Prop firms have become a major point of interest for retail traders looking to trade professionally without putting personal capital at risk. These companies provide access to trading accounts funded with firm capital, under the condition that traders meet defined profit targets while operating within strict risk parameters. For individuals with proven strategies but limited funds, prop firms offer a practical solution to scaling trading operations. This comparison focuses exclusively on reputable and well-established prop firms with a documented history of transparency, timely payouts, and consistent trader support.

Prop Firms

Prop Firms: Key Points to Keep in Mind

  • This comparison includes only prop firms with a clear track record, strong trader support, and reliable payout structures.

  • Choose the funding model that matches your trading style, risk tolerance, and readiness to perform under pressure.

  • Success in prop trading relies on consistency, rule-following, and disciplined risk management over the long term.

Broker
Step1

  • Profit Target: 10%

  • Daily Loss Limit: 4%
  • Max Drawdown: 10%
Step2
  • Profit Target: 5%
  • Daily Loss Limit: 4%
  • Max Drawdown: 10%
Open Account
Fees and Features

  • Trading Platforms: MetaTrader 4 (MT4), MetaTrader 5 (MT5), DXTrade.

  • Extras: $89 for a two-step $10k evaluation, performance split up to 90%, EAs allowed, hold overnight allowed, leverage up to 50:1.

Broker
Step1
  • Profit Target: 7.5%
  • Daily Loss Limit: 5%

  • Max Drawdown: 10%

Step2
  • Profit Target: 5%

  • Daily Loss Limit: 5%

  • Max Drawdown: 10%

Open Account
Fees and Features

  • Trading Platforms: Match-Trader, cTrader.

  • Extras: $110 for a two-step $10k evaluation, performance split up to 90%, hold overnight allowed, leverage up to 50:1.

Broker
Step1

  • Profit Target: 10%

  • Daily Loss Limit: 5%

  • Max Drawdown: 10%

Step2
  • Profit Target: 5%

  • Daily Loss Limit: 5%

  • Max Drawdown: 10%

Open Account
Fees and Features

  • Trading Platforms: MetaTrader 4 (MT4), MetaTrader 5 (MT5), DXTrade, cTrader.

  • Extras: $89 for a two-step $10k evaluation, free trial, performance split up to 90%, hold overnight allowed, leverage up to 100:1.

What Is a Prop Firm?

A prop firm, short for proprietary trading firm, is a company that provides traders with access to the firm’s capital. Traders operate under strict guidelines and, in return, share a portion of the profits they generate. Unlike brokers or investment advisors, prop firms do not manage client accounts or earn commissions from customer trades. Instead, their model revolves entirely around performance-based funding.

The core distinction is that prop firms fund traders to profit from their trading ability, not from providing financial services to external clients. In most retail-accessible setups, the trader pays an access or evaluation fee and must follow clearly defined rules regarding profit targets, drawdowns, and risk exposure. If those conditions are met, the trader receives a share of profits generated from live trading using the firm’s capital.

Types of Prop Firms

Prop firms generally fall into three categories, each with a different approach to funding and trader engagement:

  • Evaluation-based firms require traders to prove their competence before being granted access to live capital. This model may include one-step, two-step, or even three-step challenges. Each stage typically requires meeting profit targets within defined risk parameters over a limited time frame.

  • Instant funding firms offer direct access to live capital without requiring traders to pass through an evaluation process. These firms charge a significantly higher upfront fee and often impose stricter rules to compensate for the lack of screening.

  • In-house trading firms follow a traditional employment-style setup where traders are recruited, trained, and paid a base salary in addition to potential performance bonuses. These firms are usually selective, require physical presence, and are less accessible to the average retail trader.

How Prop Firms Make Money

Prop firms operate on a performance-aligned model that generates revenue through several core channels. The most common is the evaluation fee, which traders pay to access a funded challenge. These fees support the firm’s operational costs and help offset losses from failed candidates.

