If something looks too good to be true, then it probably is, right? But for people who are skilled when it comes to trading (but lack the capital to invest themselves) prop firms purport to essentially stump up the cash, let you take on the trading work and they take a cut of your profits.
So if this is an option you’re considering, how genuine is it and how do you find one you can trust?
Are Prop Firms Legit?
So the short answer is – sometimes!
The principles are legitimate and there are many successful prop firms with happy customers – including some well known trading names.
But there are (as in every walk of life) those to avoid as well.
Things to Look for in a Prop Firm
The first thing to do is speak to other traders you know and find out if they have recommendations.
If someone you know personally and trust has used one, that’s a great place to start.
Check Our Examples of People Who Made Profit
A decent Prop Firm will showcase its profit makers.
As a great example, WeMaster Trade uses interview videos and a running list of top payouts on its website to show you its winners consistently. That company is WeCopy Trade’s Prop Firm.
That’s a running list at the bottom there of customers using their packages and checking out payouts so you can see in real time people making profit.
Read the Reviews
Look for firms that have a LOT of reviews going back over time.
Don’t just look for “good reviews.”
Instead:
- Look at the the negative things people say too. Are they deal breakers for you
- Check out the reviewers themselves. Do they have other reviews? Do they review frequently? Do they look genuine
- How many reviews are there? If it’s just a handful then even a 5 star average rating is a little meaningless
- Does the company respond to reviews and engage with unhappy reviewers? This could give you a hint as to the type of customer service to expect
Read the Small Print
With Prop Firms, it’s typically the case that any money you put in up front is not guaranteed back to you. So if you spend $1000 buying a package, that will often mean you get significantly more capital to invest. But your original up front money is at risk later.
Know from the terms what you have to achieve to get your money back.
Make it Affordable
On that basis, don’t spend what you can’t afford to lose. If you’re happy to risk $100, start there. It lets you experience the company for yourself without risking too much of your own capital.
