How to Start a White Label Prop Firm: A Complete Guide to Success

The proprietary trading (prop trading) industry has seen significant growth, with many entrepreneurs looking to capitalize on this trend. Launching a white label prop firm allows new businesses to enter the market with minimal technical barriers, leveraging an established provider’s technology and infrastructure. However, starting a white label prop firm involves strategic planning, compliance, and careful management.

In this blog, we’ll explore how white label prop firms operate, what steps are needed to launch one, and how to ensure long-term success. Whether you're planning to start your own prop trading white label or interested in learning about the business model, this guide covers everything you need to know.

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What is a White Label Prop Firm?

A white label prop firm is a proprietary trading business that uses a third-party trading platform and infrastructure under its own brand name. Instead of building technology from scratch, the firm leases or partners with an established prop trading white label provider, saving time and development costs. Traders who join these firms often trade with company-provided capital, and the profits are shared between the firm and the trader.

This model offers a streamlined entry point into the financial markets, giving firms access to ready-made platforms, liquidity providers, and risk management tools.

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How White Label Prop Firms Make Money

White label prop firms generate income through multiple streams, including:

1. Trader Challenge Fees

• Most white label firms charge traders a fee to participate in evaluation challenges. These challenges determine whether the trader qualifies for a funded account.
• Example: If a trader pays $300 for a challenge and only 5% pass, the firm collects income from the unsuccessful attempts while limiting the number of funded accounts.

2. Profit Sharing

• Once a trader receives a funded account, the firm shares a portion of the profits. For example, a trader might keep 80-90% of the profits, while the firm takes 10-20% as its cut.

3. Spread Markups and Commissions

• Some firms act as introducing brokers (IBs) for liquidity providers, earning commissions or markup spreads on every trade executed through their platform.

4. Retake and Reset Fees

• Traders often pay additional fees to retry a challenge or reset an existing one if they fail. These fees contribute to the firm’s revenue and help sustain operations.

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Steps to Start a White Label Prop Firm

1. Choose a White Label Provider

Selecting the right white label provider is the foundation of a successful prop firm. Providers like TradeLocker, cTrader, and DXtrade offer comprehensive solutions, including trading platforms, customer relationship management (CRM) systems, and liquidity integration.

Key Features to Look for:

• Challenge Templates to evaluate traders
• Profit-Sharing Tools to automate payouts
• KYC and AML Integration to manage compliance
• Seamless CRM for onboarding and monitoring traders

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2. Develop a Business Plan

A solid business plan outlines the goals, target market, and revenue streams of your white label prop firm. Important considerations include:

• Challenge Pricing and Structure: Calculate the fees needed to cover costs and generate profit.
• Marketing Strategy: Plan how to attract talented traders using social media, affiliate programs, or introducing brokers (IBs).
• Jurisdiction and Compliance: Choose a jurisdiction with favorable financial regulations and register your business accordingly.

Key Business Plan Components

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3. Customize Your Platform and Brand Identity

The trading platform you lease from the white label provider should reflect your firm's branding. You can customize the interface, color schemes, logos, and trading conditions to align with your business identity.

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4. Integrate Payment and KYC Systems

A seamless payment system ensures that traders can easily pay for challenges and withdraw profits. Many firms also integrate crypto wallets and PSPs (Payment Service Providers) for added flexibility. Additionally, KYC (Know Your Customer) systems help ensure compliance with anti-money laundering (AML) regulations.

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5. Test the Platform Before Launch

Before opening your doors to traders, test the platform thoroughly. Simulate market conditions and trading scenarios to ensure the system performs smoothly under various conditions. Address any bugs or inefficiencies before launching publicly.

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6. Set Risk and Profit Controls

Establish drawdown limits to manage risk. For example, if a trader is given a $100,000 funded account with a 10% drawdown limit, they can only lose up to $10,000 before the account is closed. This ensures the firm’s losses are contained.

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Cost Breakdown: How Much Does It Cost to Start a White Label Prop Firm?

The initial and ongoing costs for launching a prop firm white label can vary depending on the provider and scope of operations. Here's a breakdown of potential expenses:

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Benefits of a White Label Prop Firm

1. Lower Startup Costs:

• Using a white label solution eliminates the need to develop software from scratch, reducing upfront expenses.

2. Faster Time to Market:

• White label providers offer ready-to-launch platforms, allowing firms to go live in a matter of weeks.

3. Scalability:

• As the firm grows, more asset classes and trading features can be added without significant new investment.

4. Access to Advanced Tools:

• Firms benefit from built-in features like profit-sharing tools, real-time analytics, and compliance modules.

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Essential Tools for a White Label Prop Firm

• Trading Platform: Ensure it supports Forex, crypto, and indices.
• CRM System: Track traders and manage challenges effectively.
• KYC/AML Compliance: Meet regulatory standards to prevent fraud.
• Payment Gateway Integration: Allow traders to pay fees and withdraw profits smoothly.
• Risk Management Tools: Set drawdown limits and monitor trader performance.

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Conclusion: Is a White Label Prop Firm Right for You?

Starting a white label prop firm offers a cost-effective way to enter the proprietary trading industry. By leveraging existing technology and infrastructure, firms can launch quickly and focus on growing their trader base. With the right platform, business strategy, and compliance framework, a prop firm white label can become a profitable venture.

If you're ready to start your own white label prop firm, choosing the right provider and ensuring operational readiness are the first critical steps. Take advantage of the opportunities in the growing prop trading industry and position your firm for long-term success.

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FAQs: White Label Prop Firms

Q1: What is a white label prop firm?

A1: A white label prop firm is a proprietary trading business that leases technology and infrastructure from an established provider, allowing it to operate under its own brand.

Q2: How do white label prop firms make money?

A2: They earn from challenge fees, profit sharing, spread markups, and additional fees like resets or retakes.

Q3: Do white label prop firms need a financial license?

A3: This depends on the jurisdiction. Some regions require registration or licensing, especially if live accounts are offered.

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Glossary: Key Terms in White Label Prop Trading

• White Label Provider: A company that offers ready-made trading platforms for businesses to rebrand and use.
• KYC (Know Your Customer): A process for verifying trader identities to ensure compliance with regulations.
• PSP (Payment Service Provider): A system for handling financial transactions.
• Drawdown Limit: The maximum loss a trader can incur on a funded account.
• Profit Sharing: A model where the firm shares profits with traders who perform well.

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External Links About “white label prop firm”

To learn more about white label prop firms, check out the following resources:

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Top External Webpages:

1. https://b2broker.com/news/choosing-a-white-label-prop-trading-provider-in-2024/
2. https://quadcode.com/blog/how-to-start-a-white-label-prop-trading-firm

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