What is Prop Firm Trading?
Prop firm trading is when you trade a company's capital (not your own) to generate profits. In exchange for proving your trading profitability through a challenge, prop firms provide you with funded accounts of $10,000-$1,000,000. You keep 80-90% of profits while the firm takes the rest as a fee. This is the dream of many retail traders – making money without risking their own capital.
How Prop Firm Trading Works
The process typically follows this path:
- Pay for a Challenge: Purchase a trading challenge ($200-$500) to prove yourself
- Meet Challenge Objectives: Hit profit target (5-10%) while staying within daily/total loss limits
- Pass to Funded Stage: Once challenge is complete, get approved for a funded account
- Trade Funded Account: Trade the prop firm's capital and keep profits
- Withdraw Profits: Receive weekly/monthly payouts based on your P&L
Top Prop Firms in 2025
FTMO: Largest and most established. $200 challenge, 10% profit target, 10% loss limit. Very strict with rules.
MyForexFunds: Growing rapidly. $149-$299 challenge, 5% profit target, 3-5% loss limit. More trader-friendly payouts.
The5ers: Innovative rules. $249 challenge, 8% profit target, 5% loss limit. Offers multiple payout percentages.
Funded Trading Plus: Affordable challenges. $99-$399, flexible targets. Good for beginners testing prop firms.
Advantages of Prop Firm Trading
- Trade with leveraged capital (10-100x depending on account size)
- No personal financial risk if challenge fails
- Consistent income once funded (if trading profitably)
- Access to trading technology and tools
- Accountability and structured trading framework
- Potential to scale to $500k-$1M+ accounts
Challenges of Prop Firm Trading
- Psychological pressure from challenge requirements
- Strict daily/total loss limits restrict trading style
- High failure rate (85-95% of traders fail challenges)
- Limited withdrawal on funded accounts
- Challenge cost ($200-500) if you fail
- Requirements vary by firm (scalping bans, certain strategies prohibited)
Is Prop Firm Trading Right for You?
Consider if you meet these criteria:
- Profitable trading track record (at least 3-6 months)
- Consistent trading methodology (your edge is repeatable)
- Psychological resilience (can handle pressure)
- Strict risk management discipline
- Capital to spend on challenge fees ($200-500)
Realistic Expectations from Prop Firms
- Challenge Pass Rate: Only 10-15% of traders pass challenges. Most fail on daily loss limits
- Monthly Income: A profitable trader on $100k account might make $2,000-5,000/month (2-5% returns)
- Time to Consistency: Usually 3-6 months to hit profitability after getting funded
- Scaling Timeline: Takes 12-24 months of consistent profits to scale to larger accounts
FAQ
A: Sometimes not. Prop firms restrict certain strategies (scalping, news trading, certain timeframes). Check each firm's rules first.
A: Typically 2-8 weeks if trading consistently. Some traders pass in 2-3 weeks; others take 2+ months.