What is a Prop Trader?

A prop trader is someone who engages in prop trading, using real or virtual capital provided by a prop trading business. Prop traders usually have a high level of autonomy in making their trading decisions, but a firm’s own capital may be at risk, there will often be higher levels of scrutiny around their trading activities, with stringent conditions imposed. Prop trading firms will usually set a loss threshold (known as a maximum drawdown limit) – if the prop trader’s trading account drops below a predetermined threshold, it will be suspended.