The industry of prop trading has undergone a big transformation. Traditional firms, along with their restrictive rules, intense evaluations, and vague payout models, are getting challenged by the more transparent and nimble alternative: the instant prop trading firms.
Understandably, some traders are still doubting the legitimacy of instant funding; however, for those who know, they are aware that the instant prop trading firms are leading a new era that empowers traders. Read on to learn more about the difference between traditional and instant prop firms.
Characteristics of Traditional Prop Firms
If three words were used to define the traditional prop firms, it would be restrictive, time-consuming, and rigid. Yes, you read this right! Most of the traditional prop firms have incredibly restrictive evaluation requirements where they require their traders to complete various evaluation phases, including the following: time limits of trading (30 or 60 days), restrictive drawdown limits (daily 5% or 10%), restrictive profit targets (8% or 10%), and trading style restrictions.
You get the point: the traditional prop trading firms are restrictive enough to filter out impulsive traders. However, the potential downside of these restrictions is that they also eliminate many of their skilled traders along the way due to their limitations in trading strategy and time constraints, which is in direct contrast to how an instant prop firm works.
Profit Sharing Limitations of Traditional Prop Firms
Another aspect to be aware of regarding traditional prop firms is that they also establish profit-sharing limitations. Now, it is important to mention here that the profit splits from traditional firms tend to vary and range from 50% to 80%. Nonetheless, the payout cycles can take up to months. Moreover, the communication is not ideal, which can lead many traders to become frustrated. The hidden fees of traditional prop firms can also affect the profits of the traders.
Characteristics of Instant Prop Trading Firms
Now, let’s explore the characteristics of instant prop trading firms, which are modern compared to the traditional ones. Three words that perfectly define the instant funding prop firms, it would come down to the following: transparency, sustainability, and structure.
With that said, one of the primary reasons why instant prop trading firms have grown immensely in popularity is due to the fact that payments are transparent, and traders can instantly access their profits. The dream of instant access to capital has become a reality with instant prop trading firms, to the point that traders can secure their live trading accounts within a few hours of starting trading.
Transparent Pricing and Minimal Restrictions
With an instant funding trading account, you only need a one-time fee, the amount of which depends on your capital level. Nonetheless, to give you a general idea, if you want to open a conservative instant funding account worth $5000, you have to pay $250 to unlock it. The best part is that you won’t have to deal with hidden charges or pay for any recurring subscriptions.
With an instant funding prop account, you get to polish your trading skills with flexible trading styles, including scalping. Also, you can expect realistic rules and flexible drawdown limits, which is actually quite liberating. So, if you want to trade the way you want and get access to profits instantly, then instant fund trading is definitely for you.
Conclusion
Traditional prop firms may be the best option for new traders but for those that are experienced the drawbacks may outweigh the advantages. For seasoned traders, an instant funding option is ideal. You gain access to an account instantly and can start trading right away versus having to pass a challenging evaluation with a traditional account.