Not to be dramatic, but choosing the wrong prop trading firm can sink your trading career and make you wish you never got into prop trading. They are not all created equally, and not all of them have your best interests in mind. So today, I’m going to rank each top firm from best to good. (The bad firms don’t belong here).
Here are the topics we are going to cover:
- The Winners From Each Category
- List Of The Best Proprietary Trading Firms
- What Is A Prop Firm
- Prop Firm Challenge – How To Pass
- How Do Prop Firms Make Money
- This Is What You Learned Today
- Learn More
The Winners From Each Category
Let me just go straight to the point and announce the current winners first. You can check all the details later in this post including several other interesting alternatives.
There was a tie in two categories, so congrats to the winners for being so competitive:
- The Best For Futures: Apex Trader Funding (link) and Topstep (link)
- The Best For Forex: FTMO (link) and Funded Trading Plus (link)
- The Best For Crypto: HyroTrader (link)
- The Best For Stocks: Trade The Pool (link)
Now let’s dig into all the 24 top firms that survived this study. You’ll understand what makes them good in making your life easier and what they could improve.
List Of The Best Proprietary Trading Firms
After analyzing dozens of firms, reading hundreds of reviews, and putting thousands of lines of information on spreadsheets, I carefully selected the prop firms I believe have the best potential to let you prove your trading skills and be your partner in your career as a trader.
It was designed to be smooth to read, by identifying the key points of each firm, but also the pros and cons of trading with them.
#1 FTMO
FTMO
REVIEW SUMMARY
FTMO is a Forex prop firm, located in Prague, Czech Republic. It was founded in 2015. Read the full FTMO review
FEATURES
Instruments: Forex, Indices, Metals, Commodities, Stocks, Crypto.
Max balance: $2,000,000
Profit split: up to 90%
Cost: from €155
Platforms: MetaTrader4, MetaTrader5, cTrader, and Dxtrade
PROS & CONS
What I like:
- Solid and respected firm, in operations for several years.
- You get back the challenge fee if you pass the evaluation steps and become an FTMO trader.
- Up to 90% profit split.
- You can pass any step of the evaluation in as low as 4 days.
- You have a free trial to test the system before you start a real challenge.
What could be improved:
- It has a 2-step evaluation so it's psychologically harder to get funded.
- You can only hold trades over the weekend or trade news if you're using the Swing account type.
#2 Funded Trading Plus
Funded Trading Plus
REVIEW SUMMARY
Funded Trading Plus is a Forex prop firm, located in London, UK. It was founded in 2021. Read the full Funded Trading Plus review
FEATURES
Instruments: Forex, Indices, Metals, Commodities, Crypto.
Max balance: $2,500,000
Profit split: up to 100%
Cost: from $119
Platforms: cTrader, TradingView, MatchTrader, DXtrade
PROS & CONS
What I like:
- No time limit to pass the challenges. You can be as quick as possible or take the time that you need.
- Good selection of programs, from instant funding to 1-step or 2-step challenges.
- On the instant funding program you can withdraw from the first day.
- You can get up to a 100% profit split which is rare in this industry.
- You get paid in as little as 1 day.
What could be improved:
- It lacks a free trial to test the platforms.
- You can't hold trades over the weekend on the instant funding account.
- The leverage is not big, but still enough for day trading or even scalping with a proper risk management.
#3 Topstep
Topstep
REVIEW SUMMARY
Topstep is a Futures prop firm, located in Chicago, Illinois, USA. It was founded in 2010. Read the full Topstep review
FEATURES
Instruments: Equity Futures, Foreign Exchange Futures, Agricultural Futures, Energy, Interest Rates Futures, Metals Futures.
Max balance: $150,000
Profit split: 90%
Cost: from $165/month
Platforms: TSTrader, NinjaTrader, Quantower, TradingView, Sierra Chart, T4, Jigsaw Daytradr, Multicharts, R|Trader Pro, VolFix, Trade Navigator, ATAS OrderFlow Trading, MotiveWave, Bookmap, Investor/RT
PROS & CONS
What I like:
- You can get your funded account in as little as 2 days.
