The barriers to entry for forex trading have been lowered in recent years thanks to the rise of online trading platforms. It’s possible to be a solo trader, but this requires you to put up your own capital, and you’ll need a high degree of personal risk tolerance.
Most traders aspire to a funded account with a prop firm, which allows them to trade with much larger sums with no risk to their personal wealth. In return for access to their funding, the prop firm will keep a percentage of any profits you make and cover any losses.
In prop firms such as FTUK, traders who hit their targets are rewarded for a consistent performance with higher profit shares and larger account sizes, up to a maximum of $6,400,000 with a profit share of 80 per cent. This offers the most talented traders an excellent opportunity to generate a very healthy income stream.
Naturally, newcomers will have some questions about how this set up works; not least regarding the prop firm payout methods. You may be investing little or even none of your own capital, but you are investing your time, energy and skills and you want to know how you will be rewarded for this.
The most common prop firm payout methods
The method of payout will vary depending on which prop firm you use, so it’s important to understand what they are before joining up. A reputable firm will be transparent and upfront about their payout structures, and happy to answer any questions you may have. Carry out some online research to compare the market and decide what’s best for you.
Payment processors: The most common payout method you will find is a payment processor such as PayPal, or in the case of FTUK, RiseWorks. These allow for swift and secure payouts with lower fees than many traditional banks, and can be accessed across international borders.
Check if the prop firm will cover the transaction fees and what their default currency is: typically, this will be USD.
FTUK traders will need to create and verify a Rise account before withdrawing a payout to either your cryptocurrency wallet or bank account. All payouts will be processed through Rise and processed within 24 to 48 working hours, or slightly longer in very busy periods.
Cryptocurrency: Many prop firms will also have the option to receive crypto payouts. This avoids the need for any extra currency conversions and they are usually fast with very low fees. It’s possible to request USDT cryptocurrency payouts via FTUK. Other prop firms may use Bitcoin or Ethereum.
Payout frequencies and minimum thresholds
The frequency with which you can make withdrawals will depend on the level you are at, the amount of capital in your account and your performance. It typically starts on a monthly basis or every two weeks, but it can be up to twice weekly or on request for the most advanced traders. The prop firm should be upfront about their policy in this regard.
At FTUK, the minimum amount of profit required for a payout is $250, which refers to your profit share, not the combined profit total in the account. This will vary depending on which level of scaling plan you are currently at. New traders may start on a 50 per cent profit share, rising to a maximum of 80 per cent if the targets are reached.
A trader will only be able to make a payout request when they have passed the evaluation phase and achieved a profit target of at least ten per cent. Prop firms such as FTUK offer one or two-step evaluation programs. The most experienced traders can access instant funding in return for an upfront fee.
Key considerations when choosing a forex prop trading firm
Prop firms offer forex traders an exciting opportunity to trade with large amounts of capital, maximising profits without any personal financial risk. They also offer attractive profit share deals with a 20:80 split for traders who have proved they can manage risk and hit certain profit targets.
Those who demonstrate a consistent trading performance will be rewarded with bigger accounts, boosting the potential to make larger profits. However, this does not mean that prop trading firms are looking for traders who are willing to take big risks.
In fact, the opposite is true: prop firms such as FTUK are looking for traders who follow long term strategies with effective risk management, and avoid reaching the maximum drawdown limit. Here’s a look at how you can progress successfully within this structure, even if you do not have a lot of experience.
Tips for increasing your forex earnings
The amount you make as a forex trader will obviously depend to a large extent on your current level of skill and experience. However, everyone has to start somewhere, and it is possible to progress steadily with the right approach.
Arm yourself with knowledge
The first step is to learn as much as you can about basic principles of forex trading, and how the market works. This research and learning phase will provide you with a solid foundation to build on, and will equip you with the knowledge and confidence to build and implement your own trading strategies.
Familiarise yourself with the meaning of commonly used forex terms such as pip, spread, leverage, lot, stop-loss order, margin, and so on, to give you a handle on how the process works. Learn about the history of the foreign exchange markets, the different styles of trading, and the various currencies of the world.
You should also learn about the concepts of fundamental analysis and technical analysis. The former involves using economic indicators and geopolitical data to inform your trading strategy. Understanding this information will help you to anticipate market movements and plan your trades accordingly.
Technical analysis involves using tools and indicators and studying price charts to predict the future movements of the markets. You can base your trading strategy on either fundamental or technical analysis, or you can use a combination of both.
Develop a solid trading plan
The next step is to develop a solid trading plan that you can use to guide you through each trade. This will help you to make quick but well informed decisions that are aligned with your trading goals and objectives, and within the rules of the prop firm.
The trading plan should be regularly reviewed to ensure that it remains optimised for the current market conditions and your maturing skills and abilities as a trader. However, you should use a consistent trading style throughout your trading month in most cases, without any drastic shifts in approach.
A basic plan will involve predefined market entry and exit points and a risk management strategy. As your skills advance, you will learn to combine technical indicators such as trailing averages with fundamental data such as interest rate changes.
The prop firm may have a list of the type of trading styles they permit, so check this first to ensure that your trading strategy falls within the rules.
Risk management
Strong risk management tools are key to achieving consistent profits. It’s advisable to use stop-losses to protect your capital, and in cases it may be a mandatory requirement of the prop firm. Less experienced traders are advised to limit their risk to one or two per cent of their trading capital per trade.
Master the trading mindset
It’s important to train yourself not to make rash decisions, which can be tempting when you are under pressure. Greed for profits or fear of losses can sometimes distract traders from their strategy and cause them to take unnecessary risks. Learn how to keep your emotions in check, cultivate patience and stay objective and rational at all times.
Keep track of your trades
The best way to monitor your progress is by keeping a trading journal. This means a method of recording and analysing your trades separately to any records kept by the trading platform. It could be a digital journal, or a pocketbook that you can keep handy to jot down notes in at any time of the day or night.
Go beyond recording basic facts such as the time, date, and outcome of the trade. Write down your motivation and reasoning for making the trade, and your feelings about it before, during and afterwards. This will help you identify patterns in your thinking that can be revealing if you are trying to understand why your trades are underperforming.
It can help to reveal common mistakes, or indeed successful behaviours and processes. This will give you a better understanding of your trading style and help you to refine your strategy, iron out any issues, and pinpoint your most profitable trading styles.