Although FX
brokers have only recently emerged in the prop trading space, two out of three
retail investors consider them more trustworthy than standard prop firms. The recent study also indicates that the profile of proprietary investors remains
relatively stable, with a majority continuing to prefer CFDs over futures.
Survey Shows Traders
Prefer Broker-Backed Prop Firms
According
to a survey conducted by PipFarm, regulated brokers entering the
proprietary trading market are changing the established rules of the game.
Currently, almost 60% of prop firm users believe that those operated by FX/CFD
companies can be trusted more. Only 14% disagreed with this statement, while
over 26% had no opinion.
“Just
because retail prop firms are not regulated does not make the business model
simple,” commented James Glyde, the CEO of PipFarm. “Most (if not all) recent
prop firm failures can be traced back to a lack of internal controls. Prop
firms backed by brokers or experienced management teams should have the skills,
infrastructure, resources and controls to manage the business properly, which
is why traders perceive such firms.”
This is
certainly a positive signal for brokers entering the space, whose numbers are
growing each month. One of the newest additions is ATFX, which announced its
expansion into prop trading in late October.
Axi
pioneered this market among FX/CFD brokers by being one of the first to launch
its own prop brand, Axi Select. Other firms soon followed, including OANDA with
Labs Prop Trader, Hantec Markets introducing Hantec Trader, and IC Markets
launching IC Funded.
Beyond
greater trust in broker-backed prop firms, respondents also indicated that
companies with in-house tech rather than external solutions are much more
reliable. 61% of traders agreed with this opinion, 31% had no opinion, and only
8% disagreed.
The decision
to choose regulated, broker-backed proprietary trading firms is becoming
increasingly prudent as global regulators intensify their scrutiny of the
industry. In July, Italy’s Consob likened proprietary trading to “video
games” rather than legitimate trading activities. Marco Martire,
Fintokei’s Italy Manager, noted that regulatory attention on the prop firm
sector is currently very high.
“The price
war and easy challenge period is coming to an end, and traders appreciate a
more transparent and institutional approach,” added Glyde
Similarly,
India’s Securities and Exchange Board (SEBI) recently referred to prop trading
as “fantasy games.” The European Securities and Markets Authority
(ESMA ) has also initiated discussions on regulating prop trading, and the Czech
market watchdog confirmed that the activities of prop trading firms may be
subject to MiFID regulations.
In a recent interview with Finance Magnates at the iFX EXPO International 2024, the CEO of PipFarm, revealed that “the risk is incredibly hard to manage in the prop trading industry.” The full conversation is available in the video below:
Stable Profile of Prop
Traders
The survey,
which PipFarm exclusively shared with Finance Magnates, is the latest in
a series of studies shedding light on the prop trading industry, allowing for
analysis and comparison of how it changes over time.
Most prop
trading investors are relatively new to the market, with 34% trading for 1–2
years and 31% for 3–4 years. In total, 65% of investors entered the market
since the 2020 pandemic.
The average
number of challenges attempted by individual traders has remained consistent
over the months. According to PipFarm’s latest poll, 42% attempt 1–4
challenges, while FPFX Tech’s September data shows traders attempt 3 challenges
on average.
Profitability
figures are also similar, with PipFarm’s August survey showing 41% of traders
being profitable. FPFX Tech reported 45% for traders who passed evaluation,
though among all traders taking the test, only 7% ever achieved a payout.
According to data from PipFarm, the average trader invests approximately $4,270 in proprietary firm challenges, aiming for substantial returns. However, FPPFX Tech reports a lower average expenditure, indicating that a single account typically spends around $800 on challenge purchases over its entire activity cycle.
Futures Trading Still
Outside Main Interest
Broker-backed
prop firms are emerging mainly due to regulatory concerns that have intensified
this year. Companies not operated directly or indirectly by FX/CFD firms are
increasingly expanding their offerings to include futures markets.
MyFundedFutures
by MyFundedFX has been operating for some time. In July, The Funded Trader took
a similar step by introducing The Futures Trader brand. However, PipFarm’s
survey data shows that most prop traders still prefer CFDs.
When asked
“Have you tried futures trading prop firms?” only 34% responded
positively, while the vast majority (nearly 66%) said no. Interestingly, this
didn’t prevent respondents from answering “I like both” (50%) when
asked whether they prefer CFD or futures props.
PipFarm, a trader-funded firm that offers proprietary trading on accounts ranging from $5,000 to $200,000, conducted the poll on a group of about 3,500 active prop traders.
