Prop Trading Accounts: Everything You Need to Know
Proprietary trading, or prop trading, has surged in popularity as traders look for opportunities to scale their strategies without risking personal capital. Central to this world is the prop trading account—a funded trading account provided by a firm that allows skilled traders to trade using the firm’s capital. In this guide, we’ll break down everything you need to know about prop trading accounts, including how they work, how to qualify, pros and cons, and how to choose the right firm.
What Is a Prop Trading Account?
A prop trading account is a trading account funded by a proprietary trading firm, not the individual trader. In this setup, the trader (also called a “prop trader”) uses the firm’s capital to trade various assets—often forex, stocks, futures, or crypto. In exchange, the firm typically takes a cut of the profits while the trader keeps the rest, often between 70% to 90%.
Unlike a traditional retail account where you risk your own money, a prop trading account allows you to trade with higher capital, sometimes with drawdown protection, evaluation periods, and access to training or tools.
How Prop Trading Accounts Work
Here’s a step-by-step overview of how most prop trading accounts operate:
1. Evaluation Phase
Most prop firms require you to pass a challenge or evaluation phase. This phase assesses your ability to trade consistently, manage risk, and follow specific rules. Key conditions usually include:
Hitting a profit target (e.g., 8–10%)
Avoiding a maximum drawdown (e.g., 5–10%)
Trading for a minimum number of days (e.g., 10–15)
Using no or limited leverage
Some firms offer one-phase or two-phase evaluations, and many now also offer instant funding for higher fees.
2. Funded Account
Once you pass the evaluation, you’re granted access to a funded prop trading account. The account size varies—commonly between $10,000 and $200,000 depending on the firm and your performance.
3. Profit Splits
You now trade the firm’s capital and keep a percentage of the profits, typically:
70/30 in the trader’s favor
80/20 or even 90/10 at premium tiers
Some firms offer scaling plans that increase your account size and profit share as you consistently perform.
4. Rules and Restrictions
Prop accounts come with strict rules. Violating them could mean losing your account. Common restrictions include:
No news trading
No holding trades over the weekend
Daily loss limits
No copy trading or using EAs (expert advisors), depending on the firm
Types of Prop Trading Accounts
Not all prop trading accounts are the same. Here's a breakdown of common types you’ll encounter:
1. Forex Prop Accounts
These are among the most common. Forex prop firms offer access to major and minor currency pairs, often using platforms like MetaTrader 4 or 5. Evaluation phases typically focus on intraday trading, although swing strategies may be allowed depending on the firm.
2. Futures Prop Accounts
Futures prop firms fund traders on platforms like NinjaTrader or Tradovate. These accounts appeal to traders focused on market depth, order flow, and volume-based strategies. Popular instruments include the S&P 500 (ES), Nasdaq (NQ), and crude oil (CL).
3. Stock Prop Accounts
These accounts allow trading of U.S. equities, usually through direct market access (DMA). Stock prop accounts are often offered by more traditional, office-based firms but are becoming increasingly available online.
4. Crypto Prop Accounts
Crypto prop firms provide funding to trade digital assets like BTC, ETH, and others. These accounts may be more volatile and are offered by a growing number of online prop firms with a crypto focus.
Advantages of Using a Prop Trading Account
Using a prop trading account can be a game-changer for disciplined traders. Here's why:
✅ Access to Larger Capital
You can scale your strategy beyond what your personal funds would allow. Some accounts start at $10K and scale to $1M+.
✅ Limited Personal Risk
In most cases, you’re not risking your own money—violating rules may lose your account, but not your personal funds.
✅ Structured Trading Environment
The evaluation phase forces traders to develop consistent, risk-managed strategies.
✅ No Licensing Required
You don't need Series 7 or other certifications unless you're trading securities through traditional U.S. firms.
✅ Performance-Based Rewards
Traders who excel can receive higher profit splits, increased funding, and access to exclusive programs.
Risks and Challenges of Prop Trading Accounts
While the benefits are real, there are also risks and challenges:
⚠️ Strict Rules
Even profitable traders can lose accounts by breaching rules—like exceeding a daily drawdown or trading news.
⚠️ Upfront Costs
Most prop firms charge for the evaluation (e.g., $100–$500+ depending on account size). You could lose this if you fail.
⚠️ Psychological Pressure
Trading someone else’s money can be emotionally taxing. Some traders over-trade or play it too safe.
⚠️ Limited Strategy Freedom
Certain strategies (like news scalping or swing trading) may be disallowed or restricted.
⚠️ Payout Delays or Firm Risk
Prop trading isn’t heavily regulated. Traders must research firms carefully to avoid scams or payout issues.
How to Choose the Right Prop Trading Account
Choosing the right prop trading firm and account depends on your style, goals, and risk tolerance. Consider these criteria:
1. Evaluation Structure
Do you prefer a one-step or two-step evaluation? Or do you want instant funding?
2. Profit Split
Look for firms offering fair profit splits, ideally 80% or higher.
3. Payout Frequency
Weekly or bi-weekly payouts are ideal. Check the minimum withdrawal thresholds too.
4. Drawdown and Rules
Understand the rules. Avoid firms with unrealistic daily drawdowns or rigid trading restrictions.
5. Platform and Instruments
Does the firm offer your preferred platform (MT4, cTrader, NinjaTrader)? Do they support the instruments you trade?
6. Reputation
Check Trustpilot, Reddit, and trading forums. Look for consistent payouts, good support, and transparency.
Are Prop Trading Accounts Worth It?
Yes—for the right trader. If you have a proven trading strategy, discipline, and a risk-managed approach, prop trading accounts can be an incredible opportunity to:
Trade with more capital
Earn meaningful profit shares
Build a scalable trading career
However, if you’re still new or trading emotionally, it might be wise to practice more on demo or small personal accounts before paying for a challenge.
Prop Trading Account FAQ
❓ Do I need to be a professional trader to use a prop trading account?
No, but you need a consistent strategy and good risk management. Most firms are open to anyone who passes their evaluation.
❓ How much does it cost to get started?
Evaluation fees range from $100 to $1,000, depending on the account size and firm.
❓ What happens if I lose the account?
If you violate the rules, you typically lose the account. Some firms offer free or discounted retries.
❓ Can I trade part-time with a prop account?
Yes, as long as you meet the minimum active trading days. Many traders do this around their jobs or studies.
❓ Are payouts guaranteed?
No. Always research the firm. Stick to companies with transparent terms and a positive reputation.
Final Thoughts
Prop trading accounts offer a low-risk, high-reward path to serious trading income. With a relatively small upfront investment, traders can access significant capital and earn the majority of profits—provided they stay disciplined and play by the rules.
If you're ready to level up your trading career and want to trade with serious funding, then getting a prop trading account may be the smartest next step.