A proprietary firm, often referred to as a “prop firm,” is a company that trades financial markets using its own capital rather than client funds. The primary goal is to generate profits for the firm, and traders are usually compensated through a profit-sharing arrangement. Proprietary firms provide traders with resources like technology, training, and market access, but they also assume the risk associated with trading activities.
These firms can trade in various financial markets, including stocks, commodities, currencies, and derivatives. Some prop firms specialize in high-frequency trading, algorithmic trading, or other specialized trading strategies. Unlike hedge funds or asset management firms, prop firms do not manage external client money and focus solely on internal trading activities.
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