Although FX
brokers have only recently emerged in the prop trading space, two out of three
retail investors consider them more trustworthy than standard prop firms. The recent study also indicates that the profile of proprietary investors remains
relatively stable, with a majority continuing to prefer CFDs over futures.
Survey Shows Traders
Prefer Broker-Backed Prop Firms
According
to a survey conducted by PipFarm, regulated brokers entering the
proprietary trading market are changing the established rules of the game.
Currently, almost 60% of prop firm users believe that those operated by FX/CFD
companies can be trusted more. Only 14% disagreed with this statement, while
over 26% had no opinion.
“Just
because retail prop firms are not regulated does not make the business model
simple,” commented James Glyde, the CEO of PipFarm. “Most (if not all) recent
prop firm failures can be traced back to a lack of internal controls. Prop
firms backed by brokers or experienced management teams should have the skills,
infrastructure, resources and controls to manage the business properly, which
is why traders perceive such firms.”
This is
certainly a positive signal for brokers entering the space, whose numbers are
growing each month. One of the newest additions is ATFX, which announced its
expansion into prop trading in late October.
Axi
pioneered this market among FX/CFD brokers by being one of the first to launch
its own prop brand, Axi Select. Other firms soon followed, including OANDA with
Labs Prop Trader, Hantec Markets introducing Hantec Trader, and IC Markets
launching IC Funded.
Beyond
greater trust in broker-backed prop firms, respondents also indicated that
companies with in-house tech rather than external solutions are much more
reliable. 61% of traders agreed with this opinion, 31% had no opinion, and only
8% disagreed.
The decision
to choose regulated, broker-backed proprietary trading firms is becoming
increasingly prudent as global regulators intensify their scrutiny of the
industry. In July, Italy’s Consob likened proprietary trading to “video
games” rather than legitimate trading activities. Marco Martire,
Fintokei’s Italy Manager, noted that regulatory attention on the prop firm
sector is currently very high.
“The price
war and easy challenge period is coming to an end, and traders appreciate a
more transparent and institutional approach,” added Glyde
Similarly,
India’s Securities and Exchange Board (SEBI) recently referred to prop trading
as “fantasy games.” The European Securities and Markets Authority
(ESMA ) has also initiated discussions on regulating prop trading, and the Czech
market watchdog confirmed that the activities of prop trading firms may be
subject to MiFID regulations.
In a recent interview with Finance Magnates at the iFX EXPO International 2024, the CEO of PipFarm, revealed that “the risk is incredibly hard to manage in the prop trading industry.” The full conversation is available in the video below:
Stable Profile of Prop
Traders
The survey,
which PipFarm exclusively shared with Finance Magnates, is the latest in
a series of studies shedding light on the prop trading industry, allowing for
analysis and comparison of how it changes over time.
Most prop
trading investors are relatively new to the market, with 34% trading for 1–2
years and 31% for 3–4 years. In total, 65% of investors entered the market
since the 2020 pandemic.
The average
number of challenges attempted by individual traders has remained consistent
over the months. According to PipFarm’s latest poll, 42% attempt 1–4
challenges, while FPFX Tech’s September data shows traders attempt 3 challenges
on average.
Profitability
figures are also similar, with PipFarm’s August survey showing 41% of traders
being profitable. FPFX Tech reported 45% for traders who passed evaluation,
though among all traders taking the test, only 7% ever achieved a payout.
According to data from PipFarm, the average trader invests approximately $4,270 in proprietary firm challenges, aiming for substantial returns. However, FPPFX Tech reports a lower average expenditure, indicating that a single account typically spends around $800 on challenge purchases over its entire activity cycle.
Futures Trading Still
Outside Main Interest
Broker-backed
prop firms are emerging mainly due to regulatory concerns that have intensified
this year. Companies not operated directly or indirectly by FX/CFD firms are
increasingly expanding their offerings to include futures markets.
MyFundedFutures
by MyFundedFX has been operating for some time. In July, The Funded Trader took
a similar step by introducing The Futures Trader brand. However, PipFarm’s
survey data shows that most prop traders still prefer CFDs.
When asked
“Have you tried futures trading prop firms?” only 34% responded
positively, while the vast majority (nearly 66%) said no. Interestingly, this
didn’t prevent respondents from answering “I like both” (50%) when
asked whether they prefer CFD or futures props.
PipFarm, a trader-funded firm that offers proprietary trading on accounts ranging from $5,000 to $200,000, conducted the poll on a group of about 3,500 active prop traders.
This post is originally published on FINANCEMAGNATES.
