How to choose the best retail prop trading firm

The modern prop trading industry has evolved rapidly in recent years. Therefore, it is no wonder that many people are losing track of who is operating in the market and the quality of services they offer. In today's article, we will try to explain what you should pay attention to when choosing a prop trading firm and what you should focus on.

The rapidly developing market of modern prop trading today offers potential clients great opportunities when choosing a company, but at the same time, it is a trap for those who have no experience in prop trading and do not know what to look for when choosing one.

An enticement for everyone

Prop trading today offers many potential traders opportunities they would never have dreamed of a few years ago. However, the opportunity to trade on an account size that the average person can barely afford is a big attraction not only for the traders themselves but also for companies that see very interesting potential in this market.

On the one hand, the large and varied offer is a plus point for those who know what they want and can choose a solution that exactly suits their requirements. On the other hand, it creates room for scammers and charlatans who take advantage of tempting offers to get rich quickly at the expense of inexperienced traders. There are simply too many players in a young and rapidly developing market looking to secure their share, but some, like many inexperienced traders, want to make too much, too quickly. So how can a potential client get an overview of who is offering them the opportunity to make money in the market and who will skin them?

Very nice promises? Hands off!

The fact that the market situation is somewhat unclear today and many companies operate on the market that do not mean well to their clients is partly due to the customers themselves. On the one hand, they want to make a lot of money (and in their ideal world, as quickly as possible), but on the other hand, they are not prepared to pay extra for the added value and are looking for the cheapest possible solution.

It is important to understand that running and operating a high-quality prop trading firm is not a cakewalk. We mention, for example, building a trading infrastructure, offering quality trading platforms and solutions, as well as the need to employ a number of employees  responsible of basic but also very advanced (yet extremely invisible) activities such as IT development and security, accounting, legal, quality support, risk management and many other departments that need to function as a unified system.

A long history

One indication of whether a company is truly viable may be the length of time it has been in business. Did you know that the vast majority of firms in the retail prop trading business were founded in 2021 or later? In contrast, FTMO, for example, has been operating in this market since 2015, and by 2021, when the other firms were formed, it was already a stable company, employing several dozen employees and paying out millions of dollars a month to its successful clients. Such an advantage over the competition simply cannot be underestimated. Newly formed firms try to attract customers with attractive conditions, but the customer has to judge for themselves whether they view this with a sufficiently critical eye. After all, their future profits are at stake.

Sustainable conditions

The biggest risk with these new companies is the terms and conditions, which can seem extremely attractive to inexperienced customers. It is logical that the success of a company depends on the number of customers, but increasing its attractiveness to clients at the expense of the company’s sustainability is not a good idea. FTMO has set the terms from the beginning, to make it interesting and achievable for clients, but also to be meaningful and sustainable for the firm itself.

So, in today's conditions, one can confidently say that setting up an FTMO Challenge where the Profit Target is the same as the Maximum Loss is the ideal solution for both parties (client and firm). Experienced traders know that with an RRR (reward to risk ratio) of less than 1, it is very difficult to maintain long-term profitability. It is equally hard to imagine why this would work for a company that offers trading accounts to its clients.

Another example is paying out more than the refundable fee paid after passing the Evaluation Process. It is also illogical to pay out profits without the customer successfully completing the Evaluation Process. At first glance, it looks as if the companies in question are not looking for serious traders, but for gamblers who rely on one good try.

Regular and hassle-free payouts

At first glance, low prices and various nonsensical marketing campaigns and discounts seem to be the most important factors for most traders. In reality, for most potential customers, the company’s reputation, the experience of customers trading with the company, and, last but not least, how long it takes for the customer to receive their payout (if at all) should be the top priority. After all, fancy discounts and nice marketing are of no use to a customer if they don't end up getting what they earned from their company through their trading app.

Quality customer support

Another factor that distinguishes high-quality and reputable companies from unreliable ones is the level of customer support. A company that is willing to pay employees to provide 24/7 customer support in more than 15 languages (and counting at FTMO) probably means well for its clients. On the other hand, a company that you can't reach and doesn’t respond to your email query after a week is probably not the right fit for customers.

Education (not only) for beginners

Companies that seek customers with growth potential and long-term goals usually offer some form of training and courses to take the quality of their traders to the next level. Education is particularly valued by beginner traders who have little experience in the world of trading and could benefit from quality information in one place. Moreover, reputable firms offer similar training and courses for free and do not want to make money from such benefits, as this is not their primary goal.

Trading apps and coaching

A company that wants to have quality and long-term successful customers should be able to offer its traders additional enhancements and various trading applications that will help traders improve their results. FTMO offers its clients a range of applications aimed at simplifying their trading and helping them achieve better trading results or analyze the results achieved. And since we are not resting on our laurels, we are working on developing more apps. We also do not underestimate the importance of psychology in trading. For this reason, we offer our FTMO Traders who have successfully completed the Evaluation Process the opportunity to have a session with our performance coaches. There are indeed many options that a good company can offer its customers.

Fair trading conditions

The last factor that separates the quality from the chaff is no less important than all the others that we have mentioned in today's article. A company that means well to its customers will strive to provide them with the best possible trading conditions. These are competitive spreads, the lowest and least possible slippage (which, unfortunately, no one can completely avoid), or minimal commissions, which, as in the case of index instruments at FTMO, can be as low as zero. In this case, the potential customer should inform themselves in advance, and, ideally, try out for themselves what combination of trading conditions the company offers and whether the promises match reality.