What are Prop Firms?

Prop Trading Firms

Proprietary Trading Firms (Prop Firms) provide traders with capital to trade with the company's money. The trader must first pass an evaluation (Challenge) to receive a "Funded Account."

How does it work?

1. Buy Challenge – You pay a one-time fee (e.g., 200-500€ for a 50,000€ account)
2. Phase 1 (Evaluation) – Reach the profit target (usually 8-10%) within the time limit, without exceeding the maximum loss limit
3. Phase 2 (Verification) – Confirm your skills with a lower profit target (usually 5%)
4. Funded Account – Trade with the company's capital and receive your share of the profits

Typical Rules

• Maximum Drawdown – Usually 10% of starting capital (absolute limit)
• Daily Drawdown – Usually 5% per day
• Profit Target Phase 1 – 8-10%
• Profit Target Phase 2 – 4-5%
• Minimum Trading Days – Often 5 days per phase
• News Trading – Some firms prohibit trading during high-impact news
• Weekend Holding – Holding positions over the weekend is often not allowed

Advantages

• Trade with large capital without risking your own money (50,000€ to 400,000€)
• Profit Split: Typically 70-90% for the trader
• No financial risk beyond the challenge fee
• Professional trading environment and discipline
• Scaling opportunities with good performance

Disadvantages & Risks

• Challenge fees can add up if you fail multiple times
• Strict rules can restrict your trading style
• Not all prop firms are legitimate – research thoroughly!
• Psychological pressure from drawdown limits

Well-Known Prop Firms

• FTMO – One of the oldest and most well-known prop firms. Strict rules, but reliable payouts.
• The Funded Trader – Various account types and flexible rules
• Funding Pips – No time limits, low prices
• MyFundedFX – Fast payouts, good conditions

Tips for the Challenge

• Treat the challenge like a real account – no gambling
• Risk a maximum of 0.5-1% per trade
• Don't use the entire allowed drawdown
• Be patient – you often have 30 days
• Focus on your best setup
• Practice extensively on a demo account with the same rules