Key Takeaways (TL;DR)
• Prop firms (Proprietary Trading Firms) provide traders with capital to trade in exchange for a profit split. • You do not need your own money—you trade the firm's capital and keep 70-90% of profits. • To get funded, you must pass an evaluation that proves you can trade profitably and manage risk. • Prop firms look for consistency and discipline, not home-run trades.
The Hook
What if someone offered you $50,000 to trade with—and all you had to do was prove you knew what you were doing?
No loans. No debt. No putting your life savings at risk.
Just pass a test, follow their rules, and trade their money. Keep most of the profits.
This is not a fantasy. This is how Proprietary Trading Firms work. And for traders without capital, it is a game-changer.
What is a Prop Firm?
A Proprietary Trading Firm (or "Prop Firm") is a company that provides traders with capital. You trade with their money, and in exchange, you share a portion of the profits—typically keeping 70% to 90% for yourself.
The firm takes on the risk of the capital. You bring the skill.
It is like a job interview, except instead of showing a resume, you show them your trading performance.
How Does it Work?
Step 1: The Evaluation (The "Audition")
Before they trust you with real money, prop firms require you to pass a trading evaluation. This typically involves:
- A Profit Target: Make 8-10% profit on a simulated account.
- Maximum Drawdown: Do not lose more than 5-10% at any point.
- Daily Loss Limit: No single day can exceed a certain loss (e.g., 2%).
- Minimum Trading Days: You must trade for at least X days (e.g., 5-10).
Step 2: Verification (Optional)
Some firms have a second phase called "Verification" with slightly easier targets. This confirms your first evaluation was not a fluke.
Step 3: Funded Account
Once you pass, you receive a real funded account. This is real money. Your profits are real. And you receive regular payouts.
What Prop Firms Look For
Contrary to popular belief, prop firms are not looking for home-run hitters. They want traders who demonstrate:
1. Consistency
Steady, repeatable profits. Traders who make 1% per week beat traders who make 20% one week and lose 15% the next.
2. Risk Management
Following the rules matters more than making money. A trader who never breaks the drawdown limits is more valuable than a gambler who gets lucky.
3. Discipline
Can you stick to your own trading plan? Prop firms watch for erratic behavior, revenge trading, and emotional decisions.
The Profit Split: How Much Do You Keep?
Most prop firms offer splits between 70/30 and 90/10 in your favor. This means if you profit $10,000 in a month, you keep $7,000 to $9,000.
Some firms also offer scaling programs—if you perform well, they increase your account size and improve your profit split.
Is It Right for You?
Prop firms are ideal for:
- Traders who have skill but lack capital
- Traders who want to prove themselves in a structured environment
- Anyone who wants to trade without risking their own money
They are NOT ideal for:
- Complete beginners who have not learned the basics
- Traders who cannot follow rules
- Anyone looking for a "get rich quick" scheme
Published: February 3, 2026 | Category: Funded Trading | Read time: 10 min
Pop Quiz
What do you typically need to do before trading a Prop Firm account?
đź’ˇ Hint: Think about what the firm needs to see before trusting you with their money.
Practice: Prop Firm Evaluation
You trade consistently, making 1% per week. After 8 weeks, you hit the profit target.
You passed! Slow and steady wins the evaluation. Many traders fail by being too aggressive and hitting the drawdown limit.
đź’ˇ Key Concept:
Prop firm evaluations typically require hitting a profit target (e.g., 8-10%) while staying within a maximum drawdown limit (e.g., 5%).