Proprietary trading, or prop trading, has gained immense popularity in the UK financial markets, offering traders opportunities to leverage firm capital to generate profits. Prop trading firms provide various account types tailored to different trading styles, risk appetites, and skill levels. In this article, we will explore the primary types of prop trading accounts available in the UK and their distinct features.
Best Prop Firms in UK
$650,000
*Choose your account type and start trading
$500,000
*Choose your account type and start trading
1. Evaluation Accounts
Key Features:
- Purpose: Designed to assess a trader’s skill and profitability over a set period or number of trades.
- Capital Allocation: Traders are given simulated or restricted live accounts to meet specific performance benchmarks.
- Profit Splits: Typically 50-80% of profits, depending on the firm and account type.
- Risk Limits: Includes predefined drawdown limits, daily loss caps, and position size restrictions.
Ideal For: Traders looking to prove their abilities before accessing significant firm capital. Evaluation accounts are popular among new entrants to the prop trading world.
Examples of UK Firms Offering Evaluation Accounts:
- FTMO (with global access)
- The 5%ers
2. Instant Funding Accounts
Key Features:
- Purpose: Provides immediate access to live capital without requiring a prior evaluation phase.
- Capital Allocation: Typically starts smaller than evaluation accounts but can grow with consistent performance.
- Profit Splits: Higher profit splits, often 70-90%.
- Risk Limits: Similar risk management protocols to evaluation accounts.
Ideal For: Experienced traders who want to bypass the evaluation process and start trading with real money immediately.
Examples of UK Firms Offering Instant Funding Accounts:
- City Traders Imperium
- TopStep (with some UK accessibility)
3. Scaled Accounts
Key Features:
- Purpose: Encourages traders to grow their account over time by meeting predefined performance metrics.
- Capital Allocation: Starts with a smaller amount but increases as traders hit growth milestones.
- Profit Splits: Often higher for traders who successfully scale their accounts, ranging from 80-90%.
- Risk Limits: Initial limits are strict but may relax as the account scales.
Ideal For: Traders with a long-term mindset who are confident in their ability to generate consistent profits over time.
Examples of UK Firms Offering Scaled Accounts:
- Fidelcrest
- MyForexFunds (UK-inclusive)
4. Hybrid Accounts
Key Features:
- Purpose: Combines evaluation and instant funding features, allowing traders to choose their preferred path.
- Capital Allocation: Varies depending on the path chosen (evaluation or instant funding).
- Profit Splits: Competitive splits based on account type, often exceeding 70%.
- Risk Limits: A blend of strict and flexible parameters, depending on the chosen track.
Ideal For: Traders who want flexibility and a personalised approach to their trading journey.
Examples of UK Firms Offering Hybrid Accounts:
- SurgeTrader
- BluFx
5. Profit-Sharing Accounts
Key Features:
- Purpose: Focuses solely on the trader’s ability to generate profits, with the firm retaining a percentage of earnings.
- Capital Allocation: Fully funded from the outset.
- Profit Splits: Typically range from 50-80%.
- Risk Limits: Stricter, as the firm’s own capital is at stake.
Ideal For: Traders confident in their strategies and performance who seek substantial backing without upfront costs.
Examples of UK Firms Offering Profit-Sharing Accounts:
- Lux Trading Firm
- The Trading Pit
How to Choose the Right Prop Trading Account
When selecting a prop trading account type, consider the following factors:
- Experience Level: Beginners may prefer evaluation accounts, while seasoned traders might opt for instant funding or profit-sharing models.
- Capital Requirements: Determine how much capital you need and assess the firm’s scaling potential.
- Risk Appetite: Evaluate the drawdown limits, daily loss caps, and other risk parameters.
- Profit Split: Choose a model that aligns with your financial goals.
- Firm Reputation: Research the firm’s reviews, funding processes, and trader support.
FAQs on Prop Trading Accounts in the UK
1. What is a prop trading account?
A prop trading account is a trading account funded by a proprietary trading firm. Traders use the firm’s capital to trade financial markets and share profits based on a predetermined split.
2. Do I need to pass an evaluation to start trading with a prop firm?
Not always. Some firms offer instant funding accounts that do not require an evaluation phase, while others require traders to prove their skills through an evaluation process.
3. How much capital can I access with a prop trading account?
Capital allocations vary by firm and account type. Evaluation accounts may start with virtual or limited live capital, while instant funding and profit-sharing accounts provide immediate access to real funds, often ranging from £10,000 to £500,000 or more.
4. What is the typical profit split in prop trading?
Profit splits generally range from 50% to 90%, depending on the firm and account type. Higher splits are usually offered to traders with proven performance or in scaled accounts.
5. Are there risks involved in prop trading accounts?
Yes, risks include adhering to strict risk management rules such as drawdown limits, daily loss caps, and position size restrictions. Failing to meet these criteria may result in losing the account.
6. Can beginners apply for prop trading accounts?
Yes, many firms offer evaluation accounts tailored to beginners. However, a strong understanding of trading and risk management is essential for success.
7. Are there any fees for opening a prop trading account?
Most firms charge a fee for evaluation accounts, which covers the cost of assessment and access to their platform. Instant funding accounts may also have upfront fees. Be sure to check the terms and conditions of each firm.
8. How long does it take to get funded?
The funding timeline depends on the account type. Evaluation accounts require you to meet specific benchmarks before receiving funding, which can take weeks or months. Instant funding accounts provide immediate access to capital.
9. Can I trade multiple asset classes with a prop trading account?
Most prop firms offer access to multiple asset classes, including forex, stocks, indices, and commodities. Check the firm’s platform for available instruments.
10. What happens if I violate the risk management rules?
Violating risk management rules can result in account suspension or termination. Always adhere to the firm’s guidelines to maintain your account status.
Conclusion
The UK offers a diverse range of prop trading account types to cater to traders of all levels. Whether you are just starting or an experienced professional, understanding the nuances of these accounts can help you make informed decisions and maximise your trading potential. Always conduct thorough research and select a firm that aligns with your trading style and objectives.