Opening a prop firm in 2024 – all the things you need to know - Leverate (2024)

Opening a prop firm in 2024 – all the things you need to know - Leverate (1)

In today’s financial landscape, there’s a growing interest in trading across various assets, from forex and stocks to cryptocurrencies and indices.

Alongside this surge, proprietary trading has gained huge momentum and has a growing demand, prompting a range of entities, from financial institutions to hedge funds, that want to establish their own prop firms.

But before diving into this venture, it’s crucial to address numerous considerations and questions. By the end of this discussion, you’ll have a clear understanding of what prop firms entail, why the regulation in so simple, the steps to launch one, and the potential benefits that our all-in-one prop trading platform has to your business.

What is a Proprietary Trading Firm?

A proprietary trading firm, often referred to as a “prop firm,” operates by utilizing its own capital to participate in financial markets. These companies specialize in various forms of active trading, including high-frequency trading, with the goal of capitalizing on rapid market movements to generate profits.

Unlike traditional investment firms, prop firms do not handle client funds. Instead, they focus solely on trading their own capital and retain a percentage of the profits generated from successful trades by revenue share.

To become a trader at a prop firm, the firm will typically conduct some auditions during the trader selection process. Proprietary trading firms only choose traders who are highly skilled, and the own’s that passed their challenges by the roles the prop firm choose like maximum daily loss, profit targets by day, Max Overall loss and more.

Do proprietary trading firms need a license?

Prop trading firms are less heavily regulated than regular brokerages and broker-dealers.
However, it depends on the way the prof firm choose to open their business. If them choose to open a firm only with trader challenges, there’s no license needed. But, if they add a funded accounts to their traders, they will need a brokerlicense.

How much does it cost to set up a prop firm?

It depends on the location and your target market. However, the business model of prop trading accounts.

Most prop trading firms provide access to real funds only after carefully evaluating their traders’ abilities, and traders usually must pay an audition fee before entering the real trading process.
In some cases, proprietary trading firms provide access to live trading for a certain fee, but the funds provided aren’t substantial, and monitored trading metrics are strict.

How do I open my prop firm?

When establishing a proprietary trading firm, you face the decision of developing your technology, which can be both costly and time-intensive, or opting for white-label technology solutions like Leverate’s prop firm platform, which is a ready-made and licensed software product that you can customize and rebrand.

We at Leverate, built a top-notch turnkey solution for prop firm to their kickstart, that contains all what new prop firm need:

Trading Platform

Our trading platform has a super-friendly interface with one-click execution, an intuitive dashboard, and easy access to advanced indicators and chart analysis.

All the features are available on Mobile, Web, and Desktop with a seamless trading.


The backbone of a Prop firm is a powerful CRM. Our CRM is specifically designed for the needs of your Prop firm. The multiple dashboards with full customization, custom reports and tailor-made interfaces allow you to get all the info you need on one page.

Back-End Office

The admin dashboard is designed to present a unified view, intuitive controls, and swift decision-making tools on real-time data.

Security & Encryption

We know how important and sensitive data is. Hence, we emphasize security, ensuring the most secure environment for your clients’ database., ensuring you can focus on developing other aspects of your prop firm.

Risk Management

With our extensive 15 years of experience in the FX industry, we possess a unique advantage in managing risk with precision and finesse.

Broker Integration & Liquidity

Leverate’s software aggregates liquidity from top financial institutions to provide competitive rates and the lowest spreads. Our Tech Team will make a secure and quick integration to any brokerage you need.

Customer Support

We offer round-the-clock, multilingual tech support services to ensure you receive comprehensive assistance whenever needed.

In conclusion, like any other brokerage endeavor, launching a prop firm demands meticulous planning, extensive research, and strict compliance with local regulations. With the appropriate strategy, technology, and risk management plan in place, a prop trading firm stands poised to flourish in today’s market environment.

To streamline the process and access essential tools and integrations affordably, consider a white-label prop trading platform that will lead your firm to success and to reach their goals quickly and efficiently.

If you thought about establishing your prop firm, don’t hesitate and contact us to start your journey as a top-notch prop firm with us.

Opening a prop firm in 2024 – all the things you need to know - Leverate (2024)


How much money do you need to open a prop firm? ›

The amount of money needed to start a prop trading firm can vary depending on various factors such as the type of assets traded, the size of the firm, and the location. However, in general, you would need at least $50,000 to $100,000 to start a prop trading firm in India.

