A proprietary trading firm ("prop firm") gives traders access to a trading account with the firm's capital in exchange for proving they can trade within strict risk rules. Instead of risking your own savings, you pay a one-time fee for an evaluation, and if you pass you trade a funded account and keep most of the profits.
The evaluation (challenge)
The challenge is a test with clear objectives. You must reach a profit target without breaching two hard limits: a maximum daily loss and a maximum overall loss. Some programmes add a minimum number of trading days, a time limit, a consistency rule or position size limits.
- 2-Step: two phases with lower targets (for example 10% then 5%) and wider limits.
- 1-Step: one phase, usually with tighter limits and a trailing drawdown.
- Futures: one evaluation on contracts like ES and NQ with a trailing drawdown and contract limits.
The funded account
Once you pass, you receive a funded account. There is no profit target anymore — you only need to respect the loss limits. When the account is in profit you can request a payout and receive your profit split, typically 80–90%.
Why traders use prop firms
- Access to a large account size for a small, fixed fee.
- Your personal savings are never at risk beyond the fee.
- Clear rules force the discipline most traders lack on their own.
- Scaling plans let consistent traders grow their capital over time.
What to check before choosing a firm
- Are the rules published clearly, including how limits are calculated?
- Does the firm show a real payout record?
- Is the trading platform reliable, and who operates it?
- How fast are payouts reviewed, and which methods are offered?