Getting Started: A Prop Firm Overview
Prop firms, or proprietary trading firms, provide traders with capital to trade financial markets in exchange for a share of their profits. Traders typically start by purchasing evaluation accounts, where they must meet specific profit targets and follow strict rules, such as drawdown limits and a minimum number of trading days. Successful traders can upgrade to performance accounts, allowing them to withdraw a portion of their profits once additional goals are met. Prop firms primarily earn revenue from fees paid by traders for evaluation and performance accounts, as many do not pass the evaluation phase.
Choosing and Connecting Your Account
When selecting a prop firm account, traders can choose between Rithmic or Tradovate connections, with Tradovate supporting multiple data feed connections while NinjaTrader supports only one Rithmic connection at a time. Account sizes typically range from $25,000 to $300,000, each with unique profit goals and drawdown limits. Selecting the right account depends on your trading style and risk tolerance. Once you’ve chosen an account, follow the connection guide provided by your prop firm to link it to NinjaTrader and begin trading.
Prop Firm Basics
A proprietary trading firm, or prop firm, provides traders with capital to trade financial markets. Unlike traditional trading where traders use their own money, prop firms supply funds to traders who show potential, usually after they complete a testing or evaluation phase. In return, traders split a portion of their profits with the firm.
Most prop firms offer traders the opportunity to purchase evaluation accounts. By meeting specific rules and achieving profit targets, traders can then purchase performance accounts. Once the performance account meets the required criteria and profit goals, traders can request a withdrawal for a portion of their profits.
The majority of traders do not succeed in passing accounts, which is why prop firms generate revenue primarily from the fees traders pay to purchase evaluation and performance accounts.
Process Overview
Traders begin by selecting an evaluation account. During this phase, traders must achieve a specified profit target without breaching the maximum drawdown limit. Requirements such as the minimum number of trading days and drawdown rules vary depending on the prop firm.
Once traders successfully pass the evaluation, they can request and purchase a performance account, which will start at the same balance as the evaluation account. When they reach the profit target in this account, they can request to withdraw actual earnings. Withdrawal limits and other requirements vary by prop firm.
Choosing Your Account
Prop firms offer accounts with connections through Rithmic or Tradovate, and some providing both options. If you plan to trade with multiple prop firms simultaneously, keep in mind that NinjaTrader only supports one Rithmic data feed connection at a time. In contrast, Tradovate allows multiple data feed connections. It’s essential to verify this detail before purchasing your account to ensure compatibility with your trading setup.
Evaluation account sizes typically ranging from $25,000 to $300,000. Each has its own profit goal, drawdown and number of accounts you can trade. Select your account based on your trading style, risk tolerance and profit goals.
How Do I Connect My Account To NinjaTrader?
Below you can find a step-by-step guide on how to connect your prop firm account to NinjaTrader based on your chosen connection type and prop firm.
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