Prop Firm vs Personal Account: Funded Trading 101
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  • Prop Firm vs Personal Account: Funded Trading 101

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    When it comes to trading, every decision matters. Whether you’re a professional trader or a beginner, you have two broad options: become a funded trader with the help of a prop firm, or go down the path of solo trading. Your choice will affect your journey in the financial market. It can even alter the opportunities presented to you and your ability to select what type of financial future you want.

    Both funded trading and sole trading have their pros and cons. Before you start your journey, you must decide whether you want to use a prop firm or a personal account. Here’s everything you need to know about the two options.

    stock market analysis prop firm
    Source: Shutterstock

    Prop Firm vs Personal Account: What’s the Difference?

    The terms “prop firm” and “personal account” are often used in the financial market. However, they’re vastly different ways of trading. Let’s look at what these terms mean and how these trading strategies differ.

    What Is a Prop Firm?

    A proprietary firm is an organization or entity that allots funds to a trader from its own capital. Traders who receive funding can employ their own market strategies to earn profit. Traders receive a substantial portion of profits made using the firm’s capital.

    Prop firms used to be brick-and-mortar establishments that hired skilled and highly experienced traders with years of experience. Unskilled and less experienced traders, on the other hand, were expected to put up a large sum of their own capital to receive training. Now, prop firms have a well-established digital presence and are much more inclusive to the average retail trader. The firms give training resources at affordable rates, and each trader goes through an evaluation process before they can receive funding.

    What Is Personal Account Trading?

    Personal account trading, or retail trading, is regular trading where traders buy or sell financial assets such as cryptocurrencies and currencies on the foreign exchange (forex) market. This type of trading is done by opening a personal trading account. For example, a person who opens an account on Robinhood Markets is defined as a retail trader.

    Both trading strategies have pros and cons. Let’s look at them in detail so you can decide which route would be better for you.

    Trading With a Prop Firm: Pros and Cons

    Prop firm accounts are also known as “funded accounts.” This simply means a trader’s account has been funded by the prop firm and they’re not using their own capital.

    Beginners are usually given a demo account to help them practice their strategies. A prop firm sets the profit targets and overall goals of the demo account. If a trader consistently meets the profit targets and achieves the goals while following the drawdown rules, they’re upgraded to a live, funded account and can start trading with the firm’s capital.


    Massive Profits

    When you have a big prop firm-funded account, it means the benefits can also be bigger. For example, if your strategy includes generating 15% profit, it would mean that with a $1,500 account, you’ll turn over only $150 profit.

    However, if your account is at $150,000, you can earn $22,500 profit. The bigger the account, the larger your profit potential is.

    Less Risk

    In a prop firm, you aren’t risking your money because the capital is being provided by the firm itself. The only financial risk is that you need to pay an initial fee for the evaluation process and could lose the fee if you don’t pass the evaluation.

    Let’s say you’ve put in a fee of about $1,000 for a $100,000 trading account. If your trade fails, you’re going to lose $1,000 instead of $100,000.

    Large Capital

    The main benefit of prop trading is that it allows traders to leverage large amounts of capital and prove their worth as professional traders. Traders can easily trade in big numbers, from $25,000 to $600,000 and more with scaling.

    Large funding also gives you a chance to make your name in the trading world.


    • Some prop firms have strict rules (in trading volume, account regulations, and more).
    • They may also have limitations in withdrawals of the profits.
    prop firm stock trading setup
    Source: Shutterstock

    Trading With a Personal Account: Pros and Cons

    Trading with a personal account means you’re all in. Here are the pros and cons of trading with a personal account.


    Low Capital to Start

    The biggest benefit of regular retail trading is that anyone can start trading, even with a small amount of initial capital. Brokerage fees are the only main expense, but that’s typically not a lot of money.

    Fewer Barriers

    You might encounter some barriers with a prop firm, such as a limited trading account. But with a personal account, you don’t have to wait for anything, nor do you have to follow someone else’s process. There are no rules and objectives set by a prop firm for a trader to follow, only their own.


    • Retail trading is high-risk because you’ll lose all your capital if the trade goes wrong.
    • You’ll need to constantly learn and stay on top of the market news, as no one is there to guide you.
    • There’s a lot of competition in the individual trading world. Building a small account will take longer to reach a significant amount of capital.
    Source: Unsplash

    Why Funded Trading (Prop Firm) Is For You

    Choosing the prop firm/funded trading route brings many benefits. First, you don’t need to have huge capital to start trading. You only need to put up an evaluation fee.

    Moreover, if you prove your skills and worth as a trader in the demo account, prop firms will start funding you. Many of them will even refund the evaluation fees. On the other hand, if you choose to trade with a personal account, you’ll be on your own and won’t receive any guidance or capital. Personal accounts are also highly risky, as you could end up losing all your initial capital.

    Prop Firm: The Safer and Better Option

    Funded trading is a better and safer option since it brings many benefits for new and experienced traders alike. You can also leverage a prop firm’s capital to develop your trading skills. Whether you’re looking to trade cryptocurrencies or forex, The Funded Trader can be the right platform for you.

    If you’re a beginner, you’ll be given detailed resources that break down complex topics and strategies and will turn you into a refined trader. For professional traders, The Funded Trader offers a funded live account.

    Contact The Funded Trader to start trading forex and cryptocurrencies today.

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    Funded Account Disclaimer

    Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, because the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Funded Account Disclaimer

    1The Funded Trader funded accounts are not live trading accounts, they are fully simulated accounts utilizing real market quotes from liquidity providers.

    The Traders featured are representative only and includes selected traders who allow their names to be publicly disclosed. Trader performance quoted represents past performance in a simulated environment and does not guarantee current or future performance. Further, financial instrument trading involves substantial risk of loss and is not suitable for every investor, trading activities referenced by or undertaken utilizing The Funded Trader may not be suitable for all persons.

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