- In business for more than a decade, which conveys confidence.
- No complex rules. Just a profit target and a loss limit.
- Proprietary TopStepX trading platform, with TradingView charts, built-in copy trading, and much more.
- Performance coaches to support you on your journey.
What could be improved:
- Minimum payout is $125.
- Day trading only. You can't hold your trades to the next day.
#4 Apex Trader Funding
Apex Trader Funding
REVIEW SUMMARY
Apex Trader Funding is a Futures prop firm, located in Austin, Texas, USA. It was founded in 2021. Read the full Apex Trader Funding review
FEATURES
Instruments: Equity Futures, Foreign Exchange Futures, Agricultural Futures, Energy, Interest Rates Futures, Metals Futures.
Max balance: $300,000
Profit split: 90%
Cost: from $137/month
Platforms: NinjaTrader, Tradovate, TradingView, Wealthcharts (web platform), Trader, ATAS, Bookmap, Edgeclear, Finamark, Jigsaw Trading, Motivewave, Quantower, Rithmic, Sierra Chart, Volfix, and Rithmic
PROS & CONS
What I like:
- Fast evaluation process with just 1 single step.
- Your first $25,000 are paid with no profit split. 100% of the profits go to you.
- Trading during news has no restrictions.
- The system doesn't let you exceed your maximum position size by mistake, which can cost you your acccount on other firms.
- You can request up to two payouts every month.
What could be improved:
- Holding trades overnight is not allowed. You can trade for 23 hours per day though.
- Except for the Static account, the trailing threshold updates considering open positions but this can be easily monitored with the software they provide.
#5 Take Profit Trader
Take Profit Trader
REVIEW SUMMARY
Take Profit Trader is a Futures prop firm, located in Orlando, Florida, USA. It was founded in 2022. Read the full Take Profit Trader review
FEATURES
Instruments: Equity Futures, Foreign Exchange Futures, Agricultural Futures, Energy, Interest Rates Futures, Metals Futures.
Max balance: $150,000
Profit split: up to 90%
Cost: from $150/month
Platforms: Ninjatrader, Tradovate, Rithmic R|Trader, TradingView, Quantower, Bookmap, Investor R/T, MotiveWave, Jigsaw Trader, MultiCharts, Trade Navigator, Volfix, Finamark, and ATAS
PROS & CONS
What I like:
- The fastest payment processing in the prop firm world.
- Only 5 days to get a funded Pro account.
- Pro+ accounts are real accounts with real funds sent to the exchange, unlike other firms that fund you in a simulated environment.
- You can get up to 90% profit split.
- Up to 3 funded trading accounts.
What could be improved:
- The drawdown from funded accounts trails with your open profit in real time but it will STOP trailing once it has reached the initial account balance.
- Only day trading is allowed.
#6 FundedNext
FundedNext
REVIEW SUMMARY
FundedNext is a Forex prop firm, located in Ajman, UAE. It was founded in 2022. Read the full FundedNext review
FEATURES
Instruments: Forex, Indices, Metals, Commodities, Crypto.
Max balance: $4,000,000
Profit split: up to 90%
Cost: from $32
Platforms: MetaTrader 4, MetaTrader 5, cTrader
PROS & CONS
What I like:
- You get a profit share right from the challenge phase, even before you get funded.
- The drawdown calculation is based on the balance, and not on open trades.
- No time limit to end the challenge. You can relax and take your time to achieve the target.
- You can get a profit split of up to 95% which is very rare.
- Up to 1:100 leverage on most accounts.
What could be improved:
- The Stellar 1-step account only gives you up to 1:30 leverage.
#7 HyroTrader
HyroTrader
REVIEW SUMMARY
HyroTrader is a Crypto prop firm, located in Bratislava, Slovakia. It was founded in 2023. Read the full HyroTrader review
FEATURES
Instruments: Crypto Spot, Crypto Futures, Crypto Options.
Max balance: $1,000,000
Profit split: up to 90%
Cost: from $89
Platforms: ByBit
PROS & CONS
What I like:
- You can trade real crypto on a ByBit sub-account, not CFDs like other firms.