Once traders are funded, firms earn a percentage of the profits generated from live accounts. This profit split typically ranges between 10 and 30 percent, depending on the firm’s structure. It creates an incentive for firms to support capable traders while limiting exposure to underperformers.

In addition to these primary revenue streams, many firms offer paid resets for failed challenges. Some also monetise optional services such as trading tools, analytics platforms, mentorship, or priority customer support. While these services are not mandatory, they contribute to the firm’s bottom line and provide an additional commercial layer.

Key Features and Rules

Most prop firms impose a consistent set of trading conditions that participants must follow in order to qualify for and maintain a funded account. These rules are non-negotiable and form the foundation of the firm’s risk management framework.

  • Profit targets and drawdowns: Traders are required to reach a profit target, often between 5 and 10 percent, while staying within strict limits on daily and overall drawdowns. Exceeding these limits typically results in immediate disqualification, regardless of account performance.

  • Time limits and trading restrictions: Some firms require the evaluation to be completed within a specific number of trading days. Others enforce minimum trading activity or prohibit trading during high-impact news events. These conditions are designed to promote consistency and limit risk exposure during volatile periods.

  • Platform usage and technology access: Most firms offer support for platforms such as MetaTrader 4, MetaTrader 5, and cTrader. While some also provide proprietary dashboards or trading analytics, access may be restricted during evaluation phases. Automated trading and expert advisors are allowed by some firms but prohibited by others.

  • Scaling plans and payout cycles: Firms often incentivise consistent performance with capital increases, improved payout ratios, or reduced restrictions over time. Payout cycles typically occur monthly or biweekly and may require traders to meet minimum thresholds or submit withdrawal requests within defined windows.

What Makes a Good Prop Firm?

Not all prop firms operate with the same level of professionalism. Several distinguishing features separate high-quality firms from those that may pose unnecessary risk to traders.

  • Transparent rules and fair conditions: Top-tier firms provide clear documentation for their evaluation criteria, risk parameters, and payout schedules. Transparency reduces the likelihood of disputes and builds trust between the trader and the firm.

  • Competitive profit splits: The trader’s share of generated profits is a core consideration. While some firms offer as low as 50 percent, most reputable operations offer 70 percent or more, with some reaching as high as 90 percent depending on account type or performance.

  • Strong trader support and funding flexibility: A firm that provides timely and knowledgeable support can be the difference between retaining and losing a qualified trader. Additionally, offering a range of account sizes and evaluation models helps accommodate different trading styles and capital constraints.

  • Reliable payout history and reputation: Consistent, timely payouts backed by verifiable testimonials or third-party audits are strong indicators of a firm’s reliability. In contrast, firms with inconsistent payment practices or vague ownership structures should be treated with caution.

Red Flags and Risks to Watch For

While many prop firms operate with integrity, others may present serious risks. Traders should remain alert to the following warning signs.

Red Flags and Risks With Prop Firms

  • Lack of transparency: Unclear rules, vague funding terms, or limited documentation can make it difficult to understand the real structure behind the firm’s offer. This lack of clarity often conceals unfair practices or shifting conditions.

  • Poor trader support: Unresponsive customer service or long resolution times may indicate that the firm lacks adequate infrastructure or prioritises fee collection over trader development.

  • Sudden rule changes or account terminations: Unexpected changes to trading rules, funding terms, or evaluation timelines can disrupt trader progress. Firms that frequently adjust their policies without notice should be considered unreliable.

  • Unclear ownership or payout delays: If a firm’s leadership is not disclosed or its financial backers are unknown, accountability becomes difficult to enforce. Similarly, any delay in profit withdrawals without valid explanation should be a cause for concern.

Who Should Consider Joining a Prop Firm?

Prop firms are best suited to traders who demonstrate discipline, consistency, and a strong understanding of risk. These firms are not designed for hobbyists or speculative traders but for those who treat trading as a structured, goal-driven pursuit. Individuals with a defined strategy but limited capital often find the prop firm model especially beneficial.

