What is a futures prop firm? How it works, explained from zero

The idea in one paragraph

A proprietary trading firm ("prop firm") gives you an account with a fixed amount of buying power — $50,000, $100,000, $150,000 — and strict loss limits. You don't deposit that money and you can't lose it: the most you can lose is what you paid for the account. If you trade well and respect the rules, you withdraw part of the profit, usually 80% to 100%.

Step 1: the evaluation (or challenge)

Most accounts start with an evaluation: a simulated account where you must reach a profit target without hitting the max loss. On a $50,000 account the target is often around $3,000 and the max loss around $2,000. Many firms add other rules: a daily loss limit, a consistency rule, a minimum number of trading days, limits on trading during news.

You pay for the evaluation once or every month until you pass, depending on the firm — see monthly vs one-time. If you hit the max loss, you fail and can buy a reset or a new evaluation.

Step 2: the funded account

Pass, and you get a funded account. Some firms charge an activation fee at this point (when it matters). The funded account has its own rules — often different from the evaluation — and its own payout conditions: a buffer to build, a minimum number of profitable days, a minimum and maximum withdrawal (payouts explained).

Some accounts skip the evaluation altogether: you pay more and start funded straight away. We track 35 of them — see instant funding: pros and cons.

Where the money comes from

Funded accounts at most futures prop firms are simulated: your trades are copied or tracked, and the firm pays your share of the profit from its own revenue — mostly evaluation fees. Some firms move their best traders to a live account after a number of payouts. This is why the rules matter so much: they decide how many traders pass and how much the firm pays out.

What to compare before you buy

• What getting funded really costs: the price, times the months for monthly plans, plus any activation fee — not the headline price. See the cheapest accounts.
• How hard the evaluation is: profit target compared with the max loss, and the drawdown type (static, EOD or intraday).
• The funded rules: profit split, payout rules, consistency rule, buffer. See the best funded terms.
• The firm: how long it has been in business, its Trustpilot rating, how much it has paid out, and whether it accepts your country and your platform.

Our ranking does all of this with one published formula for every account, and the quiz narrows it down to the accounts you can actually buy and use.

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