- Both crypto spot and futures are available.
- Leverage up to 1:100.
- Challenge fee refundable with the first profit split.
- You are able to trade with real capital after the demo simulated account.
What could be improved:
- Payouts are made in cryptocurrency.
- You can only trade cryptocurrencies.
#8 My Funded Futures
My Funded Futures
REVIEW SUMMARY
My Funded Futures is a Futures prop firm, located in Texas, USA. It was founded in 2022. Read the full My Funded Futures review
FEATURES
Instruments: Equity Futures, Foreign Exchange Futures, Agricultural Futures, Energy, Interest Rates Futures, Metals Futures.
Max balance: $150,000
Profit split: 90%
Cost: from $100/month
Platforms: Ninjatrader, R|Trader, Tradovate, TradingView, Quantower, Sierra Chart, Jigsaw Trading, ATAS
PROS & CONS
What I like:
- Minimum trading days as low as 1 day!
- No daily loss limit.
- Payments processed within 24 hours.
- The challenges only have 1 single step.
- The drawdown is only updated at the end of the day.
What could be improved:
- No trading education, but you can get it from all over the internet if you need.
- Discounts not as big as other firms.
#9 FTUK
FTUK
REVIEW SUMMARY
FTUK is a Forex prop firm, located in USA. It was founded in 2021. Read the full FTUK review
FEATURES
Instruments: Forex, Indices, Commodities, Crypto.
Max balance: $5,760,000
Profit split: 80%
Cost: from $149
Platforms: MatchTrader
PROS & CONS
What I like:
- You can get up to 1:100 leverage to trade your funded account.
- Your accounts can scale up to $5+ Million. That's an enormous amount of money to trade.
- No minimum or maximum trading days to achieve your targets.
- Instant funding and 1-step challenges available.
What could be improved:
- The profit split is only 80%.
- There's no free trial of the platform.
#10 The Trading Pit
The Trading Pit
REVIEW SUMMARY
The Trading Pit is a Futures, and Forex prop firm, located in Liechtenstein. It was founded in 2021. Read the full The Trading Pit review
FEATURES
Instruments: Forex, Indices, Metals, Commodities, Stocks, Crypto, Equity Futures, Foreign Exchange Futures, Agricultural Futures, Energy, Interest Rates Futures, Metals Futures.
Max balance: $5,000,000
Profit split: up to 80%
Cost: from €99
Platforms: MetaTrader 4, MetaTrader 5, ATAS, Quantower, R/Trader, Sierra Charts, Jigsaw, and Volfix
PROS & CONS
What I like:
- The only firm where you can trade Forex/CFDs and real Futures.
- You can scale your account up to $5 Million.
- Quick funding, as low as 3 days if you can meet the objectives fast enough.
- Cheap challenges which are refunded with your first payout.
- Free trading platforms for Forex and Futures.
What could be improved:
- The default Forex leverage is only 1:30. Not big but aligned with the ESMA requirements for brokers.
#11 Elite Trader Funding
Elite Trader Funding
REVIEW SUMMARY
Elite Trader Funding is a Futures prop firm, located in Florida, USA. It was founded in 2022. Read the full Elite Trader Funding review
FEATURES
Instruments: Equity Futures, Foreign Exchange Futures, Agricultural Futures, Energy, Interest Rates Futures, Metals Futures.
Max balance: $300,000
Profit split: 80%
Cost: from $80/month
Platforms: NinjaTrader, Tradovate, Rithmic, and TradingView
PROS & CONS
What I like:
- 100% of your first $12,500 in profits are entirely yours.
- You have a 14-day free trial to prepare for the evaluation.
- Multiple evaluation options that you can choose from according to your trading profile.
- You can trade during news.
- You can get funded after only 5 trading days.
What could be improved:
- Fast-track accounts don't have a reset option.
- Funded accounts have a consistency rule that may not be suitable for all trading strategies.
- Only day trading is allowed, you can't hold positions overnight.
