What Are Futures Prop Firms

Futures prop firms provide cost-efficient, low risk, low barrier to entry way to access and trade futures contracts without the need to open a live account and trading your own capital. Proprietary trading firms fund traders who successfully complete a prop firm challenge or buy straight to funded accounts.

Once funded, traders trade futures contracts within risk parameters and rules set by the prop firms. This way, traders can earn money through trades executed within the sim funded account before moving to live accounts, while at the same time learning to manage risk, with limited cash exposure to the markets.

Benefits & Disadvantages of Futures Prop Firms

Futures are the most popular tradeable financial products. That's because futures contracts are available for a wide range of assets like equity indexes, bonds and metals. They also include various fiat currency pairs like the EURUSD, cryptocurrencies like the Bitcoin, but also various energy and agricultural products.

The original idea of trading futures contracts was to hedge the real-existing harvest of corn or the yield from cattle breeding. By using futures contracts, the hedger can secure a specific price at a specific date, independently of the price fluctuations in the market.

However, trading futures contracts also became exceptionally popular among retail traders. That's due to the nature of how futures contracts can be traded. Due to the exceptional low margin requirements, traders can trade with enormous leverage. Some futures contracts have a tick size of $12.5 and more. And one point in market movement can consist of 4 ticks. For example, in the S&P 500 futures (/ES), That means that one point in the S&P 500 equals a 4*$12.5=$50 change in the portfolio per E-Mini contract.

If you now do the math, you’ll quickly realize the potential. On average, the S&P currently moves about 60-80 points per day, which equals about $3,000 – $4,000 value per E-Mini futures contract.

Benefits

High grade of transparency because futures contracts are traded on one specific futures exchange
High leverage due to low-margin requirements
Costs are relatively low compared to the value a contract has
Long and short trading is possible without strong restrictions
Low up font cost = Minimal capital risk
Pro firms offer ability to compound & grow at scale fast using trade copiers

Disadvantages

High leverage also means higher potential risk
Exchange fees for real-time data subscriptions can be expensive
Prop firm have rules you must obey in order to get paid
Can not take swing positions over night. All futures prop firms require "day trades" only
Subject to high volatility news events

Why Futures Prop Firms are Worth It

Proprietary trading firms can help compensate for the disadvantages and add value to futures traders having a profitable trading strategy with:

The ability to trade larger balances with a funded account compared to a traditional futures broker account
Practice trading on real-time markets without paying for the data feed during evaluation and challenges
Profit split agreements where traders can withdraw up to 100% of the profits made

Finding the best prop firms that provide you with the best solution in terms of funded trading accounts is easy and straightforward when using our comparison tools.

Things to Consider When Choosing a Futures Trading Firm

For proprietary trading firm rankings, you'll need to consider the following aspects the most:

Profit payouts on time
High trust score based on ratings across leading platforms like Trustpilot
A wide range of tradeable futures contracts
A reputable prop trading platform is available
Clear rules for payout policy

Futures Prop Trading Firms vs. Forex Prop Trading Firms

Futures prop trading firms have a clear advantage over forex prop firms due to the nature of how a futures contract works compared to trading currency pairs with a forex broker.

Let’s say you open 10 accounts with 10 different forex brokers, and you trade only one currency pair – the EUR/USD. You place the exact same orders at the exact same time. What will you experience? You’ll experience different trade executions at different price points. But why is that? That’s because different forex brokers have their own liquidity prover deals, and there is not one exchange.

With futures trading, it’s entirely different. Let’s say you have 10 futures brokers, and you execute the same order across all accounts. You’ll have pretty similar results because each futures contract is only traded on one specific futures exchange.

The main problem here is that with kind of unregulated types of order executions and the fact that there is not only one true price for an asset in the forex market, you might see some strange unfavorable trade executions.

The solution?

To prevent you from having unfavorable experiences trading FX pairs, you can trade currency pairs with a futures prop trading firm. It’s as simple as this.

One more thing to keep in mind is that all bankrupt prop firms have one thing in common: they all were in the forex market segment.

Futures Prop Firms – My Conclusion

In the futures trading segments, prop traders can rely on multiple reputable prop trading firms. There are many benefits for futures traders trading with a prop firm compared to opening an account with a broker. This can be such simple things as less paperwork, but also important aspects like lower capital requirements and low costs. Also, the fact that a prop firm challenge is risk-free makes a prop firm a good choice. Prop firm offer the ability to learn at low cost, compound, scale & growth real profits through trade copiers & now offer clear path to live trading environments.