With many analysts forecasting increasing volatility and uncertainty in the aftermath of continuing global events including geopolitical tensions, inflation worries, and supply chain disruptions, 2023 is shaping up to be a critical year for financial markets. Proprietary traders are preparing for what looks to be a difficult but potentially successful year, that’s according to the most recent Acuiti Proprietary Trading Management Insight Report, proprietary trading firms are boosting their investment budgets. The analysis indicated that 68% of the firms represented in the network were projecting above average technology investment budgets for 2023, according to a quarterly survey of the Acuiti Proprietary Trading Expert Network, a group of over 100 top proprietary trading executives. 25% of respondents stated their budget will be much higher than the national average. This increased investment in technology is primarily intended to reduce latency on current markets, underscoring the growing significance of speed during periods of unstable market conditions and liquidity shortages. Investments are also concentrated in the area of connectivity to new markets. “Traders view optimized latency as a need in erratic times. Fast trading has never been more crucial”, according to Aleksey Larichev, co-founder and managing director of low latency networking company Avelacom, which collaborated with Acuiti to create the research.

What are prop trading firms also planning to do in 2023?

Prop trading companies also intend to hire more people; nearly 80% of respondents said they anticipate doing so in 2023. The twin issues of a worker scarcity and wage inflation that were identified in the results from the previous quarter are expected to be made worse by this action. According to the report, greater investment is occurring at a time when geopolitical and economic unrest are still having a negative impact on international markets. This might be a successful year for proprietary traders, who often profit from market volatility. In all, 73% of the network anticipated that 2023 will be an above-average year for trade, and over a fifth of respondents believe that their company will perform significantly better than usual. Acuiti’s founder, Will Mitting, said, “Private trading companies play a crucial role in supplying liquidity in extremely volatile markets. The likelihood of a robust company performance in 2019 means that the global market volatility witnessed in 2022 would probably persist in 2019. Businesses invest to stay competitive. They will not, however, be immune to the rising expenses of doing business, particularly in the area of pay, where a lack of qualified workers in many countries is driving up wages significantly.”

Is it hard to be a Proprietary trader in 2023?

The short answer is that it will probably be challenging to be a prop trader in 2023. Prop traders will need to be ready to navigate a quickly changing environment and adapt to shifting market conditions because the markets are expected to be very unpredictable. The following are some of the main difficulties that prop traders will probably have in 2023:

  • Market Uncertainty: 2023 is predicted to be a year of increased market unpredictability due to continuous economic uncertainty and instability. Prop traders will need to be equipped to deal with these unpredictable market conditions and modify their trading methods as necessary.
  • Geopolitical Risks: The financial markets are susceptible to geopolitical hazards like trade disputes, political unrest, and armed wars. Prop traders must keep up with geopolitical developments and be ready to modify their trading plans as necessary.
  • Regulators monitoring: Prop traders are under regulatory monitoring and obligations, which poses a danger to compliance and may lead them to legal repercussions. The financial markets will probably be subject to further regulatory scrutiny in 2023, which could present extra difficulties for prop traders.
  • Evolving Technology:Technology is developing quickly, therefore in order to stay competitive, traders will need to stay on top of the most recent advancements. To do this, they may optimize their trading tactics using cutting-edge trading technologies like algorithms and artificial intelligence.

How should proprietary traders prepare for the new market conditions of 2023?

Given the high levels of unpredictability and volatility in the markets, proprietary traders need to be ready to maneuver through a dynamic environment and adjust to shifting market conditions. Prop traders might employ the following methods and strategies to get ready for a busy year ahead:

  • Keep abreast of market developments and trends: Proprietary traders must keep abreast of market developments and trends in order to make wise trading decisions. To do so, it is necessary to read regarding national and international news, economic statistics, and market-related events. To find promising profit opportunities, proprietary traders should also look at historical market trends and patterns.
  • Create a Comprehensive Trading Plan: Prop traders can better control their risks and increase their chances of success by creating a thorough trading plan. This entails establishing specific objectives, risk management plans, and trading regulations. Prop traders should frequently assess their trading strategies to make sure they are still applicable and efficient in the current market environment.

Work together with Experienced Mentors: Prop trading companies frequently give their traders access to knowledgeable mentors who may offer direction and help. Prop traders can benefit from their experience and get important insights into market trends and trading methods by working together with knowledgeable mentors.