#12 E8 Markets
E8 Markets
REVIEW SUMMARY
E8 Markets is a Forex prop firm, located in Dallas, Texas, USA. It was founded in 2021. Read the full E8 Markets review
FEATURES
Instruments: Forex, Indices, Metals, Commodities, Stocks, Crypto.
Max balance: $400,000
Profit split: 80%
Cost: from $48
Platforms: MetaTrader5 and MatchTrader
PROS & CONS
What I like:
- No minimum or maximum days to complete the challenges.
- You can get paid is a little as 8 days.
- The payout amounts are not deducted from the account. They are used to scale your account over time.
- You can customize your evaluation.
What could be improved:
- Maximum leverage limited to 1:50.
- The profit split is only 80%. Other firms offer more.
#13 TradeDay
TradeDay
REVIEW SUMMARY
TradeDay is a Futures prop firm, located in Chicago, USA. It was founded in 2020. Read the full TradeDay review
FEATURES
Instruments: Equity Futures, Foreign Exchange Futures, Agricultural Futures, Energy, Metals Futures.
Max balance: $250,000
Profit split: 90%
Cost: from $99/month
Platforms: NinjatRader, Tradovate, TradingView, and Jigsaw Trading
PROS & CONS
What I like:
- Free trial available to test the system and platform.
- Only one single step to get funded.
- You can use algos or bots to trade automatically.
- 100% profit split for the first $10k in profit, and 90% after that.
- No time limit to complete the challenge.
What could be improved:
- You can't trade news.
- Holding positions overnight is not allowed.
#14 UProfit
UProfit
REVIEW SUMMARY
UProfit is a Futures prop firm, located in Texas, USA. It was founded in 2019. Read the full UProfit review
FEATURES
Instruments: Equity Futures, Foreign Exchange Futures, Agricultural Futures, Energy, Interest Rates Futures, Metals Futures.
Max balance: $200,000
Profit split: up to 80%
Cost: from $89/month
Platforms: Ninjatrader, Bookmap, Agena Trader, Motive Wave, Photon, Collective2, InsideEdge Trader, Optimus Flow, ScalpTool, Medved Trader, Quantower, Trade Navigator, Overcharts, Sierra Chart, Volfix, TigerTrade, MultiCharts, Scalp, QSI, and TSLAB.
PROS & CONS
What I like:
- Trade the evaluation for as little as 5 days with no time limit.
- Programs without daily loss limit or drawdown, only a maximum loss.
- You can pay using crypto.
- You get a 100% profit split on your first $15,000 in profits.
What could be improved:
- Crypto futures trading not available.
- Profit split only 80%.
#15 Bulenox
Bulenox
REVIEW SUMMARY
Bulenox is a Futures prop firm, located in Delaware, USA. It was founded in 2022. Read the full Bulenox review
FEATURES
Instruments: Equity Futures, Foreign Exchange Futures, Agricultural Futures, Energy, Interest Rates Futures, Metals Futures.
Max balance: $250,000
Profit split: 90%
Cost: from $115/month
Platforms: Ninjatrader, Rithmic R|Trader, TigerTrade, OptimusFlow, InsideEdge Trader, Volfix, Atas, Scalp, Overcharts, Medved Trader, Quantower, QST, ScalpTool, TSLAB, TradeNavigator, SierraChart, MultiCharts, Photon, MotiveWave, RInvestor, and Bookmap X-Ray.
PROS & CONS
What I like:
- Accounts with balance up to $250k
- Option to choose between No Scalling Account and EOD Account.
- Only 1 single step.
- Get funded after only 5 trading days.
- 14 day free trial available.
What could be improved:
- Holding positions overnight not allowed.
- Algos must be approved by the team first.
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#16 City Traders Imperium
City Traders Imperium
REVIEW SUMMARY
City Traders Imperium is a Forex prop firm, located in UK. It was founded in 2018. Read the full City Traders Imperium review
FEATURES
Instruments: Forex, Indices, Metals, Commodities, Crypto.
Max balance: $2,000,000
Profit split: up to 100%
Cost: from $39
Platforms: MetaTrader 5
PROS & CONS
What I like:
- Instant funding available.
- No time minimums or limits. You can get funded on the same day.
