What is a prop firm?
Everything you need to understand proprietary trading firms before you buy your first evaluation — in plain English.
The simple definition
A proprietary trading firm — "prop firm" — gives skilled traders access to a funded account. Instead of risking a large amount of your own capital, you pay a smaller fee for an evaluation. Pass it, and the firm funds you. You then trade and keep the majority of the profit, with splits commonly running 80–100%.
How the evaluation works
You prove you can trade profitably while respecting risk. Most firms set a profit target you must hit without breaching a maximum daily loss or an overall drawdown. Evaluations come as 1-step, 2-step or 3-step formats — we break those down on the challenges page.
Where the money comes from
Firms make money two ways: from evaluation fees, and from a share of the profit successful traders generate. The best firms genuinely want you to pass, because a profitable funded trader is a long-term revenue stream. The worst rely on most people failing and re-buying. Our reviews are built to tell the two apart.
Who prop trading suits
Prop trading suits a trader who already has a tested, profitable strategy but lacks the capital to make meaningful income from it. It does not fix an unprofitable strategy — a funded account just lets you lose someone else's money faster. If you're not yet consistently green on a demo, read how to improve your trading first.
Your next steps
Understand the rules, learn how to approach a firm, then compare your options in the comparison table and shortlist from our favorite firms.
FAQ
What is a prop firm?
A proprietary trading firm gives traders access to a funded account in exchange for proving their skill in a paid evaluation. You trade the firm's capital and keep the majority of the profit, typically 80–100%.
Are prop firms worth it?
For a disciplined trader who lacks capital, yes — a prop firm is an efficient way to scale. The main cost and risk is the evaluation fee. For undisciplined traders, repeated evaluation fees add up quickly.
Do prop firms use real money?
Models vary. Many run evaluations and even funded accounts on simulated/demo environments and pay you from company funds; some route to live markets. What matters to you is whether they pay reliably.