“I keep hearing about prop firms and market makers… but which one actually matters to me as a trader?”
If you’ve asked yourself this, you’re not alone.
In today’s markets, Prop Trading and Market Making are two of the most talked-about terms, yet also two of the most misunderstood.
From global trading desks to high-speed algorithms, these models quietly shape pricing, liquidity, and the trading experience you feel every time you open a position in Forex, Crypto, Indices, or Metals.
In this blog, we’ll break down Prop Trading vs Market Making in a simple, practical way.
What Is Prop Trading?
Let’s start with the core idea.
Prop Trading (short for Proprietary Trading) is when a firm trades its own capital to generate profit. Instead of just facilitating trades for clients, the firm itself is the trader.
There are two common models:
- In-house Prop Desks
Large firms use their own funds and professional traders to trade currencies, commodities, equities, indices, and more. - Prop Firms with External Traders
These firms fund external traders (often remote, often global) after they pass challenges or evaluations. Traders then receive a share of the profits.
So how is that different from a regular retail trader?
- A retail trader trades with personal capital via a broker.
- A prop trader trades with company capital, usually under specific risk rules, profit targets, and drawdown limits.
Regardless of the structure, the goal of Prop Trading is clear:
Generate returns by predicting and trading market movements.
What Is Market Making?
Market Making is a completely different role in the financial ecosystem.
A market maker continuously quotes both buy (bid) and sell (ask) prices for a financial instrument, for example, a currency pair or commodity CFD, and stands ready to trade at those prices.
Their core purpose: Provide liquidity so that other traders can enter and exit the market smoothly.
Here’s what that looks like in practice:
- When you want to buy, a market maker is often on the other side, selling at the ask price.
- When you want to sell, they’re often the buyer at the bid price.
- They earn from the bid–ask spread, that small difference between the price you can buy at and the price you can sell at.
So while Prop Trading is all about directional profit, Market Making is about liquidity + spread capture, usually in very high volumes.
Prop Trading vs Market Making: Key Differences
Let’s put them side by side in plain language.
Aspect | Prop Trading | Market Making |
Main Goal | Profit from market direction (up or down) | Provide liquidity, profit from bid–ask spread |
Capital Used | Firm’s own capital | Firm’s own capital |
Market Stance | Often directional (bullish or bearish) | Typically neutral, hedged, spread-focused |
How They Earn | Gains from correct price prediction | Tiny profits on large volumes of trades |
Role in Ecosystem | Active trader, searching for opportunity | Liquidity provider, keeping markets fluid and tradable |
Time Horizon | Can be intraday, swing, or longer-term | Often ultra-short-term, high-frequency quoting and execution |
Both are important.
Prop Trading hunts for opportunity.
Market Making keeps the market moving.
What Do They Have in Common?
Even though they play different roles, Prop Trading and Market Making share a few important traits:
1. Both Are Profit-Driven
At the end of the day, both models are businesses built around profitability, whether through directional trades (Prop Trading) or spreads and volumes (Market Making).
2. Heavy Use of Technology
Both rely on advanced technology:
- High-speed trading systems
- Algorithmic strategies
- Real-time data feeds
3. Constant Market Participation
Prop traders and market makers are usually deeply involved in the markets, tracking moves across Forex, Commodities, Indices, and more, throughout the trading day.
Where Does a Retail Trader Fit In?
If you’re using a platform like Finsai Trade, you’re most likely:
- A retail trader,
- A beginner investor learning via demo,
- Or an experienced trader building a strategy, sometimes in collaboration with external prop firms.
You are not acting as a market maker; you’re acting as a participant who benefits from the liquidity and prices they help create.
However, you can take inspiration from Prop Trading principles:
- Clear rules
- Tested strategies
- Disciplined risk management
What Type of Trading Mindset Matches You?
Here’s a simple way to think about it:
- If you’re drawn to strategy, risk-taking, and performance-based rewards, the Prop Trading mindset probably resonates with you.
- If you’re fascinated by systems, pricing, and liquidity flows, the Market Making model may capture your interest from a more structural, institutional angle.
Either way, as a trader on Finsai Trade, what matters most is:
- Your strategy,
- Your risk control,
- And the quality of your trading tools.
Conclusion: Prop Trading vs Market Making – What Should You Take Away?
You don’t need to be a Wall Street insider to understand Prop Trading vs Market Making.
- Prop Trading is about using a firm’s capital to profit from market moves.
- Market Making is about providing liquidity and earning from spreads.
Most retail traders will never become market makers, and that’s okay.
What matters is that you have access to:
- A reliable, transparent trading platform,
- The right tools,
- And the confidence to grow your skills.
FAQs – Prop Trading vs Market Making
Prop Trading is when a firm trades with its own money instead of trading on behalf of clients. The goal of Prop Trading is to profit from price movements in markets like Forex, Commodities, Indices, or Crypto.
Market Making focuses on providing liquidity by constantly quoting buy and sell prices and earning from the spread. Prop Trading focuses on strategic positions and profits from market direction. Both operate in the same markets, but their objectives are different.
Yes. Many advanced trading firms combine Prop Trading and Market Making, using Market Making to provide liquidity and Prop Trading strategies to seek additional returns. They’re different functions, but often coexist under one roof.
As a retail trader using a trading platform, you’re typically not market-making. You’re trading as an individual, closer to a Prop Trading mindset if you’re using structured strategies and clear risk rules, but you’re trading your own capital.
You don’t need to know every detail of Market Making, but understanding that market makers influence spreads, liquidity, and execution can help you make smarter decisions in Forex and Commodity trading, especially when spreads widen during volatile periods.
Disclaimer
Trading Forex, Crypto, CFDs, and other leveraged products carries a high level of risk and may not be suitable for all traders. You should only trade with money you can afford to lose and consider seeking independent financial advice if needed. The information in this blog is for educational purposes only and should not be considered financial or investment advice.
