Proprietary trading (prop trading) is when a trader uses a prop firm’s capital to trade in financial markets. But what exactly do prop traders trade? In this article, we’ll break down the key asset classes in simple terms so you can understand what prop trading involves.

Key Asset Classes

1. Stocks

Stocks are shares of a company that you can buy or sell. Traders make money from the price difference between buying and selling. Examples of well-known stocks include Apple, Tesla, and Microsoft.

2. Forex (Foreign Exchange)

Forex is the currency market, where traders exchange currencies like the Euro (EUR), US Dollar (USD), and British Pound (GBP). Prop traders in Forex profit from changes in exchange rates.

3. Crypto (Cryptocurrencies)

Crypto trading involves buying and selling digital currencies like Bitcoin (BTC), Ethereum (ETH), and Solana (SOL). It is one of the most volatile markets, with significant price swings.

4. Indices

Indices represent a group of stocks that reflect the overall market performance. For example, the S&P 500 tracks the 500 largest U.S. companies. Prop traders trade indices because they offer stability compared to individual stocks.

5. Commodities

This category includes physical goods like gold, oil, silver, and natural gas. These assets are influenced by economic developments and geopolitical events, making them ideal for volatility-based trading strategies.

6. Futures Contracts

Futures are agreements to buy or sell an asset at a predetermined price on a future date. They are used for trading stocks, forex, commodities, and indices, offering leverage and high-profit potential.

Getting Started with Prop Trading

If you're new to prop trading and looking for beginner-friendly firms to start with, check out this article: Top Beginner-Friendly Prop Firms for Traders.

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Conclusion

Prop traders have multiple options when it comes to trading assets. Stocks and forex are the most popular, while crypto and commodities offer high volatility. The key is to understand how each asset works and choose the one that suits your trading style.

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