Frequently Asked Questions

A proprietary trading firm (prop firm) provides traders with capital to trade financial markets. They evaluate traders through a challenge or assessment process, and successful traders can then trade the firm's capital for a share of the profits.

Consider factors like account size, trading style, evaluation process, profit split, and trading rules. Key aspects include maximum drawdown limits, profit targets, daily loss limit, and whether the firm supports your preferred trading instruments and platform.

Most firms have a 1-2 phase evaluation process. You'll need to reach a profit target while staying within drawdown limits. Some firms require minimum trading days, and many have rules about position sizing and risk management.

Initial costs vary by firm and account size. Typical evaluation fees range from $30 to $700+. Some firms offer discounted reset fees if you fail the evaluation.

A funded trading account is a live trading account provided by a prop firm after you successfully complete their evaluation process. With this account, you trade the firm's capital (not your own money) and keep a percentage of the profits you generate, typically 70-90%.

Evaluation accounts require you to pass a trading challenge (usually 1-2 phases) by hitting profit targets while staying within risk limits before getting funded. Instant funding accounts give you immediate access to trade live capital without an evaluation period, but typically have stricter rules and lower profit splits initially.

Prop firms make money through evaluation fees, monthly subscription fees, profit splits (keeping 10-30% of trader profits), and spread markups on trades. They also benefit from traders who fail evaluations and pay reset fees.

Popular futures markets include E-mini S&P 500 (ES), Nasdaq-100 (NQ), Crude Oil (CL), and Euro FX (6E). Many traders start with Micro contracts which have lower capital requirements.

Micro futures contracts are 1/10th the size of regular contracts. For example, the E-mini S&P 500 (ES) has a $12.50 tick value, while the Micro E-mini (MES) has a $1.25 tick value. This allows for smaller position sizes and reduced risk.

Popular platforms include NinjaTrader, TradingView, Tradovate, Sierra Chart, and Quantower. Each platform has different features and pricing models. Some prop firms restrict which platforms you can use.

With a prop firm, you don’t need to put up full futures margins. Instead, you pay a subscription or evaluation fee, and once you’re funded, the firm provides the capital and covers the exchange margins. Most futures firms restrict holding positions overnight.

The intraday trailing threshold in a futures prop firm is a dynamic drawdown limit that moves up based on the highest unrealized balance during a trade, staying a fixed amount (e.g., $2,500) below the peak balance, regardless of whether profits are later reduced before closing the trade. For example, if you start with $50,000 (threshold at $47,500) and your trade reaches a live high of $52,000 before closing at $51,000, your new threshold will be $49,500 ($2,500 below $52,000).

Daily loss limits restrict how much you can lose in a single trading day. They're typically calculated from the previous day's closing balance. Breaching this limit usually results in automatic position closure for the day.

Position sizing should be based on your account size and risk tolerance. A common rule is risking no more than 1-2% of your account per trade. Consider using micro contracts to fine-tune position sizes.

Contract scaling is limiting the available number of mini or micro contracts that can be open at one time. As your account balance grows, some firms allow higher amounts of contracts to be used. For example, a $50,000 evalution account may only allow 2 mini contracts until your balance reaches $52,000 where you are allowed to trade 5 mini contracts.

Common violations include exceeding maximum position sizes, breaching daily loss limits, trading restricted news events, and violating overnight holding rules. Multiple violations typically result in account termination.

Many firms restrict trading during major economic news releases. This typically includes a no-trading window (e.g., 5 minutes before and after the news). Some firms require closing all positions before high-impact news.

Firms use automated systems to monitor position sizes, drawdown levels, and rule compliance in real-time. They also review trading history for pattern day trading rules and other restrictions.

Profit splits typically range from 70% to 90% of net profits. Some firms offer increased splits based on performance or account longevity. Profits are usually calculated after reaching certain thresholds or time periods.

Payout frequencies vary by firm - some offer daily, weekly, bi-weekly payouts. Many firms have minimum payout thresholds and require maintaining certain account balance levels for withdrawals. Some firms require you to have a certain number of profitable days (i.e. 5 Days of $200 profit).

Yes, many firms have special rules for first payouts, including longer waiting periods or higher minimum amounts. Some require reaching consistency metrics before allowing initial withdrawals.

Common payout methods include bank wire transfers, crypto, and payment processors like Wise. International traders may have different options or additional requirements for verification.