rash decisions. For companies, it is a way to get fast money from new clients, for a trader, it entails a high probability of rapid capital loss. The rule “If you think that the offer is too good to be true, perhaps it is not worth to risk your money” always works.
If you are a CEO, owner, or key executive of a brokerage company, you undoubtedly aim for a precise and visually clear understanding of how successfully your business operates in various regions. In this case, integrating Power BI into your company becomes not just desirable, but crucial.
What can Power BI do for Forex Brokers?
At UpTrader, we offer our clients Power BI analytics, providing a clear comparative view of any aspect of your business. Simply apply filters by regions to see which one brings in the most revenue. You will be able to see which clients trade the most successfully - perhaps they are your future managers. Determine which trading instruments and in which countries are preferred, to create special offers and trading conditions for traders from these regions. Analyze trading volumes, the popularity of payment systems, and offer special conditions for deposits and withdrawals. Compile comparative dashboards to make data-based forecasts and plan your business development.
Analytics is a powerful tool. And access to analytics with just a few clicks gives you a competitive advantage in quickly analyzing situations and making informed decisions.
At UpTrader, analytics is fully integrated with MetaTrader and all UpTrader Forex CRM modules. Want to implement this in your company? Contact your manager for details [email protected]
Power BI is a business analytics tool from Microsoft that allows users to transform data from various sources into interactive dashboards and analytical reports. It is used for aggregating, analyzing, visualizing, and sharing data. Power BI provides a deep understanding of key business indicators and data, helping to make informed decisions based on data.
Key features of Power BI include:
Data Integration: Connecting to a wide range of data sources, including cloud databases, local data, Excel, and others.
Data Modeling and Analysis: Creating custom data models and using analytical functions to extract valuable business insights.
Data Visualization: Transforming data into clear, easily interpretable visualizations such as charts, diagrams, and maps.
Collaboration and Data Sharing: Sharing your reports and dashboards with others, facilitating teamwork and decision-making.
Availability and Mobility: Power BI offers cloud solutions and mobile applications, allowing users to access their data and analytics anytime and anywhere.
This tool is widely used in various industries to optimize processes, improve performance, and identify new opportunities for business.
UpTrader, a renowned Forex CRM solutions provider, is excited to invite aspiring forex brokers to its exclusive webinar, "Three Steps to Open a Forex Broker." Scheduled for December 8 at 12:00 pm GMT, this event promises to be an invaluable resource for those looking to enter the forex brokerage industry.
- Date and Time: December 8, 12:00 pm GMT
- Host: Vasily Alexeev, CEO of UpTrader and an esteemed expert in the Forex CRM industry
In this Comprehensive Webinar, Participants Will:
- Receive a detailed overview of the forex market, specifically tailored to startups.
- Explore cost-effective company registration jurisdictions for 2024.
- Discover the benefits of various trading platforms and how to choose the right one.
- Learn about optimal Forex CRM strategies for new brokerages.
- Understand how to integrate efficient payment systems into their business model.
Interactive Q/A Session: Following the insightful presentations, attendees will have the opportunity to engage in a Q/A session with Vasily Alexeev, gaining personalized advice and direct answers to their questions.
Why Attend? This webinar is a must-attend for anyone aspiring to establish a successful forex brokerage, especially within a budget. It offers a rare opportunity to gain comprehensive knowledge, insights into the latest industry trends, and practical strategies straight from an industry leader.
Register Now Spaces are limited, so early registration is encouraged to secure a spot in this informative and transformative session.
Join us on December 8 and take the first step towards realizing your dream of opening a forex brokerage. We look forward to welcoming you to this enlightening webinar!
Best regards, The UpTrader Team
UpTrader offers forex brokers cutting-edge liquidity solutions, providing high-tech access to market liquidity, essential infrastructure, and a variety of connection options. These solutions are ideal even for working with the most complex HFT systems. Thanks to our experience and modern technologies, we provide customized liquidity solutions, fully adapted to the unique requirements of each client.
Our clients can enjoy the following benefits:
- Marginal requirements: 1%
- Trading hours: 24/5
- Access to 7 markets and over 700 trading instruments
- Competitive STP prices for Forex pairs, as well as other trading instruments and asset classes
- A full A-book model for risk-free trading
- A single margin account
- Ultra-fast STP execution
- Multiple APIs and institutional GUIs
- 24/7 technical support
- Low spreads and commissions
- A wide range of trading instruments
- Various platforms for effective liquidity distribution
With UpTrader, you get not only access to liquidity but also complete support to strengthen your brokerage business.
Reach us for more information through the live chat or by email: [email protected]
Your UpTrader Team
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