Forex/CFD Brokers Join the Proprietary Trading Trend

Modern proprietary trading firms allow retail traders to utilize a significant amount of capital from brokers without risking their own funds. Trading primarily involves using virtual funds, but profits are real.

To qualify, traders typically pay a small fee to participate in the evaluation process, demonstrating their skills through simulated trading. Successful traders can then be granted a funded account and retain the majority of the profits they generate, usually between 60% to 90%.

However, the proprietary trading industry is not without controversy, involving issues of lack of regulation and recent licensing problems with MetaQuotes' MetaTrader platform. In response to these challenges and aiming to provide a safer trading environment for traders, Forex/CFD brokers have begun incorporating proprietary trading into their services.

Currently, these include offerings such as OANDA's OANDA Labs Prop Trader, Axi's Axi Select, Hantec Markets' Hantec Trader, and IC Markets' IC Funded.

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

Axi was one of the first Forex/CFD brokers to implement proprietary trading services, offering $1 million in capital to retail investors in September last year. Unlike traditional proprietary trading firms, this service comes with no registration or monthly fees and is marketed as a "100% free" funded trading plan. However, it's not entirely free; an initial capital is still required to join the first stage.

Investors start from the "seed" stage, requiring a minimum of $500, during which they can access up to $5,000 in capital. If they achieve a 5% profit target, they can move to the next level. It's worth noting that Axi Select doesn't use a simulated account model but offers real trading, stating that simulated proprietary trading could collapse quickly.

OANDA Labs Prop Trader

Several months later, in late January 2024, OANDA launched its OANDA Labs Prop Trader service. Its offering is similar to other proprietary trading firms: traders select a "challenge" to join, pay a startup fee, and receive a specified amount of capital.

The initial challenge fee is $169, providing $10,000 in virtual funds. There are two profit targets to achieve: the first is 8%, and the second is 5%. Daily account losses cannot exceed 5%, and the maximum drawdown is 10%. Profit sharing for this challenge is set at 80%.

Unlike other platforms, there are no tiers to the challenge; beginners can start directly from the most expensive "black challenge" at a cost of $2,400, with an account size of $500,000. If daily or cumulative losses are exceeded, the challenge fails but can be retried with discounts ranging from 20% to 88%.

Hantec Trader Simplifies Structure

A day later, Hantec Markets also launched proprietary trading services through its newly established entity, Hantec Trader. Similar to its competitors, trading is done using virtual funds, but the challenge selection process has been greatly simplified.

Traders can choose between two challenges: Hantec Express Trader and Hantec Enhanced Trader. In both cases, account sizes range from $2,000 to $200,000. Traders must pay initial fees ranging from $39 to $999 (refundable for profitable traders) and then meet the challenge criteria. In Express Trader, each challenge consists of one stage, while in Enhanced Trader, there are two stages.

After reaching the profit target, traders have the opportunity to upgrade to the next challenge for free. To do so, they must attempt the same challenge again, eventually reaching $200,000 without additional fees.

Profit sharing with Hantec Trader can go up to 75%, but by purchasing special add-on products, initial fees can increase, and profit sharing can be boosted to 90%.

IC Markets Introduces IC Funded

The latest entry into the proprietary trading arena is IC Markets. In March this year, it soft-launched IC Funded, offering retail investors up to $500,000 in capital and profit sharing of up to 80%. However, the platform seems to still be in a testing phase.

The service also operates on a tiered and challenge-based system, though IC Funded refers to it as "evaluation." The fee for the first evaluation stage is $49, with an account capital of $5,000.

The evaluation is divided into two stages, with profit targets of 10% for the first stage and 5% for the second. Daily losses cannot exceed 5%, and the maximum cumulative drawdown is 10%. These rules apply to all subsequent evaluations, totaling seven stages.

At the highest level, the one-time fee is $2,498, with tradable account amounts reaching $500,000. However, profit sharing is not determined by the trader's level but by the duration of collaboration with IC Funded. In the first month, profit sharing is set at 75%, rising to 80% thereafter.