Welcome to another episode breakdown of “We Are Funded Trading Plus,” where Simon Massey, CEO, and Jamie Millar, discuss critical concepts around trading with a prop firm. This episode highlights best practices, essential tools, and sustainable approaches to funded trading—perfect for anyone exploring the journey of prop trading. Whether you’re a seasoned trader or new to the field, these insights will help you navigate the world of proprietary trading.
Risk Management in Prop Trading
One of the critical elements Simon and Jamie emphasise is the importance of risk management. The duo strongly agrees that risking more than 2% of capital on any single trade is a path fraught with danger. The rationale is simple: excessive risk-taking, especially with leveraged products, can lead to substantial losses.
Key Insight: “If your goal is to trade for a decade rather than a week, incremental growth is the way to go.” — Jamie Millar
Maintaining disciplined risk parameters is crucial, as reckless risk often leads to short-lived trading careers. This approach aligns well with many prop firms’ philosophy that funded trading should be about long-term growth, not short-term gains.
Platform Choice: Proprietary or Third-Party?
A thought-provoking debate in the episode centers around whether prop firms should build proprietary trading platforms or leverage existing third-party software. Simon and Jamie both agree that familiar, third-party platforms are often preferable for traders, as familiarity reduces the learning curve and enables traders to focus on their strategies rather than adapting to new software.
Key Insight: “Prop firms should focus on their core strengths—creating robust evaluation processes and tools rather than trying to develop software from scratch.”
For those aiming to find the best prop trading firm, it’s worth considering firms that prioritise a seamless trading experience over creating proprietary platforms that may lack the refinement of established platforms.
Should Only Experienced Traders Get Funded?
One question the hosts tackled was whether only traders with proven experience should qualify for funded trading. Here, Simon and Jamie presented a unique perspective: while traditional financial institutions may require years of experience, many prop firms, like Funded Trading Plus, welcome traders who may not have extensive backgrounds but can demonstrate skill and discipline through evaluation programs.
Key Insight: “Talent isn’t necessarily tied to years of experience. Our programs are built to democratise trading, allowing anyone to prove their ability within our rules and risk parameters.” — Simon Massey
This approach opens doors for new traders to enter the market, proving their capability through rigorous prop trading programs. It also emphasises that how to prop trade isn’t solely dependent on experience but also on discipline and understanding firm-specific trading rules.
The Role of Automation in Prop Trading
While automated trading systems and AI are rapidly advancing, Jamie and Simon caution against viewing them as replacements for human traders. Although automation can support certain aspects of trading, the belief that an off-the-shelf solution will generate substantial profits is, as Simon explains, unrealistic. Instead, they foresee a future where technology assists traders rather than replaces them.
Key Insight: “While AI may influence trading, humans are still integral to effectively managing and capitalising on market dynamics.”
Understanding the limitations and realistic expectations of automated trading is crucial for aspiring prop traders. The human element remains indispensable, particularly when identifying and adapting to changing market conditions.
Transparency in Performance Metrics
Simon and Jamie also tackled the hot-button topic of transparency in trading performance metrics. While they see some benefit in firms sharing metrics to help traders make informed choices, they caution against mandating such disclosures unless the data can be independently verified. Without verification, there’s a risk of misleading statistics, making it essential for traders to choose reputable firms with a track record of honesty.
Key Insight: “If transparency is enforced, it must be accompanied by verified, accurate information. Otherwise, traders may be misled by fabricated or misinterpreted data.”
When searching for the best prop trading firm, this episode reinforces the importance of choosing firms that provide honest, transparent information about trading performance and risk parameters.
Balancing Risk Management with Strategy
Finally, Simon and Jamie address the balance between risk management and trading strategy. While both agree that risk management is paramount, they acknowledge that a solid strategy is also essential to succeed in funded trading. A balance of sound risk practices and a well-defined strategy enables traders to remain competitive and consistent.
Key Insight: “Even the best strategy will fail without effective risk management, yet risk management alone isn’t enough to drive consistent growth.”
For anyone learning how to prop trade, this principle of balancing risk and strategy is invaluable. A comprehensive approach that combines both elements is the key to sustainable success.
Conclusion: Key Takeaways for Aspiring Prop Traders
This episode of “We Are Funded Trading Plus” sheds light on critical prop trading principles, from effective risk management to the future of automated trading. Aspiring traders should take note of the following takeaways:
Risk Wisely: Avoid putting more than 2% of capital on a single trade.
Choose Familiar Platforms: Look for firms that use popular third-party platforms.
Embrace a Learning Mindset: Experience isn’t a barrier; commitment and skill matter more.
Beware of Automation Myths: Automation is an aid, not a solution.
Seek Transparency: Opt for firms with a track record of honest metrics.
With these insights, traders can better evaluate and navigate their journey within a prop trading firm, leveraging both strategy and risk management to build a sustainable trading career. As Simon and Jamie conclude, the journey to becoming a successful funded trader is a marathon, not a sprint—one that requires discipline, dedication, and the right partnership with a prop trading firm.