Chances are you’ve heard of retail trading. It’s when investors use their own money to buy assets. However, if you’ve ever wanted someone else to put up the funds, you may be interested in p trading.
It’s a less common model where firms give their capital to qualified fessional traders and have them invest it.It may sound a cheat code since you’re using a financial institution’s vast capital to make trades without having to risk your own money.
However, there are risks to consider with p trading vs retail trading, and the bar to qualify is high.Table of ContentsWhat is p Trading?What is Retail Trading?Key Differences Between p Trading and Retail TradingSee All 11 ItemsWhat is p Trading?p trading involves using an investment firm’s capital to trade assets.
You will have to a small percentage of your fits — most firms take a cut between 10% to 30% of a trader’s fits — but you don’t have to put up your own money.
Financial institutions that permit p trading have strict requirements which strategies you can use and what type of returns you must generate to maintain your trading privilege.
However, p traders get access to advanced tools that aren’t available to retail investors, which can increase your chances of success.If a p trader blows up the account, the firm is on the hook for the losses, and that’s why they won’t take just anyone.
Applicants often go through rigorous tests and a simulated trading gram before getting any capital from a financial institution. Each p firm has different trial periods.
Some may test you over a two-week market simulation, while others may want to see how you perform in a simulated market for six months.Forex, futures, stocks, and options are four of the most asset classes among p trading firms.
If you’re good at trading any of these assets, you may have a shot with p trading firms.
Some of the best-known names include Apex Trader Funding, FundedNextFutures, and RebelsFunding.What is Retail Trading?Retail trading has a lower barrier to entry.
You just have to deposit money into a brokerage firm and start . You don’t have to strict rules and can trade any assets you want.
Retail traders can also take their time, while p traders often have tight deadlines for achieving certain returns.Retail trading platforms Fidelity and Vanguard make it easy to create brokerage accounts.
They’ll give you a wide range of tools, but they’re not as advanced as the ones p traders get.
Since you’re trading with your own money, you don’t split fits with a firm, but you do have full exposure to any losses that your portfolio incurs.Key Differences Between p Trading and Retail TradingBoth kinds of trading give you exposure to equities, currencies, derivatives, and other types of assets.
However, there are a few important differences between p trading and retail trading to keep in mind before making a choice.Capital SourceWhen deciding between p trading vs retail trading, it’s important to consider where your money is coming from.
p firms give you their capital and let you make trades. As a retail trader, you’re self-funded.
p trading is less risky for you because you won’t lose your own money, but if you incur enough losses for a trading firm, they’ll cut you off.Risk Exposurep firms impose several rules that limit which assets traders can buy and how frequently they can trade.
Retail traders can take any risky strategy they desire, but they have more exposure to risk since it’s their money.Leverage & Buying PowerRetail traders can use margin to boost their purchasing power.
Margin is similar to a loan, and you incur interest against the money you borrow against your portfolio.
The leverage that comes from margin can amplify your gains and losses and is a high-risk tool that is only suitable for advanced traders.p firm traders get more leverage and buying power than retail traders.
Some firms give fessional traders more than $100,000, but the key difference is that traders don’t pay interest or have to repay any investment losses.Regulatory Requirementsp firms face fewer regulatory hurdles than brokerage firms, which allows them to engage in riskier strategies.
However, both types of firms have to fulfill regulatory requirements. p firms are registered as es but not as brokers.
Meanwhile, all stock brokers must obtain licenses and registrations from the Securities and Exchange Commission and other regulatory bodies.fit StructureRetail traders get to keep all of their fits.
When they invest money, they reap all of the risks and rewards. p trading firms get a percentage of a trader’s fits since they’re putting up the money.
Most p firm traders get to keep 70% to 90% of the fits they generate from trades.
However, some p firms aren’t their rules and tack on hidden fees, so do your re before committing.Access to ToolsInvestors can find plenty of resources on retail trading platforms, but p firms offer more advanced tools to help traders compete with hedge funds and institutional investors.
That kind of access may not make much of a difference for retail investors who make small trades or buy and hold simple securities index funds, but it can make a significant difference for fessional traders.Which is Right for You?
Choosing Your Trading Path in 2025p trading may sound a better deal than retail trading, but that’s why p firms won’t let anyone tap into their capital.
You have to meet their rules and pass their tests to start working with them.
You also have to do your re to ensure you aren’t working with a fraudulent p firm or one that slips in a bunch of hidden fees.Retail trading is more suitable if you have a longer time horizon and don’t want to be a fessional trader.
It’s hard to be a p trader and have a full-time job, so you should only pursue that route if you make almost all of your money from trading.
If you already have enough capital and are in it for the long haul, retail trading is the better option.Frequently Asked QuestionsQIs p trading riskier than retail trading? ANo.
p trading is less risky since you are using the p firm’s capital to make trades. When you make retail trades, it’s with your funds. QCan you switch from retail to p trading?
AYou can make the switch if a p firm apves your application. You will first have to demonstrate that you can generate sufficient trading fits in a simulated market. QDo p traders need a license?
ANot all p firms require that p traders have licenses.
While a license will let you choose from a greater range of p firms, some firms only assess traders based on their skills and ability to duce fits.
Marc GubertiMarc Guberti is an writer passionate helping people learn more money management, and finance. He has more than 10 years of writing experience focused on finance and digital marketing.
His work has been published in U.S. News & World Report, USA Today, InvestorPlace and other publications.