What do I need to open a prop firm? ›

How to start a prop trading firm? Starting a prop trading firm requires a reliable white label technology, CRM tool, liquidity, and registration. A white label will give you trading platform alongside a reliable CRM tool.

What is the future of prop firms? ›

Prop firms that operate in strict adherence to regulations are likely to have a more stable and sustainable business model. Additionally, this situation may prompt prop firms to diversify their trading strategies and explore alternative markets and platforms.

How much do prop firm owners make? ›

In conclusion, the income of prop firm traders can vary greatly depending on several factors such as experience, performance, and the size of the firm. On average, a junior prop trader can expect to earn anywhere between $50,000 to $100,000 per year, while a senior trader can make upwards of $500,000 annually.

How are prop firms taxed? ›

Profitable independent contractor (IC) proprietary traders receive a 1099-MISC for “non-employee compensation.” Sole proprietors use a Schedule C to report fee revenue and deduct their business expenses, including home-office deductions, if they qualify.

Can you make a living trading for a prop firm? ›

Prop trading can be lucrative, with earnings tied to a profit-sharing ratio. Unlike traditional brokers relying on commissions, prop traders' income directly links to generated profits. Ratios vary, often ranging from 75/100 to 90/100, offering flexibility based on experience and strategy.

Is prop firm a good idea? ›

Prop firms are an excellent source of accessing further capital to increase profit potential. Passing a prop firm's evaluation means reaching a profit target while staying within its risk management rules. Prop firms require traders to use their brokers, which can be positive or negative depending on the broker.

Are prop firms profitable? ›

Prop trading is one of the most lucrative activities as the money you earn is determined by a profit-sharing ratio. Unlike brokers, for instance, which generate money from commissions or spreads, the prop firm benefits from directly trading or investing in the market.

Is Prop firm worth it? ›

Is working with a prop firm worth it? There are many unique advantages that make working with a prop firm worth it. These include access to unique software and information, trading with the firm's capital, and cashing in a large portion of your winnings.

What are the negatives of prop firms? ›

Let's explore some of these pitfalls:
  • Strict Risk Management Rules and Trading Guidelines: ...
  • Profit Sharing: ...
  • Profit Targets During the Evaluation Period: ...
  • Limited Control Over Capital and Payouts: ...
  • Lack of Regulatory Oversight: ...
  • High Leverage and Margin Requirements: ...
  • Financial Risk and Capital Exposure:
Feb 11, 2024

How many people fail prop firms? ›

Historically, retail prop firm challenges have been designed to set traders up to fail. They're given harsh targets, limited time, no support, and huge leverage – a perfect storm! It's not surprising that 95% of traders fail their challenges!

What are the best futures prop firms for 2024? ›

Quick Look: Best Prop Trading Firms
  • Best for Beginner Futures Traders: Apex Trader Funding.
  • Best for Experienced Traders: FXIFY.
  • Best for Stock Traders: Trade the Pool.
  • Best for Experienced and Beginner Forex, Indices and Metal Traders: The 5ers.
  • Best for All Futures Traders: BluSky.

How do prop firms actually make money? ›

To make money for the company, they typically participate in speculative trading, which can involve both short- and long-term trading. Proprietary trading firms typically allow their traders autonomy in making trading decisions. However, they establish a limit known as the maximum drawdown level.

Do prop traders need a license? ›

Prop trading firms are less heavily regulated than regular brokerages and broker-dealers. However, it depends on the way the prof firm choose to open their business. If them choose to open a firm only with trader challenges, there's no license needed.

How many prop firm traders are successful? ›

At its core, the prop firm challenge can be a way for prop firms to make money from failed challenges. This is because some sources have the failure rate of prop trading challenges at 90%. So for every 10 traders that buy a challenge, 9 will fail.

Do people make money with prop firms? ›

Also known as “prop trading,” it offers higher earnings potential much earlier in your career than jobs like investment banking or private equity. It's arguably the most merit-based industry within finance: if you make millions of dollars for your firm, you'll earn some percentage of it.

How much do prop firms charge? ›

Performance Fees/Profit Splits

The amount of profit split greatly depends on the prop firm you're working with, but it typically ranges from 50%-90%. For example, if you were working with a prop firm on a 90% split and made a $10,000 profit that month, you'd keep $9000, and the prop firm will take $1000.

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