FTUK

RETAIL TRADING VS PROP TRADING

Trading with a small trading account is very common in forex and can often seem easier that it is in reality. It can be very risky because of the lack of capital and risk management discipline which most traders battle with. There is also a lot of pressure put on leverage which means that the trader might overlook risk management in order to increase their gains and profits.


Trading with a small account is risky and can lead to losses. There is a high probability that the account will be wiped out and traders may also face margin calls.
The risks of trading with a small account are as follows:


– High possibility of all capital being lost
– Margin calls which means that the trader has to deposit more capital into the account to avoid liquidation
– Pressure on unrealistic targets in percentage
– High transaction costs


In order for a trading account to grow in value there must be a consistent strategy and risk management plan behind the operation. A trader might be excellent at the technical analysis and spotting trading opportunities but if they fail to take control of their bankroll and trade with large amounts of risk on certain trades this will only lead to loss in the long run. The trader can also increase their profits by using leverage within a prop firm to scale their account slowly but consistently, which means trading other prop firms’ capital.

 

What is prop trading?


The prop trading account is an account that is used for trading in the forex market. The person who has this type of account is called a “proprietary trader.” A prop trading account is usually a large amount of capital, and it can be leveraged to generate profits and gains.


The person who has this type of account must have some experience in the trading markets and they must also have a good knowledge about how to trade. The financial industry is changing. The retail trader is gradually getting replaced by the prop trader as prop trading oppournities are expanding and only getting better for traders.

 

Retail trading


The retail trader is when an individual trades with his or her own capital. The prop trader trades on behalf of a company that owns the capital, and they are compensated in terms of profits and gains. At FTUK you can get up to 80% of the profits you make. Prop traders also use leverage to increase their potential profits, but the downside is that it increases their risk as well. This is a common issue with some prop firms advertising high leverage options to increase the likelihood of the trader choosing them when most traders don’t understand it actually offers a quicker route to failure. The optimal leverage that a trader can use and profit long term with a prop firm is between 1:5 and 1:30 leverage.

 
A prop trading account can be opened with most providers and getting started is very easy, but in order to be successful you need to know what you are doing.Traders are always looking for ways to increase their capital and profits with the use of leverage. However, with high risk comes high reward – so they often set unrealistic targets which can lead to losses if they are not met.
Many traders have lost their account balance in just one trade because of the risky nature of trading. They should be aware of the risks and know when to stop trading before it’s too late. Trading has been a thing for long time now, with retail traders working from home and finding new ways of beating the market for the last two decades.

 

Trading limitations


The trading process is full of limitations and the most important one is the amount of capital that you have to invest in order to make a profit or gain. Leverage can help you with this limitation if you know how to use it properly and if you are not careful enough, it can lead to failure. The use of leverage in retail trading refers to the practice of using borrowed money to buy an asset. The purpose is to increase potential gains on the trade.
Trading can be very profitable if done right. You just need to find the right trading strategy and follow it. Traders need to constantly be adapting and find new ways to limit the amount of loss and increase the win rate or general trading edge in the market. Prop traders also need to be making sure they are managing the account correctly, to ensure long term profits and other prop trading benefits. If you invest wisely, you will see consistent gains over time.

 

A good plan is required


Trading can be difficult and risky business. However, the key to success in trading is to have a good plan and some patience. There are many different strategies that traders can use. Some of the most common strategies are swing trading, day trading, position trading, and scalping.
In order to trade successfully, traders need a significant amount of capital which might mean you already need to be wealthy in order to create more long-term wealth. The more capital they have available for trades, the more money they can make on their investments. Traders also need to be able to wait out periods where there are no profits or gains so that their account does not lose money due to losses or leverage during those periods of time when they do not make any profits or gains. Trading for a prop firm can help with this process and even long periods of drawdown times. All the trader needs to keep in mind is trade well and they will be rewarded for calculated and correct decisions.

 
Prop trading can be very lucrative when a trader aims for long term small and consistent results, when broken down is manageable and with a strong trading edge is possible to achieve. Here is a FTUK account from October to November 2020 with a very small but consistent daily results:

 

 

Traders need to break their visions down into small steps and with the opportunity in prop trading, it is very possible to scale and build large accounts by staying humble with small steps.

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All our funded accounts come with a fixed equity stop out level. Once the account equity level gets below this fixed stop out bar, we will close all running trades and disable trading and access. The stop out level is a fixed value for each funding level, this means that any profit which has been made by the trader increases the loss allowance.