- Weekend and overnight trading allowed.
- Scale your account up to $4 Million.
- Drawdown limit based on balance and not on equity.
What could be improved:
- The profit share for No Evaluation Program starts at only 50%, but this is pretty much the norm across other firms with Instant Funding.
- Maximum leverage limited to 1:30.
#17 Audacity Capital
Audacity Capital
REVIEW SUMMARY
Audacity Capital is a Forex prop firm, located in London, UK. It was founded in 2012. Read the full Audacity Capital review
FEATURES
Instruments: Forex, Indices, Metals, Commodities.
Max balance: $2,000,000
Profit split: up to 85%
Cost: from $129
Platforms: MetaTrader 4, MetaTrader 5
PROS & CONS
What I like:
- Fast scaling up to $2 Million. Your account doubles when you achieve a profit target.
- No time restrictions to complete the challenges.
- Free trial available to test the platform.
What could be improved:
- The profit share starts at 75% on the Ability account and 50% on the Funded Trader Program.
- Leverage only 1:30 on the instant funding program.
#18 Trade The Pool
Trade The Pool
REVIEW SUMMARY
Trade The Pool is a Stocks prop firm, located in Israel. It was founded in 2016. Read the full Trade The Pool review
FEATURES
Instruments: Stocks.
Max balance: $160,000
Profit split: up to 70%
Cost: from $97
Platforms: Proprietary (Trader Evolution)
PROS & CONS
What I like:
- You trade with real money on a real trading account, not a sim account like other firms.
- The firm is specialized in Stocks, which is a rare thing.
- You can try any evaluation for free for 14 days.
- Day Trading and Swing Trading accounts available.
- You get 1-1 coaching, guidance and support.
What could be improved:
- Swing trading accounts could have a bigger buying power.
- The payout split for the smaller accounts is only 50%.
#19 TickTickTrader
TickTickTrader
REVIEW SUMMARY
TickTickTrader is a Futures prop firm, located in Bucharest, Romania. It was founded in 2022. Read the full TickTickTrader review
FEATURES
Instruments: Equity Futures, Foreign Exchange Futures, Agricultural Futures, Energy, Interest Rates Futures, Metals Futures.
Max balance: $100,000
Profit split: 90%
Cost: from $145/month
Platforms: Ninjatrader, Bookmap, Daytradr, Agena Trader, Atas, Collective 2, Inside Edge, Medved Trader, Motive Wave, MultiCharts, Optimus Flow, Overcharts, Photon Trader, Quantower, Quick Screen Trading, R Investor, Scalp, Scalp Tool, Sierra Chart, Tiger Trade, Trade Navigator, TS Lab, Volfix.net
PROS & CONS
What I like:
- Drawdown calculated by the end of the day.
- You get 100% of your profits during the first three months.
- Instant funded accounts with a 90% profit split.
- You can copy trade.
- You can buy bundles with several accounts.
What could be improved:
- Minimum payout is $250.
- Algos/bots are not allowed.
#20 Traders With Edge
Traders With Edge
REVIEW SUMMARY
Traders With Edge is a Forex prop firm, located in Hong Kong. It was founded in 2022. Read the full Traders With Edge review
FEATURES
Instruments: Forex, Indices, Metals, Commodities, Stocks, Crypto.
Max balance: $3,000,000
Profit split: up to 80%
Cost: from $55
Platforms: MetaTrader 4, Metatrader 5, DXtrade, and MatchTrade
PROS & CONS
What I like:
- You can trade up to $3,000,000 of funds, which is impressive.
- Instant funding accounts available.
- After 2 years of successful funded trading, they will present you to larger institutions that can fund you up to $30,000,000.
- Holding positions overnight and overweekend is allowed.
- You can get a free trial on request.
What could be improved:
- The maximum profit split is only 80%. Although it's good, some other firms offer more.
- Small number of cryptocurrencies available to trade.
- You can only have one account at a time.
