You may
either love or hate it, but despite its controversies, prop trading could be
the future of the retail trading industry and the direction in which the FX/CFDs
are evolving. As a broker, you cannot simply stand by during these significant
changes. Especially, the first CFD brokers have already started to offer their
services in this space.
Modern prop
firms enable retail traders to leverage substantial company capital
without risking their funds. Interestingly, most trading now occurs with
virtual funds, yet the profits are entirely real.
To
participate, traders typically pay a small fee to undergo an evaluation process in which they demonstrate their trading skills through simulations. Those who succeed are granted access to a funded account and retain a substantial share of their profits, often between 60% and 80%.
“Prop
trading is an excellent opportunity for aspiring traders to see if trading
suits them, or for seasoned traders, it offers the chance to trade with higher
funding levels, advanced technologies, and extensive market data,” said Crystal
Lok, the Head of Emerging Markets at OANDA. Prop trading also provides learning
opportunities for traders at any level, as the cost is only the entry fee for
the challenge.”
Brokers Join the Prop
Trading Space
Currently,
four brokers previously known in the FX/CFD sector are now offering dedicated
prop trading services. OANDA launched OANDA Labs Trader, Hantec Markets
introduced Hantec Trader, IC Markets created IC Funded, and Axi, the first in
this space, offered Axi Select.
A separate article details their services, the size of funded accounts, and the fees charged.
However,
the most critical point is that according to discussions with industry
representatives conducted by Finance Magnates, an overwhelming majority
see prop trading as the future of retail trading .
“I
believe this is evident,” commented Maciej Wojciechowski, the Head of
Business Development at OnEquity. “Brokers with a long-term, strategic
approach to their business have identified a niche and promotional opportunity
within the prop trading sector.”
Prop Trading Emerges as
the Future of FX/CFD Brokers
According
to a survey by Finance Magnates, 90% of respondents believe that prop
trading services will be the future for CFD brokers. By offering prop trading
alongside traditional trading accounts, brokers can attract more
clients.
“Over
the past 18-24 months, this product has seen a significant increase in
demand,” observed Bashaar Gokal, the Operations Manager at Hantec Trader.
“The recent industry disruptions have driven traders to seek out reputable
institutions they can trust.”
This
development followed MetaQuotes’ suspension of licenses for non-broker prop firms, which caused a wave of closures, service interruptions, and payment
blockages.
Users of
some of these prop firms have been waiting to access their funds for over three
months.
This
situation has allowed competing platforms and brokers to offer retail traders
safer, regulated prop trading conditions, gaining entry into a new, unexplored
market with lower client acquisition costs than in the CFD sector.
“Imagine
you’re a broker in a saturated market and you’re offered a new product that
lowers your client acquisition costs, increases the lifetime value of your
traders, reduces entry barriers, KYC, and other regulatory admin, and boosts
your ROI,” highlighted Charlotte Day, the Creative Director at
Contentworks Agency.
To learn
more about how prop trading might change the FX/CFD landscape, we invite you to
subscribe to our latest digital Quarterly Industry Report for Q1 2024. You will
also find information on the trading volumes of the largest retail brokers.
You may
either love or hate it, but despite its controversies, prop trading could be
the future of the retail trading industry and the direction in which the FX/CFDs
are evolving. As a broker, you cannot simply stand by during these significant
changes. Especially, the first CFD brokers have already started to offer their
services in this space.
Modern prop
firms enable retail traders to leverage substantial company capital
without risking their funds. Interestingly, most trading now occurs with
virtual funds, yet the profits are entirely real.
To
participate, traders typically pay a small fee to undergo an evaluation process in which they demonstrate their trading skills through simulations. Those who succeed are granted access to a funded account and retain a substantial share of their profits, often between 60% and 80%.
“Prop
trading is an excellent opportunity for aspiring traders to see if trading
suits them, or for seasoned traders, it offers the chance to trade with higher
funding levels, advanced technologies, and extensive market data,” said Crystal
Lok, the Head of Emerging Markets at OANDA. Prop trading also provides learning
opportunities for traders at any level, as the cost is only the entry fee for
the challenge.”
Brokers Join the Prop
Trading Space
Currently,
four brokers previously known in the FX/CFD sector are now offering dedicated
prop trading services. OANDA launched OANDA Labs Trader, Hantec Markets
introduced Hantec Trader, IC Markets created IC Funded, and Axi, the first in
this space, offered Axi Select.
A separate article details their services, the size of funded accounts, and the fees charged.
However,
the most critical point is that according to discussions with industry
representatives conducted by Finance Magnates, an overwhelming majority
see prop trading as the future of retail trading .
“I
believe this is evident,” commented Maciej Wojciechowski, the Head of
Business Development at OnEquity. “Brokers with a long-term, strategic
approach to their business have identified a niche and promotional opportunity
within the prop trading sector.”
Prop Trading Emerges as
the Future of FX/CFD Brokers
According
to a survey by Finance Magnates, 90% of respondents believe that prop
trading services will be the future for CFD brokers. By offering prop trading
alongside traditional trading accounts, brokers can attract more
clients.
“Over
the past 18-24 months, this product has seen a significant increase in
demand,” observed Bashaar Gokal, the Operations Manager at Hantec Trader.
“The recent industry disruptions have driven traders to seek out reputable
institutions they can trust.”
This
development followed MetaQuotes’ suspension of licenses for non-broker prop firms, which caused a wave of closures, service interruptions, and payment
blockages.
Users of
some of these prop firms have been waiting to access their funds for over three
months.
This
situation has allowed competing platforms and brokers to offer retail traders
safer, regulated prop trading conditions, gaining entry into a new, unexplored
market with lower client acquisition costs than in the CFD sector.
“Imagine
you’re a broker in a saturated market and you’re offered a new product that
lowers your client acquisition costs, increases the lifetime value of your
traders, reduces entry barriers, KYC, and other regulatory admin, and boosts
your ROI,” highlighted Charlotte Day, the Creative Director at
Contentworks Agency.
To learn
more about how prop trading might change the FX/CFD landscape, we invite you to
subscribe to our latest digital Quarterly Industry Report for Q1 2024. You will
also find information on the trading volumes of the largest retail brokers.
