There are many different flavors of prop trading firms out there, but the choice boils down to the two main types: Employee vs Member.
Some prop trading firms hire you as an employee and pay you a salary plus a bonus based on your profitability. You don’t risk any of your own capital. This provides a steady income, but as you can expect, the payouts will be much lower in return. Generally they are looking for someone to fill a certain niche, so you would likely be trading a specific strategy that fits into the firm’s overall risk profile. How big you trade would be based on their allocation to that strategy, as well as your performance. These firms generally have extensive training programs, and you work in groups with other traders.
The other type of prop trading firm is the LLC Member firm. You contribute capital to the firm and become a member of the LLC, which gives you access to the firm’s capital. Since you are putting up capital, and there is no base salary, payouts here are much higher, in the 80-90% range. How big you trade is a function of how much capital you have up at the firm (including profits you leave in the firm) as well as your trading style and performance. You can get leverage on your capital of 20x-40x, allowing you to trade much bigger than you could on your own. That capital is at risk, however. First, in your own trading, as any losses will be taken out of that capital balance. Second, at the firm level – you are a member of the firm, not an account with SIPC protection, so if the firm overall loses money, your capital can be at risk. Make sure you deal with a reputable firm with a good capital base.
LLC Member firms are usually broker-dealers, which means you will need to pass the Series57 exam to trade with them. This is the Equity Trader Exam, so if you have market experience, studying for and passing the test should be relatively easy. 2-3 weeks of studying is usually required before sitting for the exam.
Joining a prop trading firm is a big decision. Make sure you talk to other traders at the firm and check the firm’s background before committing capital.