Prop Trading FAQ

A proprietary trading firm (prop firm) provides traders with capital to trade financial markets. You don't risk your own money—instead, you trade the firm's capital after passing an evaluation. Profits are split between you and the firm, typically 70-90% in your favor. Modern prop firms like FTMO, FundedNext, and The 5%ers operate remotely, allowing traders worldwide to access funded accounts.

Most prop firms require you to pass an evaluation (called a "challenge") before receiving funded capital. You pay a one-time fee and trade a demo account with specific rules—typically achieving an 8-10% profit target while staying within drawdown limits (usually 5% daily, 10% total). Pass the challenge, and you receive a funded account. Fail, and you can usually reset for a reduced fee. Some firms offer instant funding without evaluations, but typically at higher upfront costs.

Yes, legitimate prop firms do pay traders. FTMO has paid over $130 million, FundedNext over $25 million, and The 5%ers over $15 million. However, some firms have failed or scammed traders in the past (most notably My Forex Funds in 2023). To verify legitimacy: check payout proofs on Trustpilot and social media, verify how long the firm has operated, confirm they have clear terms and conditions, and look for real company registration details. We research each firm's track record in our reviews.

Drawdown is the maximum loss allowed on your account. If your equity drops below the drawdown limit, you fail. There are two main types: Static (absolute) drawdown stays fixed from your starting balance—a 10% limit on $100,000 means you fail at $90,000 regardless of profits. Trailing drawdown moves up with your profits—if you're up $5,000, your floor also moves up $5,000. Trailing drawdown is harder to manage because profits lock in your new floor permanently.

Daily drawdown is the maximum you can lose in a single trading day (usually 4-5%), resetting at a specific server time. Total (maximum) drawdown is the cumulative limit across the entire challenge (usually 8-10%). The daily limit is what catches most traders—one bad session can end your challenge instantly, even if you're profitable overall.

It depends on the firm. FTMO restricts trading 2 minutes before/after high-impact news on certain account types. FundedNext has similar restrictions. Some firms like Maven Trading allow unrestricted news trading. Always check the specific firm's FAQ and terms before trading news—violations can result in account termination even if you're profitable.

Some firms require no single trading day to account for more than a certain percentage of your total profits (often 30-50%). This prevents 'lucky' one-day passes where someone gambles on a single trade. Firms like FTMO and Alpha Capital Group have variations of consistency rules. If you make all your profits in one big day, you may fail the challenge even if you hit the profit target.

Payout speed varies by firm and payment method. FTMO typically processes within 24 hours. FundedNext takes 24-48 hours. Cryptocurrency payouts are usually fastest (same day). Bank wires can take 3-5 business days depending on your location. Most firms require you to meet minimum trading days and complete KYC verification before your first payout.

Common payout methods include: bank wire transfer (universal but slow), cryptocurrency (fast, popular—typically USDT or Bitcoin), Rise/Payoneer (popular for international traders), and sometimes Skrill or PayPal. Crypto is becoming the preferred method for most traders due to speed and lower fees.

You lose access to that specific challenge account. However, most firms offer reset options at a reduced price (often 80-90% of the original fee). Some firms offer free retries if you fail only the profit target but stay within drawdown limits. You can also purchase a new challenge and start fresh. Failing is normal—industry estimates suggest 80-90% of traders fail their first attempt.

Most firms allow EAs with restrictions. Common limitations: no high-frequency trading (HFT), no latency arbitrage, no copy trading from other prop firm accounts. Some firms like Apex Trader Funding explicitly allow copy trading across your own accounts. Always verify EA policies with the specific firm before using automated strategies.

Most forex prop firms allow scalping (FTMO, FundedNext, The 5%ers). However, some futures firms have minimum holding time requirements. Some firms may flag extremely fast trades (under 30 seconds) for review. If scalping is your primary strategy, verify the firm's policy and check for minimum trade duration rules.

Policies vary significantly. FTMO's Swing accounts allow overnight/weekend holding; Normal accounts do not. FundedNext generally allows overnight holds. Many futures firms restrict weekend holding due to gap risk. Weekend holds are particularly risky with trailing drawdown because gaps can instantly breach your floor.