New to prop firms? Here's how funded trading works
A prop firm lets you trade with its money instead of yours. You pay a fee to prove yourself in a test, and once you pass, most of the profit is yours.
The big picture
Prop stands for proprietary trading. These firms are searching for traders who handle risk well. Instead of asking you for a large deposit, they charge a one-time fee for an evaluation, which everyone calls the challenge.
During the challenge you trade a demo account with clear rules: reach a profit target and don't cross the loss limits. Manage that, and you're handed a funded account where you usually keep 80–90% of the profit.
So how do firms make money?
Most firms keep you on a simulated account even after you're funded and pay your profits from their own funds. Challenge fees are their main business, since many people don't pass.
That's why choosing a firm that really pays out is so important. How long it's been around and its Trustpilot rating are your best guides.
What you're really risking
Only the challenge fee. If the account fails, you don't owe anything more, and plenty of firms even refund the fee with your first payout.
A $100,000 challenge usually costs $300–650. You can see current prices on our cheapest prop firms list.
Is it right for you?
It's a great fit if you trade with a plan, know how much you risk on each trade and can ride out a losing streak without breaking your own rules. If you're just starting out, practise on a demo first and check out how to pass a challenge.
Questions traders ask us
Is a prop firm the same as a broker?
Not at all. A broker holds your money and places your trades. A prop firm sells you a test and shares the profit from its own account.
Could I lose more than the fee?
No. The most you can ever lose is what you paid for the challenge.