#21 Earn2Trade
Earn2Trade
REVIEW SUMMARY
Earn2Trade is a Futures prop firm, located in Sheridan, Wyoming, USA. It was founded in 2017. Read the full Earn2Trade review
FEATURES
Instruments: Equity Futures, Foreign Exchange Futures, Agricultural Futures, Energy, Interest Rates Futures, Metals Futures.
Max balance: $400,000
Profit split: 80%
Cost: from $150/month
Platforms: Ninjatrader, Finamark, R|Trader, Inside Edge Trader, Investor RT, Motive Wave, MultiCharts, Bookmap, Photon, QScalp, QSI- Quick Screen Trading, ScalpTool, Trade Navigator, Volfix.net, Jigsaw Trading, ATAS Order Flow Trading, Sierra Chart, and Quantower
PROS & CONS
What I like:
- Well-established firm, with several years in business since 2017.
- Your account scales with time and can go up to $400,000.
- NinjaTrader is available for free.
- Journalyticx, a journaling tool software, is available for free.
What could be improved:
- Educational resources are paid.
- Only day trading is allowed, you can't hold your positions to the next day or week.
#22 Lux Trading Firm
Lux Trading Firm
REVIEW SUMMARY
Lux Trading Firm is a Forex prop firm, located in London, UK. It was founded in 2020. Read the full Lux Trading Firm review
FEATURES
Instruments: Forex, Indices, Metals, Commodities, Stocks, Crypto.
Max balance: $10,000,000
Profit split: 75%
Cost: from £299
Platforms: MetaTrader 5 and TradingView
PROS & CONS
What I like:
- Free trial available to test the evaluations.
- Once funded, you trade with real money, not a simulated account.
- Your account can grow up to $10,000,000 in as little as 3 stages.
- Good selections of instruments, including 2,000+ stocks.
- You get the evaluation fee back with your first profits.
What could be improved:
- The profit split is only 75%. It could be a little more.
- You are not allowed to copy-trade.
#23 Leeloo Trading
Leeloo Trading
REVIEW SUMMARY
Leeloo Trading is a Futures prop firm, located in Montana, USA. It was founded in 2019. Read the full Leeloo Trading review
FEATURES
Instruments: Equity Futures, Foreign Exchange Futures, Agricultural Futures, Energy, Interest Rates Futures, Metals Futures.
Max balance: $300,000
Profit split: up to 90%
Cost: from $26/month
Platforms: NinjaTrader, Rithmic Pro, EdgeProX, Motive Wave, Multicharts, Jigsaw Daytradr, Trade Navigator, Volfix, Bookmap X-Ray, Investor/RT, Sierra Charts, OptimusFLOW
PROS & CONS
What I like:
- The Entry accounts have one of the cheapest fees in the industry.
- Swing trading is allowed, which is rare on a Futures prop firm.
- You can trade news and holidays.
- Free trial is available for new members to test the system.
- You can have up to 10 accounts at the same time.
What could be improved:
- To get a payout you need to trade for at least 30 days.
#24 Toptier Trader
TopTier Trader
REVIEW SUMMARY
TopTier Trader is a Forex prop firm, located in Miami, Florida, USA. It was founded in 2021. Read the full TopTier Trader review
FEATURES
Instruments: Forex, Indices, Metals, Commodities, Crypto.
Max balance: $2,000,000
Profit split: up to 90%
Cost: from $65
Platforms: MetaTrader 4 and MetaTrader 5
PROS & CONS
What I like:
- The leverage is up to 1:100 on Forex.
- The funded accounts can scale up to $2,000,000.
- Several add-ons to customize your account, like profit split increase, trade the news, weekend trading and enable EAs trading.
- Payout in 24 hours or you get a $1,000 (probably the only firm where you'll prefer a late payout).
What could be improved:
- Only 2-step challenges are available.
Bonus – Superfunded
SuperFunded
REVIEW SUMMARY
SuperFunded is a Forex prop firm, located in Victoria, Australia. It was founded in 2021. Read the full SuperFunded review
FEATURES
Instruments: Forex, Indices, Metals, Commodities, Stocks, Crypto.
Max balance: $200,000
Profit split: up to 90%
Cost: from $129
Platforms: MetaTrader 4
What Is A Prop Firm
A Prop Firm, a short form of Proprietary Firm, is a company that engages in the activity of prop trading.
