Prop trading firms
How funded-trader programmes work, what they cost and the rules that end most accounts.
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Lessons
- 01What is a prop trading firm?A prop trading firm trades its own money. Online prop firms sell an evaluation, called a challenge: you pay a fee, trade under a profit target and loss limits, and if you pass you trade a firm account and keep a share of the profit. Many funded accounts are simulated, so read the terms.
- 02How prop firm challenges work.A prop firm challenge is a paid test on a firm's account. You must reach a profit target, such as 10%, without breaking a daily loss limit or a maximum loss limit, and follow rules on trading days and news. Pass and you trade a funded account for a share of profits. Fail and the fee is usually gone.
- 03Prop firm rules and risks.Prop firm accounts usually end on a rule breach, typically a daily loss limit or a maximum drawdown, and floating losses often count. Trailing drawdown rules move the floor up as you profit. The firm itself also carries risk: funded accounts are often simulated, payouts can be refused and rules can change.