Prop Firm vs Broker :
Commissions - Don’t Go Broke using a Broker!

A Brokers main income source is from commission, therefore the more you trade the more the broker makes. Whereas a Proprietary Trading firm makes their money solely from taking a % of any profitable traders profits. At a lot of Prop Firms the commission price is typically given to the trader at the cost price.

At TraderEquity™ we see a lot of traders approach us having beaten the market only to end up with a loss after broker commissions and locate costs. Having access to ultra low commission with us enables traders to suddenly make scalping a possible and viable strategy.

Your overhead costs are a major factor to consider therefore to try and clearly illustrate how profound the effects of high brokers commission on your ability to become profitable. We have come up with the following example:

Two Friends Tom & Toby both have $5000 each and decide to each open a trading account.

Tom went with a Prop Firm TraderEquity™ didn't have a track record so was asked to provide a Performance Bond to offset any costs associated with running his account. He was given a Max Daily loss and $50,000 BP. He was told there was no relationship between the performance bond and BP. The better Tom does the more BP the firm will extend.

Toby with a Broker that offers FREE trades when you add liquidity was given 1 to 4 leverage so based on his deposit had $20,000 to trade with.

If Tom is successful with his trading at TraderEquity™ he will be offered a Funded Account where his fees will be reduced, he will be offered more capital to trade with and can withdraw his profits monthly. Tom will ONLY be offered a Funded Account if he is sucessful or shows promise, he can NOT buy access to a Funded Account.

If Toby is successful at his brokers he will have to reinvest his profits and his very high fee's will stay the same.

The table below shows both offers:

The Broker

Standard Account

Buying Power

1 to 4

From $25,000 Upwards

Commission Cost

FREE if add Liquidity / $0.005 per share
($0.99 trade min)

From $0.00177 per share
($0.99 trade min)

ECN Rebates




Tom and Toby decieded to keep the compairment fair they would both take 10 round trips per day which would be 20 trades in total. Each trade they agreed would be 1000 shares, this will therefore be a Total of 20,000 shares traded each day for each individual.

(Taking Liquidty)

(Adding Liquidty)

Cost per Day of 20,000 Shares
(Taking Liquidty)

Cost per Day of 20,000 Shares
(Adding Liquidty)

20 Trading days (Taking Liquidty)
20 Trading days (Adding Liquidty)

The Broker

- $5.00


- $100


- $2000


- $1.77

+ $0.23

- $35.40

+ $4.60

- $708
+ $92


Please Note: That although the above is just an example and for illustrative purposes, there will be other factors to consider. However saying this you can clearly see that if you were adding or taking liquidity when trading that TraderEquity™ would be far cheaper.

As you can see the profound saving that you gain by using a Prop Firm like TraderEquity™ over a Broker. Being able to beat the market is one thing but if your overheads are high when you start losing it really works against you fast.

Therefore to give yourself a chance of sucess when starting out trading you want to be in an enviroment where you can take alot at low risk and cost till you find your edge.


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