Prop firms, explained
A proprietary trading firm lets you trade their capital and keep most of the profit — after you prove you can follow rules. Here is exactly how the model works, before you spend a cent on a challenge.
1. Buy an evaluation
You pay a one-off fee (often $50–$600 depending on account size) for a demo account with a profit target and loss limits. That fee is the firm's real revenue, so read the rules like a contract.
2. Hit the target without breaking rules
Typical: 8–10% profit target, 5% daily loss limit, 10% overall drawdown, minimum trading days. Most traders fail on the daily loss limit, not the target.
3. Get a funded (still simulated) account
Almost every retail prop firm funds you on a simulated account and copies selected traders into the real market. Your payouts are real; the account usually is not.
4. Withdraw your profit split
You keep 70–90% of profits, paid bi-weekly or monthly. Consistency rules can void a payout if one single day carries most of your gains.
Established firms worth comparing
Long-running firms with public payout records. Not endorsements — rules change often, so verify current terms yourself before buying.
| Firm | Model | Split | Drawdown | Platforms | Payouts |
|---|---|---|---|---|---|
| FTMO The longest-running name in the space with a public payout record. Strict news and consistency rules. | 2-step challenge | 80% – 90% | 10% max / 5% daily | MT4, MT5, cTrader, DXtrade | Bi-weekly on request |
| FundedNext Flexible programme range. Read the specific model's rules; they differ a lot between plans. | 1-step, 2-step, instant | 80% – 95% | 8% – 10% max | MT4, MT5, cTrader | Bi-weekly, profit share from challenge phase |
| The5ers Slower scaling model that rewards low-risk consistency rather than fast doubling. | Instant funding & high-stakes | 50% – 100% | Scaled per programme | MT5, cTrader | Monthly, with account scaling |
| Topstep Futures-focused, US-regulated brokerage rails. A good fit if you trade ES, NQ or GC rather than spot gold. | Futures combine | 90% – 100% (first $10k) | Trailing max loss | NinjaTrader, TradingView, Tradovate | Weekly once eligible |
| Alpha Capital Group Popular with gold scalpers. Check maximum lot size and news-trading restrictions before you buy. | 1-step & 2-step | 80% – 90% | 6% – 10% | MT5, cTrader, Match-Trader | Bi-weekly |
Red flags before you buy a challenge
- Profit splits above 95% with no verified payout history.
- Rules that can be reinterpreted after you pass ('gambling' or 'hyperactivity' clauses with no numbers).
- No public list of prohibited strategies, or a news-trading ban buried in the FAQ.
- Aggressive affiliate marketing from accounts that have never shown a payout.
- Crypto-only payments with no company registration details anywhere on the site.