Understanding allowed trading instruments is essential because each prop firm defines which markets you can trade, how much leverage applies, and what rules you must follow. Firms operating with a PAX MARKET FUNDS–style structure offer a balanced range of instruments designed to provide opportunity while protecting traders from unnecessary risk.
This guide explains what trading instruments are, which ones are commonly allowed, and how to choose the best instruments for consistent prop trading success.
1. What Are Trading Instruments in Prop Trading?
A trading instrument is any financial asset you can buy or sell in the market. In prop trading, instruments are selected based on:
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Liquidity
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Volatility
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Risk management
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Execution reliability
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Market transparency
Prop firms restrict instruments to maintain stable risk exposure and fair trading conditions.
2. Why Prop Firms Restrict Trading Instruments
Unlike retail trading, prop firms are responsible for managing large pools of capital. Limiting instruments helps them:
✔ Control volatility
✔ Reduce manipulation risk
✔ Prevent extreme slippage
✔ Maintain fair execution
✔ Protect trader accounts
✔ Support consistent performance
PAX MARKET FUNDS–style firms choose instruments that allow professional, rule-based trading.
3. Most Commonly Allowed Trading Instruments in Prop Firms
Below are the major categories allowed by most reputable prop trading firms.
1. Forex (Foreign Exchange) – Most Popular
Forex is the backbone of prop trading.
Commonly Allowed Pairs:
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EUR/USD
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GBP/USD
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USD/JPY
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AUD/USD
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USD/CAD
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EUR/GBP
Why Forex Is Allowed:
✔ High liquidity
✔ Tight spreads
✔ 24/5 market
✔ Reliable execution
Forex is ideal for scalping, day trading, and swing trading.
2. Indices (Stock Market Indices)
Indices represent the performance of major stock markets.
Popular Indices:
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NASDAQ (US100)
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S&P 500 (US500)
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Dow Jones (US30)
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DAX (GER40)
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FTSE 100 (UK100)
Why Indices Are Allowed:
✔ Strong volatility
✔ Clear market trends
✔ High profit potential
✔ Professional trading environment
Indices are favored by experienced day traders.
3. Commodities
Commodities are physical assets traded as CFDs.
Common Commodities:
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Gold (XAU/USD)
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Silver (XAG/USD)
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Crude Oil (WTI, Brent)
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Natural Gas
Why Commodities Are Allowed:
✔ High liquidity
✔ Strong trend behavior
✔ Hedge against currency moves
Gold is one of the most traded instruments in prop firms.
4. Cryptocurrencies (Limited Access)
Some prop firms allow crypto trading under strict conditions.
Common Cryptos:
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Bitcoin (BTC/USD)
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Ethereum (ETH/USD)
Limitations:
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Lower leverage
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Higher margin requirements
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Weekend restrictions
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Higher volatility controls
PAX MARKET FUNDS–style firms allow crypto cautiously to manage risk.
5. Metals
Precious metals beyond gold and silver may be available:
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Platinum
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Palladium
Used mainly by advanced traders due to volatility.
4. Instruments That Are Usually Restricted or Limited
Not all instruments are suitable for prop trading.
Commonly Restricted Assets:
❌ Individual stocks
❌ Penny stocks
❌ Exotic forex pairs
❌ Illiquid markets
❌ Highly manipulated assets
❌ Some synthetic instruments
These assets can cause unpredictable price moves and slippage, increasing risk.
5. News Trading & Instrument Restrictions
During high-impact news events (like NFP or CPI):
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Some instruments may be restricted
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Wider spreads may apply
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Leverage may be reduced
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Trading windows may be limited
This protects traders from extreme volatility and sudden drawdowns.
6. Choosing the Right Instruments for Prop Trading Success
Professional traders don’t trade everything—they specialize.
Best Instruments by Trading Style:
| Trading Style | Best Instruments |
|---|---|
| Scalping | EUR/USD, NASDAQ |
| Day Trading | Indices, Gold |
| Swing Trading | Forex Majors |
| News Trading | Major FX pairs (if allowed) |
Focus on 1–3 instruments to build consistency.
7. How Allowed Instruments Affect Risk Management
Each instrument has:
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Different volatility
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Different margin requirements
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Different spread behavior
Understanding this helps traders:
✔ Manage drawdowns
✔ Position size correctly
✔ Avoid rule violations
✔ Stay funded long-term
Prop firms like PAX MARKET FUNDS align instrument selection with trader success.
8. PAX MARKET FUNDS–Style Instrument Philosophy
The instrument list is designed to:
✔ Offer diverse opportunities
✔ Maintain fair execution
✔ Encourage professional trading
✔ Support scalability
✔ Reduce unnecessary risk
This balance helps traders grow steadily rather than gamble.