90% of Respondents Believe Prop Trading is the Future for CFD Brokers

In the ever-evolving landscape of retail trading, Prop Trading is emerging as a significant force, set to redefine the industry. Despite its controversial nature, a recent survey by Finance Magnates reveals that 90% of respondents believe Prop Trading represents the future for CFD brokers. As the FX/CFD sector adapts, brokers must embrace this trend to stay competitive and relevant.

The Rise of Modern Prop Trading

Modern Prop Trading firms offer retail traders the opportunity to leverage significant company capital without risking their personal funds. Interestingly, much of this trading occurs with virtual funds, but the profits are entirely real. This model provides an attractive proposition for both novice and seasoned traders.

To participate in Prop Trading, traders typically pay a nominal fee to undergo an evaluation process called a “Challenge”, where they demonstrate their skills through simulated trading. Successful traders are then granted access to funded accounts and can retain a substantial share of their profits (often ranging between 70% and 90%.

“Prop Trading is an excellent opportunity for aspiring traders to see if trading suits them, or for seasoned traders, it offers the chance to trade with higher funding levels, advanced technologies, and extensive market data” said Crystal Lok, the Head of Emerging Markets at OANDA. This model also provides invaluable learning opportunities for traders at all levels, with the only cost being the entry fee for the challenge.

Brokers Enter the Prop Trading Arena

In response to this growing trend, several brokers traditionally known in the FX/CFD sector have started offering dedicated Prop Trading services. Notable entries include OANDA Labs Trader, Hantec Markets’ Hantec Trader, IC Markets’ IC Funded, and Axi Select by Axi, which was the first in this space. These services offer varying sizes of funded accounts and fee structures, catering to a wide range of traders.

Industry discussions highlight that an overwhelming majority see Prop Trading as the future of retail trading. “I believe this is evident” commented Maciej Wojciechowski, the Head of Business Development at OnEquity. “Brokers with a long-term, strategic approach to their business have identified a niche and promotional opportunity within the Prop sector.“

A Shift Driven by Demand and Industry Changes

According to Finance Magnates, 90% of survey respondents believe prop Trading services will shape the future for CFD brokers. By offering Prop Trading alongside traditional trading accounts, brokers can attract more clients and diversify their offerings.

“Over the past 18-24 months, this product has seen a significant increase in demand,” observed Bashaar Gokal, the Operations Manager at Hantec Trader. 

Recent disruptions in the industry have driven traders to seek reputable institutions they can trust. The suspension of licenses for non-broker prop firms by MetaQuotes led to numerous closures and service interruptions, leaving traders waiting months to access their funds. This upheaval has provided an opportunity for regulated brokers to offer safer, regulated Prop Trading conditions.