About Fundora: An Evaluation-Based Prop Firm
What is a Prop Firm?
Explaining the System, Features, Benefits, and Considerations
Table of Contents
2. Features of Exam-Based Prop Firms
3. System of Exam-Based Prop Firms
Prop firms (**Proprietary Trading Firms**) are a new form of trading that is gaining increasing attention in recent years. Especially in the model called "**exam-based prop firms**," traders can challenge themselves to trade in a professional environment without using their own capital.
We will carefully introduce the basic system and features of prop firms, their benefits and drawbacks, while also incorporating a **perspective as a Japanese exam-based prop firm**.
1. What is a Prop Firm?
A **Prop Firm** (Proprietary Trading Firm) refers to a company that trades in the financial markets using its own capital. Traders trade using funds provided by the prop firm, without using their own capital, and receive a portion of the profits earned as compensation.
In this model, alongside the pursuit of profits through trading, emphasis is also placed on trader development and skill improvement. While deployed globally, "**exam-based prop firms**" are gaining attention in Japan as a new form.
2. Features of Exam-Based Prop Firms
Capital Provision
Traders conduct trading using virtual trading capital (demo accounts) provided by the prop firm, without exposing their own capital to risk. This is a fully funded model, and trader losses do not result in actual financial burden.
Education and Support System
Many exam-based prop firms have established educational content and mentoring systems to support trader growth. Programs are available for each level, from beginners to experienced traders, enabling the acquisition of practical skills.
Strict Risk Management Rules
Risk management is the foundation of prop firm operations. Clear loss limits, lot sizes, position sizes, etc., are set for each trader, requiring planned trading. This establishes a sustainable and highly reproducible trading environment.
Profit Sharing Model
Profits generated by traders are shared with the prop firm based on a predetermined profit sharing ratio. The profit sharing rate is generally around 60-90%, and high compensation can be earned depending on performance.
3. System of Exam-Based Prop Firms
Exam-based prop firms are composed of the following processes, aiming to discover and develop skilled traders.
Exam Process (Evaluation Period)
Traders first take an "exam" on a demo account and must demonstrate stable performance under defined risk management rules for a certain period. This provides the opportunity for capital provision only to selected traders.
Provision of Training Programs
Training is provided to acquire multifaceted skills necessary for professional traders, such as trading strategy, mental management, and market analysis.
Development of Trading Environment
Prop firms develop professional-grade trading infrastructure, including real-time market data, high-performance charting tools, and backtesting features. Traders can fully exercise their abilities in such an environment.
Capital Provision After Evaluation
Traders who meet certain criteria are given the opportunity to manage virtual capital (demo environment) based on the prop firm's independent judgment. In this stage, trading is conducted under conditions as close as possible to the real market, and profit-sharing compensation is generated.
4. Profit Sharing Mechanism
One of the biggest attractions of a prop firm is the "**profit sharing system**." Profits generated by traders are shared between the trader and the firm according to a predetermined profit sharing ratio.
The profit sharing ratio varies depending on the trader's experience, trading performance, contract terms, etc. It is generally considered to be **around 60% to 90%**, which can be said to be a very high level of compensation for traders.
5. Benefits and Considerations of Exam-Based Prop Firms
Main Benefits
No Personal Capital Risk
Traders do not need to invest their own capital and can gain professional experience through trading with virtual funds (demo accounts).
Skill Improvement and Career Potential
Through the education and evaluation system provided by the firm, traders can hone their practical skills and develop a professional mindset.
Community and Network
Many firms have communities where traders can interact and exchange information, providing an environment for mutual growth.
Considerations (Challenges)
Psychological Pressure
Many traders feel psychological pressure in an environment with profit targets and loss limits.
Restriction on Freedom
Trading is subject to rules set by the firm, which may impose certain restrictions on your style or strategy.
Cannot Obtain 100% of Profits
Since profits are distributed in a shared format, it is important to note that not all of your effort directly translates into 100% revenue.
Understanding these factors and choosing a firm that aligns with your goals and style is the first step towards success.
6. Summary
Exam-based prop firms are a very attractive option for traders aspiring to grow in the financial markets. The ability to gain trading experience without using personal capital is a significant benefit for those aiming to become professionals.
On the other hand, there is also strict risk management and psychological load. What is important is an attitude of understanding your own strengths and weaknesses and making the most of the prop firm environment.
Fundora, as a Japanese exam-based prop firm,
fairly evaluates your abilities and provides a trading environment with significant demo capital.
Fundora offers an evaluation process where you can aim for professional qualification in as little as 5 days, allowing you to start serious trading early.
With 24/7 bilingual support available, you can resolve questions and concerns anytime, which is a great feature.
Why not aim to become a professional trader with Fundora?
See Fundora's Plan Details - You can also become a Pro Trader in as little as 5 Days
- Frequently Asked Questions
- Are there any qualifications or skills required to join a prop firm?
No special qualifications are required. What's needed is a certain level of trading knowledge and a mentality capable of risk management. Fundora also offers extensive educational content, making it possible for beginners to start.