This funding model offers significant advantages to experienced retail traders and technically proficient individuals who seek to scale their operations without using personal funds. It rewards consistent execution, rule adherence, and effective risk control rather than high-risk behaviour or market speculation.

Traders may find value in prop firms for several reasons:

  • They offer access to large trading accounts without requiring personal capital beyond the evaluation fee.

  • They allow traders to focus purely on execution without dealing with clients or investor responsibilities.

  • They provide a structured environment with clear performance benchmarks and risk guidelines.

  • They enable skill-based compensation, where consistent profitability directly translates into payouts and account scaling.

On the other hand, beginners or traders still testing their strategies are unlikely to benefit. Prop firms typically impose strict drawdown limits and evaluation conditions that can be difficult to navigate without prior experience. Those unwilling to follow firm rules or manage risk within set boundaries are also unlikely to succeed.

For traders who understand that access to capital is earned through precision, not improvisation, prop firms present a serious opportunity. When used responsibly, they can serve as a scalable route to trading professionally without external funding or client-facing obligations.

Frequently Asked Questions

What is the main difference between a prop firm and a broker?

A prop firm provides traders with access to its own capital in exchange for a share of the profits. A broker facilitates access to the markets for clients who trade their own funds and charges commissions or spreads for that service.

Do prop firms give you real money to trade?

Yes, but typically only after you complete a verification or evaluation phase. Once funded, you trade a live account or a monitored simulated account with real performance implications. Profits are shared based on the firm’s payout terms.

What happens if I lose money in a funded account?

If you breach the firm’s risk parameters, such as daily drawdown or maximum loss limits, your funded account is usually revoked. You are not personally liable for the losses, but you may need to restart the evaluation process.

Can I use my own trading strategy?

In most cases, yes. However, strategies must comply with the firm’s rules. Some firms prohibit high-frequency trading, grid strategies, or use of certain expert advisors. Always check the acceptable use policies before committing.

Are there any hidden fees?

Reputable firms disclose all fees clearly. Most charge only for evaluations, with optional fees for resets or add-on services. Be cautious of firms that are unclear about costs or change terms without notice.

How long does it take to get paid?

Payout schedules vary. Most firms offer biweekly or monthly payments, subject to a minimum profit threshold and compliance with account rules. Reliable firms process withdrawals promptly within their stated timelines.

Is prop trading suitable for beginners?

It is generally better suited to experienced traders. Beginners often struggle with strict risk rules and evaluation targets. Without a proven strategy and consistent execution, passing an evaluation is unlikely.

Can I trade news events or hold trades overnight?

That depends on the firm. Some allow unrestricted trading, while others prohibit news trading or overnight positions during evaluation. Funded accounts may have more flexibility, but the terms should always be reviewed beforehand.

What You Need to Know About Prop Firms

Prop firms offer a structured, rule-based environment where skilled traders can access capital and convert performance into profit. For individuals with proven strategies and strong risk control, they present a practical alternative to self-funding or building a client-facing trading business. The model is particularly well-suited to those who are technically proficient and results-oriented, with a focus on consistency over speculation.

However, entering this space successfully requires more than market knowledge or a profitable trading setup. It demands strict discipline, adherence to clearly defined rules, and a willingness to operate within parameters set by the firm. Many otherwise capable traders fail not because of poor strategy, but because they overlook the operational and behavioural expectations these firms enforce.

Equally important is the selection of the firm itself. The rise in popularity of prop trading has attracted both reputable providers and opportunistic ventures. Traders should prioritise transparency, track record, support infrastructure, and reliability when choosing a firm to work with. Choosing the wrong firm can compromise not only time and capital but also long-term confidence in the model itself.

As the prop trading landscape continues to expand, serious traders should approach the opportunity with realistic expectations and professional standards. In the right hands, a prop firm can be more than just a funding source—it can serve as a platform for sustained, performance-based growth.