So, what the hell does that mean?
Traditionally, when you want to invest or trade, you do it with your own money. You go to a brokerage firm and ask for advice, and you can even have a broker deciding what to trade and taking the trades for you. These typical brokerage firms charge a commission for their work or keep a percentage of the gains to them.
The solution is good if you don’t know how to trade, and especially, if you have a good amount of capital which can eventually translate into good returns over time.
Now, let’s say that you do know how to trade but you lack capital to fund a decent trading account.
How can you solve that problem?
That’s the hole that prop firms are filling.
See, these firms have a lot of capital, and they are willing to share it with traders like you. They give you a piece of their capital, and you trade it using your own trading style.
How does that sound to you?
In my opinion, it’s a great solution. You have the skills, they have the capital. You both are useful to each other. It’s a win-win situation.
Now you’re thinking: How much do I get from my trading results?
Well, that depends on what they are willing to give you. Typically, the profit share starts at around 50% but most of them are at about 80%-90%.
You, the trader, keep the majority of the gains
But things don’t end here.
Prop firms want you to succeed. When you’re trading funded accounts with their real money, your success is also their success. And most of them invest in making you succeed.
How?
Well, they give you access to a lot of tools and education.
From sophisticated trading software, that helps you to trade fast and precisely, to a lot of top-notch analysis tools, they provide you with everything.
And the best part is that usually, everything is free.
The only exception comes to some futures trading platforms. Although futures prop firms frequently give you licenses to some of the most popular platforms like NinjaTrader or Tradovate, if you wish to use other platforms you must have a license for them.
In the case of the Forex/CFDs prop firms, the platforms are always free. The most popular are MetaTrader (4 and 5), cTrader, DxTrade, and MatchTrader.
The firm wins when you win, so they have their interests aligned with you. For this reason, they also frequently give you mentorship, support, and access to education provided by experienced traders.
If you need to learn about a particular trading strategy, they teach you.
If you want to use a different trading platform, they have tutorials.
If your risk management is not the best, guess what, they force you to be!
Force? Isn’t that drastic?
Well, no because risk management is crucial when trading. If you don’t have it you won’t survive much time playing this game.
That’s the reason why they have a set of specific rules you need to comply with. The most important are the daily losses or daily drawdown, and overall losses or overall drawdown.
You need to trade without violating those rules, and all starts with the Challenge or Evaluation phase.
Prop Firm Challenge – How To Pass
Have you ever been in a job interview?
I’ll assume that most likely yes.
Business owners always like to know who they are hiring first, to understand the capabilities of the candidate and how good he is for the job.
When it comes to prop firms, it’s no exception to the rule.
But there’s a difference. You don’t get interviewed directly.
Instead…
You’re put in a simulation.
That’s right. The best way they have to evaluate your capabilities is to test you and see how you perform.
And that test, on a simulated trading scenario, is called the challenge or evaluation. Although a few prop firms fund traders without challenges, the majority will require you to pass one.
Curious to know how these challenges work?
Then keep reading…
A prop firm challenge may have one or two phases. That’s the most common at least. Three-phase challenges also exist but they are very rare.
Think of them as a computer game.
First, you need to beat the bad guys with your ammo. The ammo is your simulated trading account, and the bad guys are the other market participants.
When you start making money consistently, it means that you’re beating them and your account is increasing in value.
So the first rule of a challenge is always to achieve a minimum amount of profit.
Next, you need to preserve your health, or in this case, your wealth.
If you get too much damage from your opponents you get weak, and you die. The damage represents the losses on your trading account.
I’ll tell you a secret:
No one makes money without losing money at the same time, so you need to be able to deal with it.
The losses are counted in two different ways: daily losses and overall losses.
This is the second main rule of your challenge, avoid exceeding a maximum daily loss and a maximum overall loss. Depending on the firm, these losses can be measured from a static point of view or as a drawdown.
In the case of the first one, daily losses, you must guarantee that your account doesn’t exceed a maximum pre-determined loss in a single day. You always need to survive to live another day, so don’t let your account get hit too hard.
