Question 1

What is proprietary trading (prop trading)?

Accepted Answer

Proprietary trading means trading financial instruments using a firm's capital rather than your own money. Prop trading firms provide traders with funded accounts after they demonstrate their skill through an evaluation process. If you are profitable, you keep a percentage of the profits (typically 70-90%) while the firm covers the trading capital and assumes the risk of loss.

Question 2

How do I get started with a prop firm?

Accepted Answer

To get started, choose a reputable prop firm (see our reviews), pay an evaluation fee, and complete the firm's challenge. The challenge typically requires you to reach a profit target (usually 8-10%) while staying within daily and overall drawdown limits. Once you pass, you receive a funded account to trade with. Some firms also offer instant funding without an evaluation, though with different terms.

Question 3

Do I need previous trading experience?

Accepted Answer

While there is no formal experience requirement, we strongly recommend that you have at least 6-12 months of consistent demo trading experience before attempting a paid evaluation. The evaluation fee is non-trivial, and without a proven strategy and risk management skills, you are likely to lose that money. Start with free demos offered by most prop firms to test your readiness.

Question 4

How much does it cost to start?

Accepted Answer

Evaluation fees range from $49 (MyFundedFX for a $5K account) to over $1,000 (for $200K+ accounts at premium firms). Most traders start with $100-350 range for a $25K-$50K account. Some firms like FTMO refund this fee with your first profit payout. There are no ongoing monthly costs once you are funded.

Question 5

What is the typical profit target for an evaluation?

Accepted Answer

Most two-step evaluations require 8-10% profit in Step 1 and 5% in Step 2. One-step evaluations usually require 8-10% profit in a single phase. These targets are calculated as a percentage of the initial account balance. For example, a 10% target on a $50,000 account means you need to earn $5,000 in profit.

Question 6

What happens if I fail the evaluation?

Accepted Answer

If you breach a drawdown limit or fail to reach the profit target within the time limit, the evaluation is terminated. You would need to purchase a new evaluation to try again. Some firms offer discounted retries (10-20% off) and others offer subscription models where you can retry unlimited times within a period. The evaluation fee is typically non-refundable upon failure.

Question 7

Is there a time limit to pass the evaluation?

Accepted Answer

Most firms give 30 days for Step 1 and 60 days for Step 2, though some firms like Profunded have no time limits. Firms with no time limits allow you to trade at your own pace without pressure, which can be beneficial for swing traders or those who trade part-time.

Question 8

Can I use Expert Advisors (EAs) or automated trading?

Accepted Answer

Policies vary by firm. Many firms allow EAs and automated trading systems, while some restrict or prohibit them. High-frequency trading (HFT) bots and copy trading from other accounts are commonly restricted. Always check the specific firm's terms of service before relying on automated strategies.

Question 9

How much of the profit do I keep?

Accepted Answer

Most prop firms offer a 70-90% profit split in your favor. For example, if you earn $10,000 in profit on an 80% split, you receive $8,000 and the firm keeps $2,000. Some firms offer scaling plans that increase the split to 90% or even 100% based on consistent performance over time.

Question 10

How often can I withdraw profits?

Accepted Answer

Payout frequency varies by firm. The most common schedule is bi-weekly (every 14 days). Some firms offer monthly payouts, and a few offer weekly or on-demand withdrawals. There may be minimum payout thresholds (typically $50-100) that you must reach before requesting a withdrawal.

Question 11

What payment methods are available?

Accepted Answer

Common payment methods include bank wire transfer, cryptocurrency (Bitcoin, USDT), PayPal, Skrill, and Payoneer. Availability depends on the firm and your country of residence. Processing times range from 1-5 business days for most methods. Cryptocurrency payouts are often the fastest option.

Question 12

Do I have to pay taxes on prop firm profits?

Accepted Answer

Yes, prop firm payouts are generally considered taxable income. The specific tax treatment varies by country and jurisdiction. We recommend consulting with a tax professional who understands trading income in your specific location. Keep detailed records of all payouts for tax reporting purposes. FundedAccountReview does not provide tax advice.

Question 13

What is the daily drawdown limit?

Accepted Answer

The daily drawdown limit is the maximum amount you can lose in a single trading day, typically set at 4-5% of the account balance. If your losses reach this level on any given day, the account is terminated (during evaluation) or suspended (funded account). The calculation method varies by firm -- some use starting balance of the day, others use the highest equity reached during the day.

Question 14

What is the difference between static and trailing drawdown?

Accepted Answer

Static drawdown means the maximum loss level is fixed from your starting balance. If you start with $100K and the max drawdown is 10%, your account is terminated if equity falls below $90K, regardless of how much profit you have made. Trailing drawdown means the loss level moves up as your account grows. If you reach $105K, the new minimum becomes $95K. Trailing drawdown is more restrictive as profits can raise the termination level.

Question 15

Can I hold trades over the weekend?

Accepted Answer

Policies vary. Many firms allow weekend holding but some require all positions to be closed before the market closes on Friday. Weekend holding carries additional risk due to gaps that can occur when markets reopen. Even if allowed, consider the risk-reward of holding positions through the weekend, especially during your evaluation.

Question 16

Can I trade during news events?

Accepted Answer

Most firms allow news trading, but some restrict trading within a 2-5 minute window around high-impact economic releases (such as Non-Farm Payrolls or interest rate decisions). Even if news trading is allowed, the extreme volatility during these events can cause slippage, widened spreads, and rapid drawdown. Consider avoiding major news events during your evaluation unless news trading is your specific expertise.

Question 17

Are prop trading firms regulated?

Accepted Answer

Prop trading firms operate in a regulatory gray area. They are not typically regulated as brokers or financial advisors because they are providing access to the firm's own capital, not managing client funds. However, reputable firms are registered as businesses, operate under local business laws, and many use regulated brokers for trade execution. Always verify a firm's legal registration and business history before investing.

Question 18

How do I know if a prop firm is legitimate?

Accepted Answer

Look for: a verifiable business registration, at least 2+ years of operating history, consistent payout track record verified by independent reviewers, active community presence, transparent terms of service, and responsive customer support. Be cautious of firms that only accept cryptocurrency payments, have no verifiable business address, or have overwhelmingly negative reviews on independent platforms.

Question 19

Can I lose more than the evaluation fee?

Accepted Answer

No. The evaluation fee is the maximum amount you risk. If you fail the challenge, you lose the fee. If you trade a funded account, you trade with the firm's capital. You cannot lose your own money beyond the evaluation fee. However, if your funded account is terminated due to rule violations, you lose access to future profits from that account.

Frequently Asked Questions

Getting Started

Evaluations & Challenges

Payouts & Profits

Trading Rules & Risk

Safety & Legitimacy

Still have questions?