Technology plays a huge part in every aspect of business these days, so it is not surprising that prop firms are increasingly taking advantage of modern solutions too.
What do prop firms need help with?
Proprietary firms work by providing traders with cash assets to use on the financial markets. These traders then give them a percentage of the profits they earn.
This enables traders to gain a much bigger return than if they were only able to use a much smaller amount of capital, and it also means they do not have to be responsible for any monies lost. Therefore, if they make a loss on their trade, the prop firm loses out, not the trader.
At the same time, prop firms are able to become successful as they have ownership of the traders’ accounts. As well as earning a proportion of their gains, they also earn money through joining fees and monthly subscription charges.
In addition to this, many sell training courses to develop the traders’ skills and increase their chances of making money, which adds to their profits.
These earnings help to create new pots of capital that can then be given to other traders who can make the prop firm more money. This form of investment means setting up a prop firm can be a very profitable move and an astute business idea.
Technology gives a lending hand
However, getting started in the prop firm industry comes with its challenges, particularly for business owners who are not used to managing lots of clients, data sets, reports and accounts.
That is where technology comes in, as it can manage all the different components, from data analytics to account management, to make it easier for prop firms to handle a growing clientbase.
Here are just a few ways prop firm software can help:
– Automated back office
Having a back office system is incredibly useful, as it can provide automated emails, create reports, and complete payouts promptly and to schedule.
This frees up a significant amount of time for the prop firm to concentrate on looking after their traders and making sure they are knowledgeable and skilled enough to work the markets correctly.
By providing them with training and assistance, the prop firm has a higher chance of making a return out of their trader, so moving over some of the administrative tasks to a software system means they can focus on this and boost their earnings.
– In-depth account analytics
The technology can also analyse the account data and provide relevant information about traders’ finances.
This thorough data analysis can highlight trends, patterns, and trading styles, which help the prop firm know what strategies the trader is likely to use and what their trading style is.
By monitoring their actions, prop firms can more easily measure their success and value, helping to determine whether they are worth giving more money to trade with or if there is a need to shut down their account.
– Risk management
It also provides prop firms with advanced risk management tools so their traders are less likely to make dangerous moves on the financial market and potentially lose lots of the company’s money.
For instance, the software includes proactive monitoring and smart alerts. This means traders are alarmed when they are about to undertake unnecessary risk, encouraging them to act quickly and avoid it, whether that involves entering or exiting a trade.
It also gives thorough overviews for traders, which helps them have all the information they need to make difficult decisions. By being able to see the data analysis quickly and easily, without having to sift through the statistics themselves, they can act promptly but responsibly.
– Up-to-date notifications
Like all apps these days, the software can provide up-to-date notifications to prop firms. This allows them to stay in touch with any market changes, the actions their traders have taken, and what is happening with the accounts.
They can also receive warnings to help them remain in control of their traders, helping them to manage their customers more effectively and efficiently.
– Acts as a customer relationship management platform
Prop firm technology can also provide customer relationship management (CRM) tools that allow businesses to stay on top of their marketing, customer support, and sales calls.
It is essential for all companies, including prop firms, to have regular contact with their customers, responding to their queries and concerns, and providing assistance when necessary. This makes it more likely they will perform well, which will result in financial success for the prop firm, as well as the trader.
– Provides KYC verification
Another reason to use prop firm technology software is to take advantage of Know Your Customer (KYC) Verification tools. This allows companies to check the customer’s identity when they open an account.
It is important they can trust the person they are giving tens, if not hundreds, of thousands of pounds to. If they do not verify the identity of the trader properly, for instance, they could end up handing over the cash to a fraudster, putting huge amounts of the firm’s money at risk.
With KYC Verification, they can be sure the software will detect if official documents have been tampered with or if they are not the legitimate versions. This prevents any fraudulent activity from occurring, and means the prop company’s capital can remain safe.
– No limit to number of traders
The more traders a prop firm has on its books, the harder it is to manage them all. The good news with prop firm technology is that the software is capable of including as many traders as possible in one system.
Therefore, prop firms can look at all their traders in one place, and stay on top of their metrics. It also allows them to connect with different customers from the same place, and have one streamlined system for managing them all, improving efficiency in the workplace and reducing any confusion.
