I think you are conflating several issues. Pros and cons of prop outfits are one thing, fx cash an entirely different thing. I am not a fan of any prop shop that asks traders to put up their own money. Financial markets offer sufficiently leveraged instruments. If that is not enough then a retail trader simply is exceeding prudent risk levels. Period.
But pros and cons for or against fx cash is an entirely different story. From a risk perspective cash fx is one of the safest instruments after investment grade bonds one can trade (that some beginners abuse leverage is their own fault) . The market is the most liquid in the world, fx are kind of macro instruments, meaning they are not jerked around by some bank analysts or pump and dump schemes, they trade 24/5, one can get in and out at any time at minimal cost. Leverage is sufficient and volatility is more than manageable.
The question arises which broker to trade fx through. And there is unfortunately no good one for Americans because of regulations. I do not even consider bucket shop brokers. I consider a good broker one that has been in the business for over 10-15 years at least, never had a major incident of theft or client funds disappearing. A broker who is very prudent in managing its risk. A broker that passes through bank and ecn liquidity with zero markups. And even for non Americans there are very few choices: Interactive Brokers, Dukascopy, Lmax, Baxter, Pepperstone, and perhaps 2 or 3 others. The rest of the fx brokers are utter garbage who are either dishonest or have not been in the business long enough, or overcharge, or are not prudent enough re risk management.
PS: this post was more in response to your post than the OP. I think he is not experienced enough and does not understand that trading at leverage multiples of greater 20 is a recipe for disaster. Even in fx markets there is the occasional 2-5% melt-down/up, sometimes within seconds or minutes, sometimes within hours and that would mean at worst a total loss of investment even with 20:1 leverage levels. And larger moves such as the depeg of Euro and Swiss Franc can even end up in debit balances and debt to the broker.
But pros and cons for or against fx cash is an entirely different story. From a risk perspective cash fx is one of the safest instruments after investment grade bonds one can trade (that some beginners abuse leverage is their own fault) . The market is the most liquid in the world, fx are kind of macro instruments, meaning they are not jerked around by some bank analysts or pump and dump schemes, they trade 24/5, one can get in and out at any time at minimal cost. Leverage is sufficient and volatility is more than manageable.
The question arises which broker to trade fx through. And there is unfortunately no good one for Americans because of regulations. I do not even consider bucket shop brokers. I consider a good broker one that has been in the business for over 10-15 years at least, never had a major incident of theft or client funds disappearing. A broker who is very prudent in managing its risk. A broker that passes through bank and ecn liquidity with zero markups. And even for non Americans there are very few choices: Interactive Brokers, Dukascopy, Lmax, Baxter, Pepperstone, and perhaps 2 or 3 others. The rest of the fx brokers are utter garbage who are either dishonest or have not been in the business long enough, or overcharge, or are not prudent enough re risk management.
PS: this post was more in response to your post than the OP. I think he is not experienced enough and does not understand that trading at leverage multiples of greater 20 is a recipe for disaster. Even in fx markets there is the occasional 2-5% melt-down/up, sometimes within seconds or minutes, sometimes within hours and that would mean at worst a total loss of investment even with 20:1 leverage levels. And larger moves such as the depeg of Euro and Swiss Franc can even end up in debit balances and debt to the broker.
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