In the high-stakes world of financial markets, proprietary trading has been surging in popularity. However, this arena remains a challenging landscape where success eludes many. A recent PipFarm poll, exclusively obtained by Finance Magnates, sheds light on the current state of prop trading. The study, which gathered insights from 459 respondents, reveals a striking contrast: while the industry attracts many, only 40% manage to turn a nice dime.
Finance
Magnates gained
exclusive insight into a recent poll conducted among PipFarm clients, which
shed light on the trading experiences and profiles of those actively using prop
firm offerings.
The poll showed that the vast majority of retail traders (70%) start their market
journey either with FX/CFD (51%) or cryptocurrencies (19%). Only one in nine
people (14%) entered the markets through evaluation firms, while others
indicated stocks, futures, or other instruments as their debut venue.
“FX and
crypto have been prominent alternative investments for many years and are
heavily marketed to retail traders. Unsurprisingly, most traders were
introduced to trading through FX and crypto platforms,” James
Glyde, the Founder and the CEO of PipFarm commented for Finance Magnates.
Nearly half
of the respondents (45%) use both their own funds and funded accounts for
trading. Only 14% indicated that they rely entirely on their own funds. But
this should not be surprising, as the poll was conducted among clients of a
company whose main goal is to fund traders.
In a recent
interview with Finance Magnates at the iFX EXPO International 2024, Glyde
also revealed that “the risk is incredibly hard to manage in the prop
trading industry.” The full conversation is available in the video below:
Meet the Profile of an
Average Prop Firm Trader
The data
collected by PipFarm clearly shows that the average prop firm client tries to
maximize their chances of success in challenges and evaluations by using the
services of more than one firm (68%). However, it turns out that most limit
themselves to two (43%) or a maximum of three (31%). A few record holders
indicated cooperation with 6-11 props (6%).
The most
important factors motivating retail traders to choose a particular proprietary
trading firm are clear operating rules (79%), meaning transparent regulations
and simple requirements for participating in challenges. Very important factors
are also fast fund withdrawals (75%).
“Contrary
to the recent prop firm price war, traders really want clear rules rather than
low prices and high-profit shares,” explained Glyde. “Many firms have started
rejecting payouts due to technicalities, such as IP address inconsistencies,
KYC discrepancies, vague definitions of gambling, news trading, and consistency
targets.”
39% of
respondents look for attractive prices (cheap challenges and low spreads) in
prop firms and evidence of past payouts to other clients (37%). Less important
were factors such as high-profit share, ease of challenges, or the length of
the firm’s market presence.
What do
investors want to avoid? Most are discouraged by trailing drawdown (54%),
consistency rules (53%), or the prohibition of trading based on the latest news
and macroeconomic data (37%) in prop firm offerings.
For a large
number of respondents (ranging from 22% to 28%), negative factors also include
profit cap, transaction risk limitation, daily trading limits, and too low
maximum lot sizes. Less important are low leverage , slippage rules, or
martingale.
The poll also showed that prop traders easily adapt to changes. 57% stated that in case
of a platform change, they need less than a week to get used to it, and another
31% indicated that a maximum of a month is enough for them.
In the case
of current prop firm problems with MetaTrader from MetaQuotes, only one in 10
respondents indicated that they miss this platform and are waiting for its
return to the offer.
“This
survey highlights that most traders could adapt and switch platforms in less
than a week,” added Glyde. “While some traders remain passionate about
MetaTrader, its absence will not stop them from trading, and many are learning
that other better platforms were available all along.”
Over $4,000 Spent on
Challenges
From the
data seen by Finance Magnates, it also appears that the average trader
invests $4,270 in prop firm challenges, hoping for a high return on their
investment. However, nearly half of investors never realize any payout, and
almost 60% of all clients lose capital.
The number
of profitable prop traders reaches 41%, and among them, prop trading indeed
becomes a high-risk but high-reward game. PipFarm data shows that respondents
collectively invested $1.9 million in challenges, ultimately earning $7.6
million, which translates to a total return rate of 300%.
The poll was conducted on a group of about 500 active clients of PipFarm, a
trader-funded firm that offers proprietary trading on accounts ranging from
$5,000 to $200,000.
