How Prop Firms Make Money | Maven Trading (2024)

Prop firms can help talented traders access new markets and develop their trading skills. That said, we know the prop firm business model itself can be confusing. How do prop firms work, and where do they get income from?

If you have questions like these, here’s a look at how proprietary trading firms work and how they make money.

What is a Prop Firm?

If you’re new to the whole concept of prop firm trading, let’s define what a prop firm is.

Prop firms, or proprietary trading firms, give traders access to simulated capital. In return, the traders agree to give the firm a percentage of their profits.

Traders normally have access to various markets, including crypto, Forex, and even the news. This means that prop firms attract a wide variety of talented day traders to partner with them.

How Do Proprietary Trading Firms Work?

So if that’s what a prop firm is – how do they actually work?

• The trader plans to open an account. They must first pass a few “challenges” to see if they have the skills to trade.
• If they pass the firm’s challenges, they can get verified and start trading.
• The trader can choose between various plans e.g. a basic account or a pro account. The pros account has quicker withdrawals and higher drawdowns.
• The prop firm provides the trader with an agreed amount of simulated capital.

For traders, prop firms provide access to simulated capital they couldn’t otherwise access. This means traders don’t need large amounts of savings behind them to develop their skills or become better traders.

Where Do Prop Firms Get Their Money?

We’ve covered what prop firms are and how they operate. Now let’s consider the key question – how do prop trading firms make money? While every prop firm is a little different, here’s how they generate income.

Profitable Traders

It’ll come as no surprise that profitable traders help prop firms make money. Remember, prop firms provide access to a funded account and simulated capital. What they get in return is an agreed-upon portion of the trader’s profits.

This is a reason why prop firms are selective about which traders they offer funded accounts to.

Monitoring of Revenue Streams

At Maven Trading, we allow traders to make frequent withdrawals. This means we always need funds in place available to pay our successful traders.

How do we ensure this? Copy trading!

We closely monitor our best day traders and their successful moves. We assess the risks and we might “copy” those trades to generate income. That way, there’s always money in place to fund withdrawals – and we’re making money, too.

Risk Management

Thanks to our business model at Maven Trading, we have the revenue structure in place to pay our clients. What underpins this business model? Risk management.

Our experienced risk department weighs up the pros and cons before we:

• Launch different types of trading accounts.
• Accept new traders (who can, hopefully, turn a profit).
• Determine what constitutes a “good” trade worth copying.

Evaluating risk doesn’t just help prop firms make money. It helps them retain and grow that money, too.

Why Choose Maven Trading?

As mentioned, every prop firm is different. So, why choose Maven Trading? Well, there are many reasons why talented traders should consider us, but here’s a look at our stand-out features.

Account Resets

Sometimes, you need to press pause and reset your prop firm account. Maven Trading makes it possible to dial it in and start again under certain conditions.

For example, say you accidentally go over your daily drawdown. You can buy back an account by starting a support request and asking to use our Buyback feature. We’re not here to punish traders if you make a mistake – we want to help you grow! And if you need any more help or advice, our support team can go over our trading account rules with you.

That’s one thing you can count on if you choose Maven Trading – customer service. We care about being client-friendly, so don’t hesitate to log a support request if you need us.

Instant Funding

We know you want to start trading sooner rather than later. This is understandable – after all, you’re a day trader. You thrive on the exhilaration of making quick trades. And that’s why we offer instant funding options to all applicants.

Yes, seriously. We offer instant simulated funding if you want to just open an account and start trading. All you need to do is pay a small fee to gain market access and start trading. If you opt for this route, there’s no challenge completion required!

Low Spreads

The “spread” is the difference between the buy price (the offer) and the ask price (the sell). A low spread means there’s not much difference between the buy and ask price. Why is this a good thing?

Well, think of it this way. Low spreads mean you’re paying close to what the asset is actually worth. This helps to keep trading costs down and promotes fair market conditions.

Another benefit? Since low spreads are closer to true market value, they make it easier to accurately assess your next move. There’s more certainty. It’s simpler to calculate what profits (or losses) to expect.

For day traders moving fast, certainty is a huge benefit.

Prop traders at Maven Trading can enjoy low spreads through our broker.

Risk Management

Trading always involves some degree of risk. Good traders take steps to reduce that risk while still looking for opportunities.

At Maven Trading, we’re constantly evaluating our exposure to risk. We may adjust and tailor our business model to promote better risk management in the long run. This is, of course, for the benefit of all our proprietary traders.

Why? Because it makes us safe to trade with. We do everything we can to promote profit without unnecessary exposure to risk. We’re all about trading responsibly here.

Choose Your Account: Maven Trading

The prop firm business model can be confusing. But once you understand how it works, you can see that it’s an appealing way for any talented trader to develop their skills.

At Maven Trading, we see our traders as partners. We’re all part of the same team, with the same goal – success. We give you the tools and the resources, and you make the trades. Together, we can grow.

If you’re ready to trade, choose from our challenge accounts. If you complete our challenges, then congratulations. You can join the team and start trading! Contact us if you need more information or make your choice today!