Then we have the maximum overall loss (or drawdown). Think of it as an accumulation of losses from different days.
If you get hit too many times and you don’t heal, your character from the computer game will die.
When trading, it’s the exact same thing. Even if you only lose small bits of your account per day, you need to be able to recover those bits at some point. Otherwise, your account will just trend to zero. For this reason, your trading skills must keep your account away from this maximum drawdown limit.
That’s how you are forced to have good risk management.
Depending on the firm, the challenges may have a maximum time to complete, as well as a minimum.
The maximum time is a rule that has been disappearing over time. It didn’t make much sense actually. Results from trading have a random distribution, and cannot be forced. When you’re put in a situation where you’re forced to achieve a certain profit target in a limited amount of time, things don’t tend to work very well.
The minimum time to trade makes sense in my opinion. No one can evaluate if someone is a good trader after just a couple of trading days. It’s easy to get luck, even if you don’t know much about trading, and perform well during a short period. Despite that, a lot of prop firms have a really small number of days to qualify, which is an advantage to you.
What about the costs?
Nothing good comes without some cost, even if it’s minimal.
And prop firms are no exception. All these challenges, support, infrastructure, …, have a cost to them. So you must pay your part when you’re taking the challenge.
The most common way is an initial fee.
The fee depends on the size of your trading account and varies a lot from from to firm. If you want to have an idea, the fees are about 0.5%-1.0% of the account size where you’re doing the evaluation.
For example, a $500 fee can easily give you access to a $50,000-$100,000 account. That’s a small price to pay since you have the potential to recover that on a single trade after you get funded.
Oh, and I almost forgot, frequently the fee is reimbursed to you later when you start getting payouts.
And that’s the next phase.
Once you pass the challenge phase, you’ll finally get your deserved funded trading account.
All profits that you make with this trading account will be shared between you and the proprietary firm. Typically the trader gets the bigger chunk of the profits, which can go up to 90%.
During this phase, the rules are pretty much the same as you had in your evaluation. Although you may not have a target to achieve, you still have to maintain good risk management to keep your balance above the maximum daily and overall losses.
And finally the best part.
Yes, there’s an even better part.
Can you guess what can be better than receiving a funded account to trade?
Your account scaling in size!
Your initial account size is just the beginning.
The computer game continues, level by level.
When you keep performing well, the prop firm may increase your trading capital in steps. Every couple of months or so, they evaluate your performance, and your funded capital may easily double.
This means that you need to take much smaller risks to make the same amount of money. Or that you can keep risking the same (in terms of money), while your returns can potentially double.
How cool is that?
Above in this article, there’s a list of the best prop firms, with links to detailed info about how to pass each prop firm challenge.
Are you ready to take your challenge?
How Do Prop Firms Make Money
Proprietary firms make money when you make money.
When you trade using an account funded by them, your profits will be shared with the prop firm, although typically the trader gets the bigger piece.
Prop firms also won’t let you deviate from good trading and good risk management.
Why?
Because if you lose, you are also losing their own money, and of course, the company doesn’t want that.
There is a set of rules that you need to follow, especially when it comes to risk management. If you take a big risk or if you go into a big drawdown, your account may be closed and you’ll need to pass the prop firm challenges again. So, don’t ever forget to set your stop loss, and calculate and respect your maximum lot size.
This Is What You Learned Today
- Proprietary firms allow traders to access their capital to trade and share the revenue.
- To be able to access a proprietary firm account you need to pass a challenge with one or two phases.
- Prop firms make money when you make money, so you have a list of rules to follow especially risk management.
- Proprietary firms let you trade almost anything: Futures, Forex, Stocks, Indices, Metals, Commodities, and even Crypto.
Learn More
- PropScan – challenge filter and selector
- Compare any prop firm with this prop trading firms comparison tool
- What is prop trading and how to become a prop trader
- The best Futures prop firms
- The best Forex prop firms
- The best Crypto prop firms
Now I want to hear from you.
Did I miss any prop firm on the list? Which one?
Let me know below in the comments.
