If you aim to become a career trader, you might consider prop trading as one of many avenues for achieving your goal. Finding your footing as a prop trader means becoming intimately familiar with the markets and identifying the best connections to add to your professional network. As a Chicago prop trading firm, our team at Black Eagle Financial Group knows the ropes well. 

Below, we will explore how to become a prop trader in Chicago, Illinois. Our guide will provide you with a fantastic starting point for pursuing your goal while making knowledgeable decisions along the way. 

Understanding Proprietary Trading

At its core, proprietary trading is a close partnership between the trader and the firm. The firm gives you capital, and you trade the capital to turn a profit. Then, you and your firm profit from the increase. 

As a prop trader, you will likely choose one or two of the following financial markets or assets:

• Futures contracts: You use these legal agreements to purchase and sell assets at predetermined periods. 
• Stocks: You purchase ownership shares from promising brands, which may allow you and your firm to claim earnings. 
• FX currency pairs: You trade foreign currencies for profits on the foreign exchange market. 
• Options: You use these contracts to choose when you sell assets and at what price. 
• Commodities: You purchase physical goods through typical trading avenues to sell when the price seems right. 
• ETFs: An exchange-traded fund is a stock or bond collection you package to trade or sell for profit. 

No matter which avenue you choose as your specialty, you will undergo a rigorous preparation process to ensure you are ready for your path as a prop trader. 

How To Become a Prop Trader in Chicago, Illinois

Because of our modern digital climate, there are countless ways to learn how to become a prop trader. However, not all routes carry the same value or thoroughly prepare you for the rigors and triumphs of proprietary trading. Reputable firms like Black Eagle Financial Group might suggest the following steps to strengthen your professional profile and develop your expertise. 

1. Get Educated

Proprietary trading careers don’t require college degrees to obtain firm backing or succeed. However, you should approach every effort and transition with caution and interest. While you don’t have to pursue a degree, you should take ample time to learn as much as possible about the field. 

First, learn the basics, like the ins and outs of proprietary trade regulations. Knowing how the federal government regulates these trades can save you from trouble later. You can also take online courses to further your education. Alternatively, you might take individual college courses that relate to your aspirations instead of pursuing a full degree. 

2. Weigh the Perks and Pitfalls of Prop Trading

Prop trading has its pros and cons. Perks that draw people to this career include:

• Merit-based rewards: The more successful your strategies, the more income you’ll earn. You don’t have to wait for a boss to give you a raise. 
• More profits: You can earn more within a shorter time than other avenues. 
• Higher capital out of the gate: Individual trading methods mean you can only use what’s in your personal trading budget. When you partner with a trading firm, you can use the capital they give you without digging into your funds. 
• Flexibility: You can experiment with different trading methods to see what works best.

However, prop trading still comes with a few risks that might deter others from learning how to become a prop trader. For instance, you must front a few thousand dollars as a security deposit to your chosen firm. You will also face more scrutiny and potential micro-management from your firm to ensure you successfully turn a profit. 

3. Practice Your Skills Through Simple Trading Avenues

Try your hypothetical trading strategies on a smaller scale. Purchase small quantities of commodities, stocks, or bonds to troubleshoot which methods don’t work for you while honing your instincts to capitalize on those that do. You can more quickly prove that you know your way around the market to a reputable trading firm, using your portfolio as proof.

4. Prepare To Join a Trading Firm

You can’t choose any old trading firm. You want one that accommodates you from the start. Otherwise, you might feel stifled by your decision. Choose only from among federally regulated firms registered with well-known agencies like the Financial Industry Regulatory Authority and the U.S. Securities and Exchange Commission. These smart decisions not only protect your efforts and deposit but can also showcase your knowledge and establish a good professional reputation.  

5. Enact and Perfect Your Strategies

You can jump into action once you interview with and are accepted by a reputable, registered trading firm. Few things are as exciting as watching your previous research and techniques truly take flight with the backing of a trusted firm. You’ll nurture your partnership and bank account by turning profits on the financial markets. 

Insiders’ Prop Trading Tips and Tricks

What else can you learn from a trading firm candidate? 

1. Budget well ahead of time. Remember that security deposit we mentioned earlier? If you are serious about prop trading, you’ll want to set aside some money to cover it. 
2. Never underestimate the power of research. You will never know everything there is to know about prop trading. Seek mentors and dig deeper in your research and education dives. 
3. Familiarize yourself with different risk management strategies. Interviewing firms will want to know how you approach risk management. After all, you will use their money to trade. Have some approaches prepared for your interviews and future positions.
4. Prepare to work alone. Proprietary trading is incredibly competitive. While many new cohorts will seem supportive of your initial market entry, they may not offer much support during your low points. Prepare to pep-talk yourself or rely on your mentor for help. 
5. Make sure you love the game. Like any source of income, life as a proprietary trader is more fulfilling if you enjoy everything from the gains to the minutiae. Part of prior experimentation means determining whether you want this career as part of your lifestyle. 

If you think prop trading might be a rewarding addition to your career journey, consider discussing your ideas with Black Eagle Financial Group. 

Choose Black Eagle Financial Group As Your Trading Firm and Headquarters

Want to know more about how to become a prop trader? Perhaps you’re partially through your journey and need guidance. Black Eagle Financial Group can help you choose a prop trading firm or provide more assistance through our mentorship program. Contact us to learn how we can help you refine your journey or support your other financial efforts.