In the high-stakes world of financial markets, proprietary trading has been surging in popularity. However, this arena remains a challenging landscape where success eludes many. A recent PipFarm poll, exclusively obtained by Finance Magnates, sheds light on the current state of prop trading. The study, which gathered insights from 459 respondents, reveals a striking contrast: while the industry attracts many, only 40% manage to turn a nice dime.
Finance
Magnates gained
exclusive insight into a recent poll conducted among PipFarm clients, which
shed light on the trading experiences and profiles of those actively using prop
firm offerings.
The poll showed that the vast majority of retail traders (70%) start their market
journey either with FX/CFD (51%) or cryptocurrencies (19%). Only one in nine
people (14%) entered the markets through evaluation firms, while others
indicated stocks, futures, or other instruments as their debut venue.
“FX and
crypto have been prominent alternative investments for many years and are
heavily marketed to retail traders. Unsurprisingly, most traders were
introduced to trading through FX and crypto platforms,” James
Glyde, the Founder and the CEO of PipFarm commented for Finance Magnates.
Nearly half
of the respondents (45%) use both their own funds and funded accounts for
trading. Only 14% indicated that they rely entirely on their own funds. But
this should not be surprising, as the poll was conducted among clients of a
company whose main goal is to fund traders.
In a recent
interview with Finance Magnates at the iFX EXPO International 2024, Glyde
also revealed that “the risk is incredibly hard to manage in the prop
trading industry.” The full conversation is available in the video below:
Meet the Profile of an
Average Prop Firm Trader
The data
collected by PipFarm clearly shows that the average prop firm client tries to
maximize their chances of success in challenges and evaluations by using the
services of more than one firm (68%). However, it turns out that most limit
themselves to two (43%) or a maximum of three (31%). A few record holders
indicated cooperation with 6-11 props (6%).
The most
important factors motivating retail traders to choose a particular proprietary
trading firm are clear operating rules (79%), meaning transparent regulations
and simple requirements for participating in challenges. Very important factors
are also fast fund withdrawals (75%).
“Contrary
to the recent prop firm price war, traders really want clear rules rather than
low prices and high-profit shares,” explained Glyde. “Many firms have started
rejecting payouts due to technicalities, such as IP address inconsistencies,
KYC discrepancies, vague definitions of gambling, news trading, and consistency
targets.”
39% of
respondents look for attractive prices (cheap challenges and low spreads) in
prop firms and evidence of past payouts to other clients (37%). Less important
were factors such as high-profit share, ease of challenges, or the length of
the firm’s market presence.
What do
investors want to avoid? Most are discouraged by trailing drawdown (54%),
consistency rules (53%), or the prohibition of trading based on the latest news
and macroeconomic data (37%) in prop firm offerings.
For a large
number of respondents (ranging from 22% to 28%), negative factors also include
profit cap, transaction risk limitation, daily trading limits, and too low
maximum lot sizes. Less important are low leverage , slippage rules, or
martingale.
The poll also showed that prop traders easily adapt to changes. 57% stated that in case
of a platform change, they need less than a week to get used to it, and another
31% indicated that a maximum of a month is enough for them.
In the case
of current prop firm problems with MetaTrader from MetaQuotes, only one in 10
respondents indicated that they miss this platform and are waiting for its
return to the offer.
“This
survey highlights that most traders could adapt and switch platforms in less
than a week,” added Glyde. “While some traders remain passionate about
MetaTrader, its absence will not stop them from trading, and many are learning
that other better platforms were available all along.”
Over $4,000 Spent on
Challenges
From the
data seen by Finance Magnates, it also appears that the average trader
invests $4,270 in prop firm challenges, hoping for a high return on their
investment. However, nearly half of investors never realize any payout, and
almost 60% of all clients lose capital.
The number
of profitable prop traders reaches 41%, and among them, prop trading indeed
becomes a high-risk but high-reward game. PipFarm data shows that respondents
collectively invested $1.9 million in challenges, ultimately earning $7.6
million, which translates to a total return rate of 300%.
The poll was conducted on a group of about 500 active clients of PipFarm, a
trader-funded firm that offers proprietary trading on accounts ranging from
$5,000 to $200,000.
