How to Manage Multiple Prop Firm Accounts

The world of proprietary prop trading is growing, and more and more traders are exploring the possibility of dealing with multiple accounts across several proprietary trading firms. With the emerging online trading platforms and their differing proprietary evaluation systems, there are numerous ways for traders to formulate strategies, manage risks, and increase profits. One of the easiest gateways into prop trading is the “Two-Step Evaluation” system. Prop trading firms require heavy discipline and care to strategically think through multi-account management. In this article, we analyze multi-account management on different prop trading platforms and provide some core solutions aimed at improving the efficiency of traders who work with several firms simultaneously.

Understanding Prop Firms and Their Components 

Before I dive deep into the details of dealing with different account management, it is critical to explain what proprietary trading firms are (prop firms) and how they work. Prop firms are businesses that give traders capital to trade in stocks, forex, commodities and even cryptocurrencies. They, in turn, expect traders to return a portion of the profits gained. The main form of trading which is prop trading has its merits since it allows a trader to access significantly higher amounts of capital than his personal resources, thus increasing chances of earning considerable returns. 

All these prop firms have come to the markets with different offers and approaches to sell their services. Some of the Best Prop Firms offer capital and funding without requiring any from the traders as a deposit. Others deal with the formation of traders, mentoring or paying for results.

One of the most preferred structures among Best Prop Firms is the “2 Step Evaluation” model. The procedure of the model usually has 2 steps: the 1st one involves the trader completing a series of trading challenges where adequate risk management alongside profits needs to be achieved. If completed successfully, they move onto stage to step two which is in fact a bit easier to pass but has more capital allocated to it. This model minimizes risk for prop firms while allowing traders to maximize their skills.  

Why Manage Multiple Prop Firm Accounts?  

Whether or not to manage multiple prop firm accounts highly depends on a trader’s objective, level of experience, and appetite for risk. A more experienced trader enjoys a plethora of benefits when managing several accounts such as:  

• Risk Mitigation Through Diversification: Traders are able to protect themselves from significant losses in one account by spreading risk across multiple accounts with different firms. The poor performance of one firm can be balanced out with the good performance of another, therefore fostering a more stable trading portfolio.
• Access to Capital is Easily Attainable: Just like any lending institution, prop firms enhance their clients’ trading responsiveness by providing readily-available trading capital. When several traders combine their efforts across multiple prop firms simultaneously, the amount of capital within their collective reach increases even further, allowing them to pursue richer and more varied ventures.
• Wider Opportunities For Increased Success: The interplay of capital of different degrees with diversified trading activities offers wider opportunities for profit maximization for a trader. This is very much so for the traders who are maintaining multiple accounts because different account profiles with varied risk levels can be assigned simultaneously.
• Unique Evaluation Frameworks: Each prop firm is provided with evaluation criteria and some characterizations might be more relevant to a trader’s style of trading or his strategy. For example, one firm might have a comprehensive risk management framework while another has a simplistic evaluation framework – a trader might prefer one over the other based on their risk appetite. The existence of numerous prop firms gives traders the option to choose the best and most convenient conditions for their trading strategies.

It goes without saying that juggling multiple prop firm accounts comes with its challenges. For example, monitoring all accounts and their associated rules, evaluation phases, and chronologies is a daunting task that is both time-consuming and demanding. Every firm has different rules which require one to be on top of risk management and performance benchmarking on different systems.

Having trading software would capture all forms of trading from the different accounts and even segments into one easily monitorable document. Plenty of traders are professionals at this point, meaning they have software that performs trading on their behalf with an analytics dashboard consolidating all trade data. This can be especially handy for those whose work involves trading around different asset classes as it consolidates account performance snapshots in real time.  

Time Prioritization and Management  

Every trading firm utilizes different accounts or company profiles. With so many accounts, time management is critical. Every single one of these firms is likely to have a unique set of evaluation timeframes that govern how aggressively risk management rules may be implemented, as well as market trading hours for those they support. For every account, specific time needs to be set aside for analysis in order to take relevant responsive actions to upcoming opportunities.  

Perhaps the most challenging problem traders face is coping with multiple evaluation steps with different firms. Different firms will have different tolerances and expectations of risk for their clients. The 2 Step Evaluation model is an example in which profit targets must be met at the first stage, while simultaneously enforcing drawdown limits. It becomes more difficult when controlling several firms, because one has to pre-organize all steps to meet expectations and strategy requirements with all contracting firms.

Make sure you create a timetable for trading and performance evaluations which can be done daily or weekly. Don’t forget to allocate time for every account, perform the analysis, and design a plan to improve the account’s performance. You will not fail to meet deadlines and it becomes easier for you to monitor how each account is performing.  

Managing risks stands out as one of the most critical factors in prop trading especially when dealing with several accounts. Every prop firm has its own risk management rules and it is crucial to stick to the rules because failure to do so may disqualify you or cause a loss in capital. Not adhering to set restrictions related to risk will lose you the account and that puts your performance at serious risk.  

Now the challenge shifts when handling accounts from different prop firms. These accounts can be difficult to manage when you begin applying additional risk criteria, such as daily drawdown limits, maximum loss thresholds, and even profit cap limits.

Working simultaneously on these rules, adds additional layers of challenge to the work and to achieve success in the long run, balance among each of them while ensuring all parts are followed is critical. 

Risk management for multiple accounts 

Opening several accounts at the same time is referred to as diversification in managing risk across different accounts. Because you are trading various instruments or strategies, there exists the potential of distributing your risk across multiple positions. For example, dealing in foreign exchange with one firm, stocks with another, and commodities with a third firm helps reduce the risk of large losses significantly affecting all your accounts at the same time. 

Something else equally important that needs to be looked into is the exact ratio of risk and reward of your trading strategy. In this case, the chances of being over exposed to one position or account is covered because there are sufficient profits available to offset a person’s risk. 

Tracking your progress

Going over your progress is as important as dealing with the numerous accounts. It helps complete all of the courtesy requirements for each of the firm’s two-step evaluation and lets you use strategies that boost performance.

Some prop firms might collect responses through various methods, including performance reports, evaluation updates, and possible risk level notifications. Strategically analyze the change in reporting after implementing the suggested adjustments to your trading strategies. If the account you hold is underperforming significantly, consider reducing the risk on better-performing accounts or changing your overall trading strategy to adapt to the firm’s favorable conditions.

Conclusion

Maintaining multiple accounts for a single prop firm can simultaneously be a rewarding and challenging experience. The Best Prop Firms present great opportunities for businesses and can be fully exploited by blending risk and profit allocation. Undoubtedly, achieving success comes initially from having discipline, but even more so from managing time in conjunction with the firm’s risk management policies which is critical. All of this allows for achieving optimal trading performance which enhances winning odds in prop trading. Whether it is through the 2 Step Evaluation or exploring new trades, managed prop firm accounts bring a plethora of new possibilities for traders.