New to prop firms? Start here.
One canonical place for the terms, rules, and fees that decide whether a prop firm actually suits you — in plain English.
- 1Learn
Skim the glossary below so the comparison table stops being jargon.
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See every firm side by side on the rules and costs you just learned.
Open comparisons - 3Decide
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What is a prop firm?
A proprietary trading firm — a “prop firm” — gives you access to a larger trading account than you’d fund yourself, in exchange for proving you can trade within its rules. You pay a one-time evaluation fee, hit a profit target without breaking the risk rules, and the firm gives you a funded account. From then on you keep a share of the profits you make, usually 80–90%.
Most prop accounts today are simulated: you trade live market data and the firm pays you from its own capital based on your results. The catch is the rules — daily loss limits, drawdown, and consistency requirements decide whether you actually get funded and paid. Below, every term is in plain English so the comparison table stops looking like jargon.
How an evaluation works
Four stages from buying a challenge to withdrawing your first payout.
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Buy an evaluation
Pick an account size and pay a one-time fee (often discounted with a code).
- 2
Pass the challenge
Hit the profit target without breaking the daily loss limit or max drawdown; some firms require a minimum number of trading days.
- 3
Get funded
Clear the rules and the firm activates your funded (usually simulated) account; some charge a one-time activation fee here.
- 4
Trade & withdraw
Trade the funded account and withdraw your profit split on the firm's payout schedule.
The rules that decide if you get funded and paid
Every term you’ll see across the site, in plain English. Grouped by where it matters in your prop-firm journey.
Group A — Getting funded
Evaluation / Challenge
The test you buy to prove you can trade within the rules. Pass it and you qualify for a funded account. May be one step or two.
Profit Target
The amount you must earn to pass — e.g. 8–10% on forex challenges, or a fixed dollar amount like $3,000 on a $50K futures account.
Daily Loss Limit
The most you can lose in a single day before the account fails. The #1 reason traders blow evaluations — one bad day ends it.
Drawdown (Static vs Trailing vs End-of-Day)
The maximum your account can fall before it's failed. Static stays at a fixed dollar floor; trailing moves up as your balance grows (intraday trailing follows every tick, end-of-day locks at your highest closing balance). Trailing rules are the most common reason traders blow accounts after a winning run.
Consistency Rule
Caps how much a single big day can count toward passing or toward a payout (often your best day can't exceed 40–50% of total profit). Stops one lucky trade from carrying you.
Group B — Keeping it & getting paid
Funded Account
The account you trade after passing, usually simulated (the firm pays you from its capital based on your results). This is where you actually earn.
Payout Cadence & Minimum Trading Days
How often you can withdraw (weekly, bi-weekly, monthly, or on-demand) and the minimum number of trading days required before your first payout.
Profit Split
Your share of the profits — commonly 80–90% to the trader, sometimes up to 95–100% on promotions. The rest goes to the firm.
Scaling Plan
How your account size and contract/lot limits grow as you stay profitable. Good scaling rewards consistency; restrictive scaling caps your early size.
Group C — What you actually pay
Evaluation Fee
The upfront price of the challenge, often discounted with a verified code.
Activation Fee
A separate one-time fee some firms charge when you reach the funded stage. Easy to miss — it changes the true cost.
Reset Fee
What it costs to restart a failed evaluation instead of buying a new one. Cheap challenges get expensive after a couple of resets.
Futures vs forex prop firms
The two big buckets of prop firm — different platforms, different rules.
Route to NinjaTrader or Tradovate, use fixed-dollar drawdowns and contract limits, and often have monthly platform/data fees.
Use MT4/MT5 or cTrader with percentage targets and drawdowns, and no separate data fee.
Pick the market you already understand, then compare the drawdown type and daily-loss rule before price.
How to choose a firm
A short checklist of what to verify before you pay for any evaluation.
- 1
Read the rules before the price
A small discount on the wrong rule set costs more than full price on the right firm.
What to check before buying an evaluation - 2
Check the drawdown type
Static vs trailing vs end-of-day changes difficulty more than the headline price.
Why traders fail prop firm challenges - 3
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