Proprietary trading has become a hot topic in recent months, drawing attention from retail investors and sparking regulation controversies. After unlicensed companies failed to maintain traders' trust, FX/CFD brokers started offering prop trading services, recognizing a new niche in the industry. As experts interviewed by Finance Magnates claim, the niche can be really rewarding in the near future. Prop trading is set to become the next revolution and the future for the CFD sector.

Four companies, including OANDA, Axi, IC Markets, and Hantec Markets, have decided to pursue this market so far. In this article, we compare their "challenges" and trading conditions.

FX/CFD Brokers Join the Prop Trading Boom

Modern prop firms allow retail traders to leverage significant amounts of the brokerage’s capital without risking their own funds. Trading is predominantly conducted with virtual funds, yet the profits are real.

To qualify, traders typically pay a small fee to enter an evaluation process where they demonstrate their skills through simulated trading. Successful traders gain access to a funded account and keep a substantial portion of the profits they generate, often between 60-90%.

This model is particularly enticing for novice investors: Imagine accessing an account worth $100,000 for just a few hundred dollars. This undoubtedly ignites traders' imaginations and contributes to the popularity of prop trading.

However, the prop trading industry is not without controversies concerning the lack of regulation and recent licensing issues with MetaTrader platforms from MetaQuotes. In response to these challenges and aiming to offer traders a safer trading environment, FX/CFD brokers have started incorporating proprietary trading into their offerings.

Currently, these include OANDA, which introduced OANDA Labs Prop Trader, Axi with its Axi Select, Hantec Markets launching Hantec Trader, and IC Markets with IC Funded.

Axi Select and the "100% Free" Funded Trader Program

Axi was a pioneer among FX/CFD brokers to implement a prop trading service. As part of its new product Axi Select, it offered retail investors the opportunity to access up to $1 million in capital last September. Unlike traditional prop trading firms, this service has no registration or monthly fees and is promoted as a “100% Free” funded trading program. However, it is not entirely free of charge. To join the first available stage, an initial capital is required.

Investors start with at least $500 at the "Seed" stage, during which they can receive maximum funding of $5,000. If they achieve a profit target of 5%, they can progress to the next level. Interestingly, Axi Select does not use a demo account model but instead offers live trading. At the same time, it claims that demo prop trading may soon collapse.

There are six levels in total, each with increasing minimum equity requirements, up to $40,000. With each level, the maximum financing and profit share also increase. Like standard prop firm offerings, there is also a maximum loss limit set at 10% per stage; exceeding this sends the account into "quarantine."

OANDA Labs Prop Trader and Accounts up to $500,000

A few months after Axi, in late January 2024, OANDA launched the OANDA Labs Prop Trader service. Its offer closely resembles those well-known from other props: traders select one of the available "challenges" to join, pay a startup Startup A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is c A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is c Read this Term fee, and gain access to an account of a specified amount.

The first challenge is available from $169, providing investors with $10,000 in virtual funds. There are two profit targets to achieve: the first at 8% and the second at 5%. Daily account losses cannot exceed 5%, and the maximum drawdown is 10%, with the profit share in this challenge being 80%.

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— OANDA Labs Trader (@OANDALabsTrader) May 13, 2024

Unlike other platforms, challenges are not tiered; beginners can start immediately from the most expensive Black Challenge, which has a fee of $2,400 and an account worth $500,000. If daily or cumulative losses are exceeded, the challenge is lost, but it can be reattempted with a 20% discount.

Hantec Trader Offers Simple Structure and $200,000

Just a day later, Hantec Markets also presented its prop trading offer through the newly opened entity, Hantec Trader. Like its competitors, trading takes place on virtual funds, but the process of selecting challenges has been significantly simplified.

Traders can choose between two of them: Hantec Express Trader and Hantec Enhanced Trader. In both cases, funded accounts range from $2,000 to $200,000. Traders must pay an initial fee ranging from $39 to $999 (refundable for profitable traders) and then meet the challenge conditions. In Express Trader, only one stage is required per challenge, while in Enhanced Trader, there are two stages.

After achieving the profit target, traders have the opportunity to scale up to the next challenge free of charge. To do this, they must attempt the same challenge again, ultimately reaching up to $200,000 without additional fees.

The profit split in Hantec Trader can be up to 75%, but it can be increased to 90% through the purchase of special add-ons, which also increase the initial fee.

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— Hantec Trader (@HantecTrader) May 15, 2024

"Hantec Trader has experienced strong double-digit month-on-month growth since its launch, and we anticipate this trend will continue for the remainder of the year,” said Bashar Gokal, the Operations Manager at Hantec Trader. “It’s evident that customers are seeking reliable and experienced firms to partner with, given the ongoing uncertainty in the industry. We expect the demand for prop trading to continue growing as prop trading providers target new market segments."

IC Markets Implements IC Funded with up to 80% Gain Share

The latest broker to enter the world of prop trading was IC Markets. In March, it soft-launched IC Funded, where retail investors can obtain up to $500,000 in funding and up to 80% gain share. However it looks like the platform is still in the beta testing phase.

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— IC Funded (@IC_Funded) April 29, 2024

The offer is also based on tiers and challenges, though IC Funded terms them "evaluations." The first evaluation stage starts with a one-time fee of $49 and an account funded with $5,000.

The evaluation is divided into two stages, the first with a profit target of 10% and the second of 5%. The maximum daily loss cannot exceed 5%, and the maximum cumulative drawdown is 10%. These rules apply to all subsequent evaluations, of which there are seven in total.

At the highest level, the one-time fee is $2,498, allowing for trading with $500,000. However, the profit split is not dependent on the trader's level but on the duration of cooperation with IC Funded. During the first month, it is up to 75%, and after that, it is up to 80%.

Which Offer is the Best?

The products of various FX/CFD brokers offering prop trading are very similar regarding platforms, profit splits, loss limits, and leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term. Differences can be seen in the profit target, with Axi Select having the lowest entry threshold. Although the company suggests that it does not charge fees, the smallest account must have a deposit of at least $500.

On the other hand, Hantec Trader stands out for the lowest fees. The cheapest challenge costs $39, and the smallest account size is $2,000. However, for $49 at IC Funded, traders can receive an account worth $5,000.

OANDA Labs Trader appears to have the best ratio of the lowest challenge price to account size. For $169, the investor gets an account worth $10,000, and the first profit target is not the standard 10% but 8%.

Before deciding on a specific platform, it is worthwhile to compare details, such as the possibility of hedging, the necessity (or absence) of using stop losses, the ability to trade on macroeconomic data, the use of copy trading, etc.

Industry professionals Finance Magnates spoke with in the newest Quarterly Industry Report overwhelmingly agree that modern prop trading could be the future and an important part of the development of FX/CFD brokers. "I believe this is obvious," commented Maciej Wojciechowski, the Head of Business Development at OnEquity.