What Is a Crypto Prop Trading Firm? Should They Be Avoided?

Key Takeaways

• 24/7 crypto trading means you can get involved anytime, anywhere, even at the weekend when traditional forex markets are closed.
• Despite plentiful opportunities, crypto trading involves risks and uncertainties due to its decentralized and volatile nature. A diverse portfolio and strong risk management skills can reduce potential losses and amplify profits.

The Role of Prop Firms

Proprietary trading firms, or prop firms, provide traders with capital and resources once they pass an evaluation process, typically known as a Funded Account Challenge (FAC). Once in, traders are given access to a considerable chunk of capital, paired with a profit-sharing agreement with the prop firm called a profit split or profit share. By joining forces with a prop firm, a genuinely skilled trader can seriously boost their profit potential.

That being said, there are still risks and trade-offs that need to be considered when looking into a prop firm. Traders should carefully read and understand the firm’s policies and terms before taking the leap. For a more in-depth breakdown of prop firms, be sure to check out our article. 

In short – proprietary trading firms can create a win-win scenario for skilled traders who can show that they’ve got talent, and not just luck, on their side. 

Now, what happens when you want to combine cryptocurrency and prop trading? Enter crypto prop firms.

Crypto Prop Trading Firms

Cryptocurrency broke onto the scene in January 2009, when Bitcoin was first launched as the OG coin. First used to buy a pizza, the buzz around Bitcoin spread and in no time at all, digital assets became a top choice for traders around the globe. Their popularity comes in part due to their decentralized finance (DeFi) status, and is constantly boosted by the community base surrounding them. As more and more tokens and coins emerge and root themselves deeper into financial markets, crypto prop firms have become a key player in the game.

Combining the best of forex and crypto trading into a crypto-prop firm melting pot, the resulting mixture offers traders not only access to more capital and liquidity, but also the tools and resources they need to navigate a multitude of different markets. The end result can seriously open up a whole new world for traders who have been stuck in the forex bubble who are looking to branch out into new territory.

If your mission is to trade crypto in a funded account, it’s essential to choose a reputable, fair firm. FunderPro offers a variety of different challenges, with unlimited time to pass them.

The Benefits

With a crypto prop firm, traders have access to something that is viciously undervalued – diversification. A diverse portfolio won’t totally wipe out risk, but it can reduce it by serving as a solid risk management tool. The renegade cousin of forex, cryptocurrency is typically viewed as a hedge against market volatility, offering a bit of a buffer when you want a break from traditional forex markets. A mixed portfolio means traders aren’t putting all of their eggs into one basket. In turn, investors can spread their risk among their portfolio and reap the rewards of a broad range of investments, with a little more peace of mind.

The world of crypto trading presents more unique opportunities to bolster your success thanks to its inherent volatility. Unlike traditional forex trading, the crypto market operates 24/7 – yes, including weekends – meaning it’s an open invitation to get involved when you want.

The Challenges

Although trading crypto offers unique opportunities for success, it does indeed come with its own fair share of risks. Due to its decentralized nature, it comes with extra baggage like security concerns, regulatory uncertainties, and sudden price volatility. Whether you’re a budding trader or an experienced veteran, it’s essential to understand crypto trading for what it is at its core – a demanding and dynamic market.

Before diving head-first, take a minute to assess your risk appetite. It takes a strong will and even stronger stomach to brave the decentralized exchange that holds tokens and coins near and dear.

To that end, there’s nothing stopping you from making safer bets on your crypto. By using risk management strategies such as Stop Loss & Take Profit orders, traders can make moves toward protecting their positions from significant losses.

Choosing a reliable trading platform is just as important as having the right mindset. We use and back TradeLocker, which is a community-built platform, designed by and for modern traders. With charting capabilities from TradingView™, TradeLocker offers traders one-click trading along with ultra-fast execution. In an ever-changing crypto market, traders need to react quickly to market changes. TradeLocker understands this concept well and has integrated on-chart and one-click trading to cut the time between your decision and execution.

Should You Avoid Crypto Prop Firms?

In a word – no. While crypto prop firms shoulder their own set of challenges, they offer a wealth of opportunities to those looking to capitalize on the booming cryptocurrency market. These crypto prop firms are popping up everywhere, so it’s never been more important to conduct thorough research and complete your due diligence before taking the plunge. If you’re thinking about testing the waters, consider trying a free trial challenge on a demo account with FunderPro to get your practice in, risk-free.