Prop trading has become a key option for traders looking to grow quickly without putting their own funds at risk. It lets you trade with house money in flexible trading environments with significant capital, which makes it ideal for both new and experienced traders. Two of the most prominent prop trading markets for traders are forex and crypto. While both offer substantial opportunities, crypto trading is quickly becoming the preferred choice. This article examines the distinctions between forex and crypto prop trading and why crypto emerges as the winner on multiple fronts.
KEY TAKEAWAYS
➤ Prop trading allows you to trade using a firm’s capital and earn a share of the profits.
➤ Crypto prop trading offers 24/7 market access, higher volatility, and more flexible tools than traditional forex.
➤ Prop traders benefit from better profit splits, faster scaling, and more trading instruments in the crypto market.
➤ Forex remains tightly regulated and limited to 24/5 trading, which makes crypto a more dynamic option for traders.
- Prop trading in a nutshell
- Key differences between crypto and forex markets for prop trading
- Why is crypto better for prop traders?
- Crypto Vs Forex Prop Trading
- Who is crypto prop trading for?
- Top crypto and forex prop firms
- Crypto vs. forex prop trading: Which is the right choice for you?
- Frequently asked questions
Prop trading in a nutshell
Prop trading is when traders trade on the trading firm’s capital, instead of their own funds. Traders retain a significant portion of the profits, while the trading firm receives a cut for providing the funding.
It is an attractive proposition for skilled traders who lack sufficient capital.
While prop trading exists across multiple markets, forex has largely dominated the space until now. However, crypto-focused firms like Fondeo are changing the game with new and sophisticated tools alongside 24×7 market access.
Key differences between crypto and forex markets for prop trading
While the fundamental rules of prop trading apply to both crypto and forex, the two markets differ significantly in volatility, liquidity, and trading hours:
Market hours
Forex: Open 24 hours, 5 days a week. Forex trading does not happen on weekends.
Crypto: Crypto is decentralized, and there’s no closure of markets. Crypto operates 24/7, round the clock, and so do the crypto prop trading firms.
Volatility
Forex: Forex markets typically exhibit low volatility on a daily basis, which makes it more challenging to generate profits.
Crypto: Crypto, on the other hand, is way more volatile compared to forex. Prop traders have a fixed time to generate profits, making crypto the perfect asset class.
Leverage
Forex: Most Forex Brokers offer very low leverage. They max out at 1:30.
Crypto: Many crypto platforms offer 1:50 leverage or even higher. Although it is risky to have increased leverage, experienced traders can greatly benefit from it.
Regulation
Forex: Highly regulated and has various restrictions based on geography.
Crypto: Fewer regulations and easy access in many regions. Crypto provides equal opportunities to everyone, regardless of their geographical location. With that said, due to fewer regulations, it is also essential to do your own due diligence.
Market structure
Forex: Centralized currency exchange between banks and countries.
Crypto: Made up of thousands of centralized and decentralized exchanges with on-chain and off-chain trading options.
Market manipulation
Forex: Forex is the trading of different currencies. Hence, they are controlled by the central banks of the respective countries.
Crypto: Crypto is decentralized and traded on thousands of centralized and decentralized exchanges. When it comes to larger cryptocurrencies like Bitcoin and Ethereum, they are less prone to manipulation compared to the forex markets of some currencies.
Why is crypto better for prop traders?
Here’s why crypto is a much better asset for prop traders compared to Forex:
24/7 market access
Crypto markets never shut down. They do not stop trading on evenings, weekends, or even public holidays. This gives you the freedom to act on trades anytime, be it day or night. That said, constant access can also create certain risks. For instance, price action can accelerate during traditionally low-volume hours, which could then catch some traders off guard.
Higher volatility
While volatility is often viewed as a negative aspect, it can be a trader’s best friend. Only when there is volatility is there money to be made. It means there are more opportunities for skilled prop traders as it allows them to reach their profit targets much faster.
Lower entry barriers
Cryptocurrency is accessible to almost anyone in the world with internet access. Anyone can get started with crypto trading without any restrictions. Prop trading takes this even further by providing skilled traders with access to capital.
Transparency
Crypto is very transparent and not easily manipulated. Forex is directly controlled by the various countries that use it and their trade policies. Two countries could agree with each other to ensure that a particular currency does not exceed the set threshold.
For example, the Hong Kong Dollar is pegged to the US Dollar, and the central bank of Hong Kong actively works towards defending this peg. No such manipulations can be made with cryptocurrency, and all transactions are transparent on the blockchain.
More trading instruments
Forex trading pairs are limited to the popular currencies. On the other hand, there are thousands of cryptocurrencies to choose from. This extensive selection presents unique opportunities for cryptocurrency traders.
Better profit splits and tools
Crypto prop firms usually offer much better profit-sharing terms compared to other assets. They also allow traders to build advanced trading systems, bots, and automations for efficient trading. For instance, Fondeo offers up to 90% of the profit to successful traders.
Crypto Vs Forex Prop Trading
| Feature | Crypto prop firms | Forex prop firms |
| Market hours | 24/7 – No Downtime | 24/5 (Paused on weekends) |
| Instruments | BTC, ETH, Altcoins, Perps, DeFi tokens | Major/Minor Currency Pairs |
| Volatility | High | Moderate |
| Profit split | Up to 90% | Usually 50-70% |
| Tech stack | APIs, bots, smart contracts | MT4/MT5-based |
| Entry process | Instant, often remote | Varies, often regulated |
Who is crypto prop trading for?
Crypto prop trading is ideal for the following types of traders:
- Tech-savvy traders who are looking to automate fast-paced trading. You can experiment with TradingView scripts or Python strategies.
- Traders who are on the move and want to trade at any time. Crypto trading does not stop for weekends or at night, and is accessible from most countries.
- Thrives on volatility. Traders who see price swings as opportunities will be at home with crypto.
- Successful traders who are eager to make fast gains. Crypto prop firms give higher profit shares compared to forex.
In short, if you’re a savvy trader who appreciates speed, flexibility, and adaptability, crypto prop trading might be the right choice for you.
Top crypto and forex prop firms
If you’re looking to get started with crypto prop trading, Fondeo is an option worth considering. It is a crypto-native platform, so it supports on-chain funding, crypto payouts, and trading conditions tailored for digital assets (and not adapted from forex models).
You can even connect your ByBit demo account and trade on it, to execute buy & sell orders on your funded Fondeo account. With 70-90% profit split and over $1 million paid out, Fondeo is far ahead of the competition right now.
When it comes to forex prop firms, popular options include FTMO, City Traders Imperium, and E8 Funding. They offer up to 90% of the profits and come with various limitations. Such as typically operating in a 24/5 schedule, making them less dynamic compared to crypto-focused alternatives.
Crypto vs. forex prop trading: Which is the right choice for you?
While both forex and crypto prop trading firms offer unique advantages, crypto prop traders typically enjoy some distinct advantages. For instance, forex markets tend to move within tighter ranges and show fewer sharp price dislocations. This can limit short-term trade setups.
Crypto markets, on the other hand, often register wide swings, sometimes within minutes. This opens the door to more frequent high-reward opportunities. So, all factors considered, crypto prop trading offers a more flexible and potentially more rewarding environment for traders who can handle the added volatility and risk.
Frequently asked questions
Is crypto trading better than forex trading?
Do prop firms allow crypto trading?
What is the biggest market, forex or crypto?
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