The Rise of Prop Trading Among Young Investors

Ricky Saldana, a 29-year-old trader from New York, first came across mentions of prop trading in 2021. A connection shared insights that felt almost clandestine: a small fee paid to a prop firm could lead to thousands of dollars in trading capital, potentially doubling a trader’s profits if the market cooperated.

Saldana, aspiring to achieve financial independence, considered this a golden opportunity.

“Look, if you’re earning $40,000 a year, go on two vacations, and you love your life, that’s great. But that’s not me. I want to be free for at least 300 days a year,” he remarked.

This viewpoint resonates with an increasing number of traders who are now opting for prop companies, which provide a pool of funds for a fee ranging from $50 to a few hundred dollars.

But, as with anything, there are caveats.

First, candidates must pass a series of assessments that showcase their trading abilities. Successful individuals receive accounts that let them trade with amounts ranging from $5,000 all the way up to several hundred thousand dollars.

Secondly, if they profit from a trade, the company typically takes around 20% of those earnings.

And, importantly, if a trader incurs significant losses, their account may be shut down, and their funds withdrawn.

Yet, a growing cohort of Gen Z and Millennial traders is willing to embrace more aggressive risks. For many, the chance to earn substantial returns justifies the hurdles they must overcome, and they often express a determination to keep opening new accounts, even if it costs them thousands and results in losses.

This year, interest in prop trading—distinct from the proprietary trading done by Wall Street firms—has surged as U.S. stocks have reached new heights. Google trends show an 85% increase in searches for “prop companies” and a staggering 139% for “prop deals” over the past year.

A study noted a 25% rise in the number of active prop traders globally in the last three years. Some analytics firms estimate the prop trading sector’s worth at about $12 billion.

The typical age of a prop trader is just 29, and about three-quarters do not anticipate maintaining profitability over a six-month stretch.

Top Step, a well-known prop trading company, indicated that around 12.4% of their traders achieved funding in 2024 after passing the necessary evaluations. Among those, 28.3% saw actual payments from their trade profits. TopStep was unreachable for comment.

FTMO, another popular firm, hasn’t released specific trading statistics and didn’t respond to inquiries.

Apex Trader Funding, which opted not to disclose trader performance metrics, acknowledged significant growth in the past three years. Chief Strategy Officer Dan Cook noted a sixfold increase in payouts to traders over the past year.

Cook attributed increased interest during the pandemic to more individuals recognizing retail investing as a viable work-from-home option. “I think it’s really booming because of word-of-mouth,” he stated. “People realize they don’t have to cough up thousands of their own money.”

When asked about criticisms regarding fee structures and limited returns, Cook emphasized the need for clarity on the part of traders entering prop firms. “The terms and conditions are all laid out beforehand. So there are no surprises,” he said.

Saldana’s Experience

When Saldana received his first funded prop trading account, he was ecstatic. After passing his exam, he even cried and played Frank Sinatra’s “My Way,” accidentally waking his girlfriend in the middle of the night.

However, things took a turn for the worse. Juggling full-time trading and an internship, his initial enthusiasm led to several poor trades that resulted in his account being “blowned,” a term among traders for accounts being closed due to losses.

Saldana estimates he has invested roughly $10,000 into opening new prop accounts over time. He considers himself someone who can’t give up on prop trading, believing that financial freedom is within arm’s reach.

“When I saw $2,000 hit my account, I just pushed a button,” he recalled about the excitement of earning in the market. “But then my girlfriend said, ‘Hey, my car payment is $500.'” He felt no hesitation in giving it to her.

Many traders entering the prop trading landscape express a commitment to continue despite the obstacles. Some say the prospect of accessing larger sums of money and the potential for financial growth outweigh the stress and losses associated with paying trading firms.

Daniel Inskeep, a 37-year-old trader from Chicago, became interested in prop trading years ago, believing using a firm’s capital could limit risk. He estimates he has spent about $10,000 in fees over the years but acknowledges he’s overall lost on prop trades.

Inskeep describes prop trading as emotionally taxing and significantly more stressful compared to personal trading. Besides initial evaluations, traders face challenges that require hitting specific profit targets to receive payouts.

A single misstep can wipe out an account, compelling traders to either open a new account or pay for another challenge to get funded again. “It’s a watershed moment for many,” he said regarding the challenges of prop trading.

Nevertheless, Inskeep remains passionate about trading. “Sitting at home in your sweatpants and making money with just a few clicks? There’s nothing better,” he remarked. “I still blow accounts, but that’s part of the learning process. Gaining this skill could give you the freedom to trade without worry of being fired by a boss.”

Joseph Katumba, a 32-year-old trader based in the UAE, was drawn to prop trading a few years ago after seeing related content on YouTube. He invested a considerable amount of time studying the market to pass his first assessment.

Although he has experienced some losses, having blown two funded accounts, he has still managed to turn a profit while spending around $7,000 on fees over the years. Currently, he is working to raise funds for a new account and dreams of using his success to improve his life and contribute to charitable causes in Uganda.

“It’s a chance, but it’s really hard for many to find opportunities like this,” Katumba remarked. “If you get it right, it can change your life.”