Prop Firms: What you need to know before using

The actual definition of prop firm is Propriety Firm, they are firms that for the most part allow traders to trade with higher capital at a price of passing a test and paying a certain eval fee. These firms are useful as they allow a trader that may have had to take more time to build up, to scale faster. But aside from the simple definition, what actually is the use of a prop firm in your trading, and what should you know before using one.

These, I'd consider essential before using any sort of prop firm. 

Firstly, always investigate if there is real payout structures, and payout proofs. Publicly. You have to understand that most of your time will be spent building in this prop firm or somewhat around it. So you need to know that what your building around actually has some form of track record, allowing you to be safe in your work.

Secondly, in this game, if its too good to be true. Believe me, its too good to be true. In trading, its incredibly easy to run scams on people, because its a game revolved around pure randomness. You always have to keep in mind that if someone or a business offers you a scheme or a fast way to make money. Its too good to be true, which doesn't exist in the game.

Lastly, you NEED some fundamental level, if not a more advanced level of trading skill. This is not some fast money scheme, you need to have committed to the game itself in order to see the success that it holds. I feel this creates a scam in a certain light, and actually puts a lot of people against prop firms. Even though in this case, the tests are made to filter out people like this, who have no experience.

Now even with those three points, its not a blameless game on the other side of the fence. So lets get into what you need to avoid.

This is easier than you think to spot. Lets break it down into the two main categories.

First. The most important thing to stay away from is creators that funnel you toward prop firms actively. This is IMO the largest problem with the trading industry. New traders are extorted to boost the deals that have been landed by, or created by the huge content creators. It is a big problem, even one that the props don't realize they are contributing too.

You see, the scam begins with these guys, who extort their audience by funneling them to props to fast. Instead of pushing them to practice for longer and get better at a much steadier rate. As this way (the proper way) isn't as profitable as doing it all at once. So in these creators pushing the props, they don't realize that the name of the scam is being amplified, as if the majority of people stop using props they have no business.

Secondly, and not quite as essential as the first point, is the props themselves. There are, just like in anything, good and bad prop firms. Since you will always have those who use models to extort, and those who use it properly. Usually there is a common pattern to identify the scammers of the industry, that pattern being challenge rules and prices.

If you see a prop firm boasting about cheap prices, your likelihood of ever receiving a payment is almost 0, as this is purely a marketing ploy. Avoid these at all costs, because they will put you off the prop firms to some extent, and from my experience, as a beginner, that can be the difference between one day seeing profitability and never seeing it at all.

Lastly, and more off topic. I believe a strong point to avoid would be stories of people who have had beginner experiences with these props. As people will try to put the general industry down, regardless to the fact there is good ones out there. My belief is, if you go to a prop firm without being 200% prepared and sound strategically. If you lose, its on you dude. 

I know you want to be told that the scam is the system, but in most cases the scam is you being told you should use them earlier then you should. Which I can sympathize with, but, let it be known, the business is still an essential resource to use somewhere in your career. So don't let the voices on either side of the fence tell you what to do.

Remember, you had people always around you telling you that it couldn't be done. You didn't listen, so why would you listen to people saying other wise. Try it yourself.