What is a prop firm, and how does it work?
What does a prop firm do? It gives you an account funded with its own money. You pay for a test, and if you pass, you keep most of the profit.
What does prop mean?
It's short for proprietary trading. Prop firms want traders who manage risk well. Do they ask for a big deposit? No: they charge a single fee for a test, called the challenge.
What happens in the challenge? You trade a demo account with clear rules: reach a profit target without breaking the loss limits. Succeed and you get a funded account, usually keeping 80–90% of the profit.
How do firms earn money?
Most firms keep funded traders on simulated accounts and pay profits from their own funds. Their main income is challenge fees, since many traders don't pass.
So which firm should you trust? One that actually pays. Years in business and Trustpilot ratings are your best evidence.
What can you lose?
Only the challenge fee. Lose the account and you owe nothing more. Many firms even refund the fee with your first payout.
What does a $100,000 challenge cost? Usually $300–650. Current prices are on our cheapest prop firms list.
Is it right for you?
Do you trade with a plan, know your risk on every trade and stick to your rules through a losing run? Then it can be. New? Practise on demo first and read how to pass a challenge.
Got questions?
Is a prop firm a broker?
No. A broker holds your money and executes your orders. A prop firm sells you a test and shares the profit made on its account.
Can I lose more than the fee?
No. The fee is the most you can lose.