Prop trading starter guide

A prop firm (proprietary trading firm) is a company that recruits traders to trade its own capital. You pay an evaluation fee, prove yourself on a simulated account, and once you pass you get a funded account and split the profits with the firm — usually 80–90% to the trader.

The upside is running a $50,000–$150,000 account without tying up tens of thousands of your own capital. The risk is that breaking a rule such as the drawdown or the daily loss limit closes the account immediately. In prop trading, managing the rules matters as much as reading the market.

1. Evaluation (Challenge / Combine) — you pay the fee and hit a profit target on a simulated account while respecting the drawdown and the minimum trading days. Fail, and a paid reset lets you try again.
2. Going funded (PA / Funded) — after passing, an activation fee ($0–$149 depending on the firm) opens the funded account. At most firms the environment is still simulated (sim funded), but the payouts are real money.
3. Payout — once you meet the minimum amount and the conditions (trading days, safety net), you can request one. Rise and Wise are the usual channels.
4. Going live (some firms) — some firms move consistent traders onto a real live account.

Exact terms per firm and model are in the rankings and the rule matrix.

① Trailing max drawdown (TMDD) — how far the account may fall from its peak. What matters is how that peak is tracked: EOD (end of day) ignores intraday peaks and is far easier to manage; Intraday (live) follows your highest unrealised profit of the day and is far tighter. The same $2,500 drawdown feels like a completely different rule. → Learn more

② Daily loss limit (DLL) — the most you may lose in a single day. Some firms have one, some don't, and a breach either locks you out for the day or closes the account. → Learn more

③ Consistency rule — “no single day may account for more than N% of total profit.” If your style is one big day and done, pick a firm or model without one. Always check whether it applies only during the evaluation or at payout time too.

• Evaluation fee — either a monthly subscription (charged every month until you pass) or a one-off payment. Discounts and promo codes are near-permanent, so never pay full price.
• Activation fee — what it costs to open the funded account after passing. Some firms charge $0, others over $100. real total cost = discounted price + activation fee is the only fair way to compare.
• Reset fee — what a retry costs after a failed evaluation. Once you factor in repeat resets, a model with a roomier drawdown often works out cheaper than a low headline fee.

Firms differ on the minimum payout ($125–$1,000), the minimum trading days, and the safety net (only the amount above the drawdown band is withdrawable). Most traders get paid through Rise or Wise, then convert to their local currency — count the FX fees when you work out what actually lands.

Real payout experiences are on the payout reviews board.

1. Buying on price alone — check the drawdown tracking method and the consistency rule before you look at the discount.
2. Letting unrealised profit run on an intraday-drawdown account, then getting closed out by the trailing peak.
3. Dragging a monthly subscription evaluation out for months and paying more than a one-off would have cost.
4. Holding through a news release — the classic way to blow the DLL in one slippage-filled minute.
5. Going all in on one firm — until you find rules that suit you, it's safer to try two or three with small accounts.

• ✓I've written down my trading style (scalping or swing, trades per day)
• ✓I can explain the difference between EOD and intraday drawdown
• ✓I've checked whether my chosen model has a consistency rule and where it applies
• ✓I've worked out the real total cost (discounted price + activation) and the reset fee
• ✓I've checked the payout conditions (minimum, trading days, safety net)
• ✓I've applied a discount code

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