## Proprietary Trader for Beginners: The Art of Choosing a Company and Risk Management

### How does a Proprietary Trader work before becoming a Trader

If you want to enter the proprietary trading industry, you should understand that these companies operate differently from regular brokers. Instead of using their own capital, Prop companies use their own funds and allocate them to Traders to trade in exchange for a profit split.

The process is quite strict: you must pass an assessment called the "Challenge" by paying an upfront fee. The typical duration is 30-60 days. During this period, the company wants to ensure that you have consistent profit-making skills and can manage risk well.

### Proprietary Trading is a conditional investment

The important thing to know is that not everyone is suitable for this career. Prop companies look for Traders who are disciplined, emotionally controlled, and have a clear trading plan.

**Basic requirements for applicants:**
- Minimum age according to company rules
- Experience level (may be a beginner but must demonstrate ability)
- Readiness to train and learn
- Ability to pass an initial interview

The company will inquire about your trading strategies, target markets, and risk management experience.

### Forex Prop Trading: Two Different Models

**Traditional** (Physical Office):
- Traders work at the office as employees
- Receive a salary, bonuses, and benefits
- Have a stable career progression

**Online** (Online Platform):
- More flexible, can trade from anywhere
- Has an initial interview fee
- Increasing in number after the global pandemic
- Traders are responsible for their own risk but receive capital from the company

### Advantages of Being a Proprietary Trader

✅ **Access to Large Capital** - No need to invest your own large funds

✅ **Time Freedom** - Set your own trading schedule

✅ **High Profit Potential** - If you trade efficiently, returns can grow rapidly

✅ **Profit Sharing** - Common splits are 50/50 or 25-30%, depending on skills and company

✅ **Low Risk for Traders** - The company bears most of the risk; you only risk the interview fee

✅ **Community and Support** - Prop companies often have trader groups exchanging strategies and 24/7 support channels

### Disadvantages and Challenges

❌ **Requires Discipline and Strong Mindset** - Awareness, revenge trading, and impulsive trading cause many to fail

❌ **Trading Psychology** - Controlling emotions is difficult; fear and greed can destroy accounts

❌ **Unsteady Income** - No fixed monthly salary, no days off, or social security

❌ **Interview Fees** - If your income is limited, you may need multiple attempts to access higher capital

❌ **Consistency as a Key Indicator** - Companies look for consistent profitability, not just one-time success

### Application Process Steps

**1. Find a Company** Check reputation, platform, and profit-sharing terms

**2. Verify Qualifications** Ensure you meet age and experience requirements

**3. Apply Online** Submit an application with your experience details

**4. Interview** Discuss your strategies and background

**5. Start the Evaluation Period** Usually 30-60 days, trading with the company's funds

**6. Submit for Approval** If you pass, you will access official trading capital

### Key Difference: Hedge Fund vs Prop Trading

**Hedge Fund** - Pools money from external investors and uses various investment strategies to generate returns. Managers charge management fees and profit shares.

**Prop Trading** - The company uses its own funds and hires Traders to profit from price volatility. Profits are split with the Trader.

### Essential Strategies for Beginner Proprietary Traders

#### 1. Strict Risk Management
Risk only the money you are prepared to lose. Use appropriate Stop Loss. Risk/Reward ratio (Risk/Reward) should be 1:2 or higher.

#### 2. Control Emotions
Avoid rushing to recover losses (revenge trading). Set realistic income goals. If you have a bad day, stop and come back the next day.

#### 3. Stick to Proven Strategies
Don’t change strategies frequently. If what you do works, just refine and practice.

#### 4. Use Support and Resistance
Identify key levels and trade accordingly. Buy near support, sell near resistance. This technique is especially good for risk management, particularly for beginners.

#### 5. Use RSI (Relative Strength Index)
This indicator ranges from 0-100 and helps identify overbought (Overbought > 70) or oversold (Oversold < 30) conditions. Use it as a decision aid.

### Practice Before Real Money Trading

Beginners often rush into live trading too soon. Follow these steps:
- Practice on a Demo account before the Prop interview
- Backtest strategies with historical data (Backtest)
- Record every trade and learn from mistakes
- Develop a clearer trading plan

### Long-term Risk Management

**Continuously study the market** - Forex markets are constantly changing. Allocate time to read economic news and important reports.

**Develop a trading system** - Have risk management rules, entry and exit criteria, and stop trading guidelines.

**Stick to your plan even after losses** - Don’t change strategies after losing. Give it time and analyze what went wrong.

**Risk only what you can afford to lose** - The most fundamental and crucial principle.

### Summary for Aspiring Proprietary Traders

Proprietary trading is an option for those passionate about trading, disciplined, and emotionally controlled. Prop companies provide large capital and opportunities but come with challenges and risks.

**Key to success:** Choose a reputable company, study before applying, pass assessments with discipline and patience, then employ good strategies, manage risk, and stay committed to your trading plan.

If you are ready for the challenge and have a strong mindset, becoming a proprietary trader could transform your financial life. But remember, there are no shortcuts to success in the markets. Practice, learning, and perseverance are the keys.