In recent years, prop firms have gained popularity among traders seeking to profit from trading without breaking the bank. Most of these firms partner with other businesses to enhance the services they offer traders to sustain their operations. This article explores how prop trading firms are forging B2B alliances to broaden their market reach.
What Do Prop Firm B2B Collaborations Look Like?
Prop firms are moving away from their solitary business approach and embracing collaborative strategies that offer mutual benefits. This shift is aimed at several business goals, such as market expansion, risk diversification, technology sharing, and talent pool expansion.
- Market expansion allows companies to enter geographic regions quickly and efficiently. For instance, a U.S.-based firm specializing in equity derivatives might partner with a European firm with expertise in forex trading. These partnerships can help companies expand as new products and services are offered to a new pool of clients.Â
- Beyond partnerships between prop firms, alliances can be formed with startups, fintech companies, or brokers like OANDA. One such collaboration is between FTMO and Algobuilder, as discussed in the case study below. Such technology sharing has become crucial, particularly in an industry where microseconds can make the difference between profit and loss.Â
- These collaborations are also significantly broadening the talent pool. Businesses are tapping into various traders and analysts, resulting in innovative trading strategies and a larger market overall.Â
Case Studies
Case Study 1: AlgoBuilder and FTMO
AlgoBuilderX is a web-based platform designed to create and backtest algorithmic trading strategies. Earlier this year, AlgoBuilderX and FTMO collaborated to merge their expertise in market prediction and Forex trading. They leveraged AlgoBuilderX’s analytics technology with FTMO’s robust infrastructure and large trader base.
As a result of this partnership, prop traders on FTMO can now create their custom strategies by;
- Choosing entry, exit, and risk management rules
- Defining financial instruments they would like to trade and on what time frame
- Backtesting and optimising their strategies using backtesting data
Once a strategy has proven profitable, it can be deployed to the trading platform (cTrader) and left to run on autopilot. This benefits new and experienced traders — particularly those who prefer a hands-off trading experience.
Both companies worked together to develop a system that enhanced the efficiency of trade execution, increased Algobuilder’s market share, and broadened FTMOs market presence.
Case Study 2: iDenfy and Ftmo
In March 2024, iDenfy, a tech company based in Lithuania, collaborated with FTMO to enhance and simplify the onboarding procedure for new traders. iDenfy provides three-layer identity verification solutions to prevent fraud and ensure companies easily comply with anti-money laundering laws.
This partnership aimed to improve compliance processes for Know Your Customer (KYC) and Know Your Business (KYB), with a focus on minimizing the number of duplicate accounts.
FTMO benefited from this partnership by enhancing the management of its expanding platform to provide traders with a streamlined and safe registration process. Moreover, iDenfys verification tools helped FTMO cross-check international sanction lists to ensure adherence to guidelines. iDentify benefitted from an increased market share and client base — both in the prop trading industry and the Czech market.
What Makes a Successful Prop Trading Partnership
Below are the key features that make partnerships such as these a success.
Mutual Benefits
Successful B2B partnerships often involve companies with different expertise and strengths. For example, one company may specialize in forex market analysis, while another offers algorithmic trading capabilities (or other specialized services). Collaboratively, the two companies can devise a trading strategy that merges market insight with efficient execution.
This symbiotic partnership can be extended to B2B partnerships across sectors. It’s crucial to seek out companies with competitive advantages in areas where you would like to improve and provide them with a form of value they would equally benefit from.
Effective Communication
Effective and clear communication ensures success and profitability in B2B partnerships. These communication channels help both businesses constantly align objectives and meet the partnership’s goals. Performance evaluations can also be used to evaluate the effectiveness of existing strategies and make adjustments for better outcomes. Most companies use shared data platforms to facilitate real-time information exchange among stakeholders by providing access to trading data streams and essential risk metrics.
Risk Management
Established protocols for risk management are necessary in prop trading partnerships and often involve predefined risk parameters. Various risks can result from a partnership, including loss of funds, legal issues, and diverse public perception. It can be challenging to manage all possible drawbacks, and that’s where having an exit plan (or an exit clause) for these partnerships comes into play.
Prop Trading Partnerships Pioneering the Future
The prop trading industry offers valuable lessons for B2B partnerships in different sectors. Proper risk management, effective goal alignment, and communication are just a few of the ways these partnerships can garner success and drive growth and innovation.
