I imagine most prop traders think of themselves as mini hedge fund managers, just with a small nut (asset base). Yet most fail and fail spectacularly, driving themselves to the brink of bankruptcy if they cannot find another line of work when the money runs out. Moreover, they rarely can transition into real trader jobs in investment banks and hedge funds. I believe the reason for this is twofold. First, most self funded prop traders don't have a lot of money to begin with (<$100K). That means if they have no other income coming in to support them, they must make money immediately. This leads to high risk behavior even if they are normally risk averse. When their stock trades don't work out or make them fast money they move on to options and futures trading. This added leverage is often what wipes them out. Yet they have no choice because even the best traders can rarely earn enough to both support themselves and also increase their initial investment. To illustrate: If one starts with $100K and needs $30K a year to live on should trading be a full time job, one would need to earn above 30% returns (ex trading costs/fees) to increase their pot at all. While an exceptional individual may be able to do this, not every trader can earn these WAY above returns. Indeed, most novices lose money initially because they aren't accustomed to the market. So, they panic and leverage up, just to get back to even. Second, most prop traders don't run other people's money. Since novices have no track record, most people are reluctant to hand over their savings to someone to learn on the job. Investment bank and hedge fund traders do have access to OPM. Moreover, they have sophisticated tools, technologies, and access to information that most prop traders don't have. Therefore, professional traders can place large diverse bets and ride out early losses and wait to capitalize on future wins. Even if their returns are just mediocre, professional traders' immediate salaries are not dependent upon what kinds of returns they make for their investors. They often get a fee just for managing investors' assets. A prop trader doesn't have that kind of opportunity. Therefore, the professional trader can be more conservative and place long-term bets. Does this mean prop trading is a fool's game? Statistically, speaking it does. But if there are talented prop traders out there, I'd suggest you do everything you can to become a professional in order to have the opportunity to run other people's money. It's your best bet. Ciao.