🏢 What is a prop firm
A prop firm (from “proprietary trading firm”) is a company that allocates its own capital to a trader for trading in financial markets. The trader uses this capital and agrees to follow risk‑management rules. In return, they receive a share of the profit — typically 70–90% — while losses are fully covered by the firm. In essence, a prop firm is a partner that takes on the main risk but earns together with you.🔄 How the process works
- Registration and program selection. You choose a model. Usually it’s a “Challenge” (evaluation) or “Instant Funding”.
- Evaluation phase (challenge). The trader must earn a set percentage within a limited time (e.g., +8% in a month) while staying within drawdown limits. ✅ Example: daily drawdown no more than 5%, overall drawdown no more than 10%.
- Verification. Some firms add a second step — confirmation of stable trading.
- Capital allocation. After passing, you receive a live company account — this may be $10,000, $50,000, or even $200,000.
- Trading and profit split. Profits are split, for example: 80% to the trader, 20% to the firm. Losses are covered by the company — your maximum loss is the initial challenge fee.
Tip: carefully review drawdown limits and challenge deadlines before you start.
⚡ Benefits of working with a prop firm
- 💰 No large personal risk. You don’t risk your own capital; at most you lose the challenge fee (usually from $50 to $500).
- 📈 Scalability. Many firms let you scale up with consistent performance — for example, from $10,000 to $400,000–$1,000,000.
- ⚡ Infrastructure support. Pro platforms, fast servers, low spreads — all provided by top firms.
- 💵 Payouts. Profits can be withdrawn monthly or even every two weeks.
💰 How much can you really make
Example calculation: Suppose you pass the challenge and receive a $100,000 account. In a month you make +8% = $8,000. Your 80% share = $6,400 net. And all of this without risking your own capital. Of course, results depend on your strategy, discipline, and market conditions. But hundreds of traders around the world have already made prop trading their primary source of income.📜 Typical prop‑firm requirements
- ⚠️ Follow risk management. If you exceed the daily drawdown limit, the account will be closed.
- ⚠️ Stay active. Long inactivity can also lead to account termination.
- ⚠️ Abide by platform rules. For example, no abuse of arbitrage or prohibited instruments.
✅ Conclusion
Prop trading firms offer a real chance to manage larger sums and earn without risking your own capital. Yes, you’ll need to pass an evaluation and prove your skills, but in return you get access to resources you could only dream of before. If you’re confident in your trading system, can control risk, and are disciplined, a prop firm can be an excellent starting point — or a powerful tool to scale your income.⏭️ What’s next?
❓ Frequently asked questions about prop trading
What is a prop company in trading?
A prop company (proprietary trading firm) provides traders with access to the firm’s own capital for trading financial markets. In return, the trader shares part of the profit with the company.
What are the benefits of working with a prop company?
The main benefit is the ability to trade larger capital without risking your own money. Firms also often provide support, education, and access to professional tools.
Are there risks when working with prop companies?
Yes. Some companies are unreliable or impose hidden terms. Always check licenses, reviews, and conditions before you start.
Can I join a prop company without experience?
Many firms require you to prove your skills via a test or a trading challenge. Beginners should start with education or a demo to improve their chances.
What profit share does a trader receive in a prop firm?
On average, traders receive from 50% to 90% of the profit, depending on the company’s terms.
What criteria help choose a reliable prop company?
Pay attention to the firm’s reputation, any licensing, transparent rules, payout terms, and trader support.