With more prop firms than ever before, the idea of trading with multiple prop firms might seem appealing. Different prop firms have different offerings, reputations, pros and cons that you need to be considering and leveraging to your advantage as a trader. This leads to traders asking whether or not it’s possible to actively trade with multiple prop firms at once.
It is entirely possible to trade with multiple prop firms at once and this is a great way to reduce your risk exposure with prop firms.
In this article we’ll look at the art of trading with multiple firms, why it’s a good idea, the drawbacks and how to effectively set this up. So, let’s get into it…
Trading With Multiple Prop Firms
Trading with multiple prop firms is becoming more and more popular as prop firms are constantly bringing out more features, better offers and discounts to attract new traders.
It’s incredibly beneficial to trade with multiple prop firms if you have the means to do so. It can however be a logistical headache to do, so you need to ensure you have the right infrastructure in place to facilitate this.
There are no rules against trading with multiple prop firms and any prop firm that actually cares about their traders should be encouraging this behavior as it can reduce the risk exposure for a trader.
Of course, trading with multiple prop firms is only beneficial if you ensure that you’re trading with reputable prop firms that aren’t going to scam you. If you fail to conduct proper due diligence on the prop firms in question, there is little point trying to diversify your prop firm portfolio.
The Benefits of Trading With Multiple Prop Firms
So, let’s look at the benefits of trading with multiple prop firms, rather than just one!
1. Increased Profits
The first benefit is obvious. The more prop firm accounts you have, the more profits you should in theory be able to obtain through the markets.
If you’re trading with 3 prop firms, you’ll likely have more capital under management than a trader only working with 1 prop firm. More capital means higher profits, if you’re a consistently profitable trader.
2. Decreased Risk
If we have learned anything from the recent events with MyForexFunds, demo/simulated prop firms can go under and get shut down by the regulators.
At Lux Trading Firm, we’re a real money prop firm that isn’t based upon the Ponzi model. Therefore, we aren’t going to get stung for being a Ponzi scheme like some other firms.
We recommend traders to diversify their prop firm accounts and weave in some real money prop firms too. This greatly reduces your risk of the prop firms you work with being shut down.
By leveraging multiple prop firms, if one got shut down, you’d still have profits flowing in from multiple other firms – giving you the chance to remain in the markets!
3. No Extra Effort
It takes no additional effort to replicate your trades to multiple prop firm funded accounts. In fact, most traders that do this use a trade copier system to replicate their trades automatically.
This allows you to increase your profits with the exact same amount of work. Typically, once your trade copy system is set up, you won’t need to touch it again unless you want to change the risk management on one of your funded accounts.
4. More Scaling Opportunity
When trading with multiple prop firms, you increase your scaling potential. Each prop firm should be offering you the ability to scale your trading capital under management. With that being the case, after a period of consistent trading months – you should have been able to scale your capital exponentially.
This will be much faster than just trying to trade your own capital or just scaling with one prop firm.
The Drawbacks of Trading with Multiple Prop Firms
Although the positives vastly outweigh the negatives, there are still drawbacks of trading with multiple prop firms that you need to consider.
1. Financial Cost
Purchasing multiple prop firm challenges with various prop firms isn’t going to be cheap. You can expect to spend thousands of dollars doing this, if you’re looking to work with 2-5 prop firms.
However, we’d recommend that if you’re going to look to take this approach, ensure you’re funded with a prop firm first and pay for further challenges from your withdrawals/profits. Don’t keep putting your savings into this.
2. Trade Copier Setup Costs
Trade copiers are not too expensive but it’ll be a monthly outlay of between £10 and £50. You’ll also need to purchase a forex VPS to run the trade copier on 24/7 to ensure no trades get missed when your local computer is turned off or loses internet connection.
Again, the VPS won’t be expensive but a good VPS will set you back another £30-£50 per month.
3. Some Prop Firms Don’t Allow Trade Copying
If you read the terms of service with some prop firms, they don’t allow traders to either replicate their trades to other accounts, or have replicated trades taken on the funded accounts.
If you fail to abide by this, the prop firm has every right to disable your funded trading account – so ensure that you check this prior to signing up!
How To Find Prop Firms To Trade With
Finding a prop firm is incredibly easy but finding a prop firm you should actually be trading with can be a bit harder to do. Here are some helpful tips to consider…
1. Reputation
The reputation of a prop firm is incredibly important. If you’re seeing traders not being paid out or the firm is manipulating traders pricing to force stop losses, you need to stay clear – regardless of the offering!
2. Age
The older the prop firm, typically the better. The brand new prop firms popping up everyday might be great but until they have an established operating model and have weathered the storm, it’s not worth gambling on them working out!
3. Customer Support
Customer and trader support is another crucial point to consider. If a prop firm is slow to reply or hard to get a hold of, this is a red flag.
Also, prop firms offering resources and support for traders is always a positive. For example, Lux Trading Firm offers a whole risk desk and mentor to traders to ensure they’re as profitable as they can be!
4. Funding Method
There is a vast difference between how prop firms are funding traders these days. This can be broken down into two business models.
Business Model A – Ponzi. These are the ‘simulated’ prop firms that offer traders simulated accounts. These firms lose money on profitable traders and can only pay out profitable traders from the challenge fees of losing traders. If their marketing and leads dry up, they cannot afford to pay out profitable traders anymore and will crumble.
Business Model B – Real Money. Prop firms like Lux Trading Firm offer real money to traders. Therefore, these firms only make profits from the profit splits of profitable traders. This means that the business is self-sufficient – even if the companies received no more traders through the doors, it would still run and be able to pay out the traders!
5. Cost
The cost of the trading challenges need to be considered as well. If a prop firm is incredibly expensive, beware. Likewise, if a prop firm is offering funded accounts for very cheap, you need to be wary of why this might be. Are they desperate for new losing traders to pay the profitable traders?
In Conclusion – Can You Trade With Multiple Prop Firms At Once?
In summary, it’s entirely possible to trade with multiple prop firms at once, provided it’s within the terms of service of the prop firms you’re working with.
This can be very beneficial and allow traders to scale their capital under management, increase profits and reduce their risk.
Of course, this is only worth thinking about if you’re already a profitable trader. If you aren’t at that stage yet, focus on getting funding from one prop firm first!
Are you looking to become a funded trader? Work with Lux Trading Firm today!
