Prop trading is more popular now than ever before, and the growth of prop trading firms speaks to that truth. While some firms like FTMO might be well-established in the industry, they can have harsh requirements and might not suit all traders. There is a range of alternatives to FTMO that traders can choose, but how can they differentiate between these alternatives?
Proprietary trading, otherwise known as prop trading, has provided many newer traders with great opportunities to display their understanding of the financial markets and to make themselves and the prop trading firms they work with a good deal of money. The industry is well-established enough that some of the bigger firms, such as FTMO, have storied histories and are well-known for their methods and success stories. However, these large and well-established firms are in a position to set somewhat draconian terms for their evaluation periods, and might not be the best fit for every trader.
Traders who want an alternative to FTMO and other long-established firms are in luck. As the prop trading market has grown in popularity, it has also seen a number of alternative firms start, each with its own take on the various systems and components that they provide. Platforms, including Get Leveraged, are increasingly discussed as good alternatives for traders seeking different evaluation models or payout structures. But how do traders choose which FTMO alternative might be best for them?
Let's take a closer look at some of the differentiating factors that traders often look at when trying to decide which alternative prop trading firm might be the right one for them.
Who Evaluates the Evaluation Process?
Because it is the first thing that any prop trading firm will ask a trader to do, it makes sense that the evaluation process is one of the crucial first steps for many traders to consider when deciding whether or not a firm is worth their time. Typically, an evaluation process will have a couple of phases that traders must pass in order to demonstrate that they have a good understanding of the financial market and can follow the prop firm's trading rubric.
Important things to think about when evaluating the evaluation process are:
- How much do I lose if I don't pass it?
- What the profit target is.
- What the daily drawdown and overall drawdown limits are.
- Any time limit they have.
Every prop firm has a slightly different expectation for traders, and not all traders will be able or willing to meet those expectations.
Do I Have to Pay for the Evaluation Process Before or After Passing?
One of the other important factors that traders should think about when choosing between alternative prop trading firms is the evaluation fee and what happens if they do not pass the evaluation. With most companies, the evaluation fee is simply forfeited, and you lose the whole of it, yet some innovative platforms like Get Leveraged came up with a unique model that lets you take the evaluation for a few bucks and complete the fee only if you successfully pass the evaluation, reducing the upfront risk to virtually none.
What Restrictions and Trading Rules Does the Firm Have?
This is often one of the biggest make-or-break factors for traders. Not all traders have the same styles and strategies that work for them, and some prop firms have rules that make following certain strategies much more complex or even impossible. Some common restrictions that firms have are on things like:
- Weekend holding.
- Overnight positions.
- Trading on news.
- Copy trading.
- High-frequency trading.
If a trader's style or strategy is precluded by the rules that a firm operates under, it's best for them not to waste each other's time.
What Size Accounts Are Available?
Some traders make the choice about which firm to go with based on the size of the account that they will get to play with. This makes sense, as your profits scale based on the percentage you get back, so in theory, a bigger account to use can lead to more profit.
This is another time where it is important for traders not to get tunnel vision about 'bigger number=better' because that isn't really how it works. But, nevertheless, traders who want to make ambitious plays can be well served by looking at how big the accounts they will have access to are.
What Sorts of Assets and Markets Does the Prop Firm Allow
Another very crucial factor when considering an FTMO alternative is the range of assets that they offer. Modern prop trading platforms, including Get Leveraged, often support a large range of different asset classes, including many cryptocurrencies, but not every prop firm will do so.
It is crucial for traders to thoroughly assess if the asset types that they are most proficient with are in use by a firm before starting their evaluation process.
How to Determine the Best Fit?
There is no clear-cut way to determine which FTMO alternative firm is the best one, because every trader has a different range of features that are most important for them. Some traders will flourish in modern platforms like Get Leveraged that offer access to a wide range of assets and low upfront risk, while others might be uninterested in gaining exposure to cryptocurrency trading and don't mind risking the high evaluation fees upfront.
The important thing for traders is to be honest with themselves about their skill set and objectives, and to review the prop trading firms from a place devoid of ego.
