The traditional prop firm model has a dirty secret: many firms profit when traders lose. They're essentially taking the other side of your trades, creating an inherent conflict of interest. At Velotrade, we've built a fundamentally different model using institutional hedging. Here's how it works and why it matters.
The Problem with Traditional Prop Firm Models
Most retail prop firms operate on a simple premise: collect evaluation fees from thousands of traders, knowing that the vast majority will fail. The few who succeed get paid from a pool of evaluation fees, with the firm pocketing the difference.
Even worse, some firms actually trade against their successful traders. When you win, they lose. When you lose, they win. This creates a fundamental misalignment of incentives. The firm benefits from trader failure, leading to unnecessarily strict rules, hidden requirements, and opaque risk management that seems designed to cause violations.
This adversarial relationship is the opposite of a true partnership. You're not collaborating toward shared success -- you're in direct competition with the firm providing your capital.
How Institutional Hedging Works
Institutional hedging is a sophisticated risk management technique used by banks, hedge funds, and large financial institutions. Instead of taking directional bets or trading against clients, institutions use hedging to generate consistent, low-risk returns regardless of market direction.
Here's how we apply it at Velotrade: When you take a position, our system doesn't bet against you. Instead, we use institutional liquidity bridges to hedge your exposure in real-time across multiple venues. We're essentially earning the spread and optimizing execution while neutralizing directional risk.
This means we profit from your trading activity, not from your trading losses. Your consistent profits, combined with smart drawdown control, generate steady volume that we can hedge efficiently. The better you perform and the longer you trade profitably, the more we earn through optimized execution and spread capture.
Why This Aligns Our Interests Perfectly
With institutional hedging, Velotrade makes money when you make money. Your success directly translates to our success. This alignment creates a genuine partnership:
We want you to succeed because successful traders generate consistent volume. We want you to manage risk well because controlled trading is easier and more profitable to hedge. We want you to trade long-term because sustained relationships are more valuable than one-time evaluation fees.
This is why our rules are transparent and trader-friendly. We don't need hidden consistency requirements or trailing drawdowns to protect ourselves -- our hedging model is designed for trader success. When you win, we win. It's that simple.
The Infrastructure Behind the Model
Institutional hedging isn't something you can bolt onto a traditional prop firm model. It requires significant infrastructure, including direct relationships with institutional liquidity providers, sophisticated hedging algorithms, real-time risk management systems, and significant operational capital.
This is where our $2 billion track record matters. We've built these institutional relationships over years in traditional finance. We have the systems, the capital, and the expertise to implement genuine institutional hedging, not just marketing claims.
Our AI-driven hedging algorithms analyze your positions in real-time, execute hedges across multiple venues to optimize spreads, monitor correlation and portfolio-level risk, and adjust dynamically as market conditions change. This sophisticated infrastructure is what enables us to offer up to $200,000 in trading capital while maintaining the risk profile of a traditional financial institution.
What This Means for Your Trading
For you as a trader, institutional hedging creates several tangible benefits:
First, you can trade with confidence knowing the firm isn't betting against you. Second, you get transparent rules because we don't need tricks to protect ourselves from your success. Third, you receive better support because helping you improve directly benefits us. Fourth, you keep 80% of profits because our revenue comes from hedging, not from taking your share.
Most importantly, you're entering a true partnership. You bring trading skill and discipline. We bring capital, infrastructure, and risk management. Together, we both profit from your success. This is how the prop firm model should work -- and at Velotrade, it's how it does work.
