What Is Proprietary Trading?

Proprietary trading firms trade with their own capital — not client money. Their P&L is the firm's P&L. This distinction shapes everything from compensation to risk culture.\n\nBroadly, the industry splits into two camps. Traditional prop firms (Jane Street, Optiver, Jump, DRW, Citadel Securities) deploy internal capital across market making, arbitrage, and quantitative strategies. They are typically partnerships with intense hiring bars and seven-figure compensation for top traders.\n\nRetail-facing funded trader programs (FTMO, Topstep, MFF, TFT) emerged in the last decade. These firms 'evaluate' traders through paid challenges and allocate capital — usually simulated — to those who pass. The economics are different: firms earn a meaningful share of revenue from challenge fees themselves.\n\nBoth models live under the same umbrella term, but the day-to-day reality could not be more different.