Navigating Futures Trading with Prop Firms: Your Definitive Handbook (2024)

FAQs

Can you trade futures with prop firms? ›

Futures trading can be quite expensive, and when our account is small, it's difficult to cover the costs and even make a profit on top of that. The solution that a lot of traders find is to apply to a futures funded account from a proprietary firm.

The article from Lux Trading Firm provides slightly different results. According to it, 4% of traders, on average, pass prop firm challenges. But only 1% of traders kept their funded accounts for a reasonable amount of time.

For example, FTMO clients can access CFD contracts on stock indices, crypto or futures with zero commission. However, the truth is that trading Futures is still much more difficult financially because of paying for the data feed and platforms.

FTMO have now restricted access to all new US-based traders as of January 2024. This appears to be related to regulatory issues and may have something to do with the recent My Forex Funds case.

According to FTMO statistics, only about 10% of traders are able to pass the funded account challenge at any account level. This means approximately 90% of aspiring funded traders fail the evaluation and are unable to gain access to the firm's capital.

Yes, prop firms do pay. While there are some scams out there popping up everyday, reputable prop trading firms like True Forex Funds, FTMO,5%ers,FundedNext are legitimate and pay traders according to their profit-sharing agreements. As for True Forex Funds, I can vouch for their credibility.

Limited Control Over Capital and Payouts:

- Traders in prop firms often have limited control over the firm's capital. They may need to deposit their own money as collateral or risk management. - Additionally, payouts are subject to the firm's rules, which may restrict a trader's access to profits.

Both Futures/Futures Options and Forex are regulated by the NFA, which has no rules on day trading. As such, Futures/Futures Options and Forex round trips don't count toward the PDT rules and funds covering margin on Futures/Futures Options and Forex positions don't count toward the $25,000 FINRA equity requirement.

Do you trade futures like stocks? ›

When trading futures vs. stocks, there are no rules requiring a minimum account balance or restricting how many trades can be placed in a week. As a futures trader, you can trade long or short multiple times a day or week without worrying about day trading restrictions.

The broker/provider charges you a transaction fee whenever you open a trade. In FTMO, commissions for currency pairs are $3/lot, for metals and equity CFDs they are based on percentage/volume. Equity CFDs have a commission of 0.0040% per lot, metal CFDs (XAG, XAU, XPT and XPD) have a commission of 0.0010% per lot.

What futures are most profitable? Trading in futures markets such as the Micro E-Mini Russell 2000 (M2K), Micro E-Mini S&P 500 (MES), Micro E-Mini Dow (MYM), and Micro E-Micro FX contracts can be highly profitable due to their distinct market characteristics.

This can be a risky form of trading, but it also has the potential to generate large profits. If you are starting with a small amount of capital, such as $10 to $100, it is still possible to make money on futures trading.

The top futures prop firms are TopStepTrader, Jane Street, FTMO, 3Red Partners and The Trading Pit. Jane Street and 3Red Partners are very secretive about their fees and profit splits but they do offer some of the best technology and high-frequency trading.

An individual or retail investor who wants to trade futures must typically open an account with a futures commission merchant and post the initial margin requirement, which, in turn, is held at the exchange's clearinghouse.

Proprietary trading firms, or prop firms, are specialized financial entities that engage in trading assets with their own capital across various financial markets. These can include stocks, currencies, commodities, crypto-assets, and other financial instruments.