Online Prop Firms vs. Traditional Prop Firms vs. Retail Trading

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Awesome, you’ve decided that you want to give forex trading a shot, but what to do next? Before you start trading you’ll have to decide whether you want to use an online prop firm, get hired at a traditional firm, or use a brokerage firm. We’ve broken down the pros and cons of each and the differences between online prop firms retail trading and traditional prop firms (however, we are partial to online prop firms 😉).  


Online prop firms

Online prop firms have changed the trading game since they first emerged in 2016. After the Covid-19 pandemic, their popularity rose even more. 

Now traders can trade from the comfort of their own homes, can use trading as a part-time job/second stream of income, and gain access to a much larger amount of capital than they would have on their own. 


  • Access to capital

One of the main benefits of using a (online) prop firm is the capital that traders are provided with. This means that traders can make a lot more money than they can on their own, since profit comes at a percentage of the transaction.

  • Flexibility

Online prop firms allow traders to make trades from the comfort of their own homes and based around their own schedules. During challenges, traders will have a set time to reach the profit goal, and they may also have minimum required trading days. However, they shouldn’t be too limiting. Once traders are funded, they can come and go as they please.

  • Can use it as a second stream of income

Given the flexible nature of using an online prop firm, traders can use trading as a second source of income and plan their trading hours around their full-time job. Making online prop firms a great option for anyone not interested in giving up their profession to trade full-time. 

  • Growth schemes

Almost all prop firms will have some sort of scaling plan where traders are allocated more capital in their accounts when they hit certain targets. These plans will also give traders a higher percentage of the profit the better they do, and some even award bonuses.

  • Access to resources

Online prop firms tend to provide traders with high-quality education, mentorship, and other resources. The reason behind this is that since traders are using the firm’s capital, it is in the firm’s best interest to put measures in place to provide traders with superior trading education. Most prop firms will have community communication platforms, such as Discord

  • No experience needed

Traders are not vetted before signing up for an online prop firm. Traders of any experience or skill level are welcome to attempt challenges required for acceptance as funded traders. 

  • Low risk

Since traders use the firm’s capital instead of their own, there is less risk to the trader’s own pocket. In addition, in order to prevent a large loss, firms put boundaries in place that limit the damage a trader can make. 

For more benefits of using a prop firm, check out our article, Benefits of Using a Prop Firm.



  • Need to share profits

A drawback of using a (online) prop firm is that profit must be split with the firm. The ratio of the split is based on the success of the trader. That being said, more successful traders can scale up their profit to 80%, 90%, or even 100% with some firms.   

  • Need to pass a challenge to get accepted

Whilst online prop firms are open to traders of all skill levels, a challenge must be passed in order to become a fully funded trader with a firm. These challenges generally require participants to reach profit targets within a set amount of time. Additional rules are often set to prevent participants from losing the firm too much money. 

differences between online prop firms traditional prop firms and retail trading pros and cons

Traditional prop firms

With traditional prop firms, traders a hired as full-time employees and receive salaries, in addition to bonuses for successful trades. Like online prop firms, traditional prop firms give traders more capital than they would generally have access to.    


  • Access to capital

Similar to online prop firms, traders are given capital by the firm to trade with. Again meaning that traders can make more money as profits are larger.

  • Full-time job

For those looking to make a full-time career out of trading, gaining employment at a traditional prop firm is a great option.  

  • Bonuses

Like at most 9-5 jobs, high performance is met with bonuses. In this case, a series of successful trades often means that traders are rewarded with bonuses. 

  • Stable salary

For many, trading can be an unstable way to make money. Traders often don’t know how much they will take home at the end of the day, month, or year. One month they may make more, the next month less, and this can be quite unsettling. However, traders who traditional prop firms hire will receive a base income, giving them more financial stability.    

  • Low risk

As with online prop firms, the capital that is being traded is not coming out of the trader’s pocket, and therefore they can afford to take more risks. However, a series of losses and continuous underperformance does mean that a trader could be fired.    


  • Need to share profits

Just like with online prop firms, profits from trades must be split between the trader and the firm. Although with traditional prop firms, the split favors the firm a lot more. 

  • Need to come with experience/track record

Out of the three systems mentioned here, traditional prop firms require the most experience. Traders are evaluated as potential employees which means they are asked to exhibit their trading portfolio.   

  • Expected to use a specific strategy

When trading with a traditional prop firm, traders might be expected to use specific strategies that the firm approves of.  


Retail Trading

Different than the previous two structures, retail trading has traders use their own capital. 


  • No rules to follow, margins to hit, etc.

Unlike using a prop firm, when trading independently there are obviously no rules, as you are using your own capital. 

  • No experience needed 

Before traders begin, brokers will often give them funds to practice with in a demo account. This allows them to get a feel for the market without risking real capital. This can be especially useful for a beginner. 

  • Bonuses

Sometimes brokers will reward clients with bonuses or free credit that can be used towards trading. 


  • High risk

Since traders use their own money, they are at risk of losing large amounts without anything to protect them. The “lawless” nature of the arrangement means that traders are often impulsed to make risky moves and behave recklessly. 

  • High costs

Hiring a broker can be expensive. More often than not you will have to pay a fee with each transaction that you make. In order to make trading worthwhile traders are suggested to come in with at least $20,000. 

  • Limited opportunities 

When trading with a small amount of capital, profits are going to be relatively small in size. For example, if you start with $1000, and you make a 5% monthly return, you’d make less than $2000 in a year. 

  • No access to community and extra resources

Trading solo means that you do not gain access to the community of traders that prop firms build or the resources they provide. This means that traders can miss out on valuable information that will improve their trading skills. 



The type of trading structure you choose is going to depend on multiple factors. How much capital you’re willing to put up initially, whether you want to make trading a full-time profession, and your lifestyle and trading style.

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