Prop trading, or proprietary trading, gives traders access to significant capital in exchange for a share of profits. Instead of risking personal savings, you trade the firm’s money—if you can prove you have the skill and discipline. Starting a prop trading account is not as simple as signing up; it requires passing evaluations and following strict rules. This guide explains the steps, risks, and tips for success.
Step 1: Choose a Reputable Prop Firm
Not all firms are equal. Some have built strong reputations and payout histories, while others are untrustworthy.
- Trusted Names (2025): FTMO, The5ers, Funded Trading Plus, Blue Guardian.
- Red Flags: Unrealistic promises, lack of payout history, no clear rulebook, or guaranteed funding claims.
Tip: Always check independent reviews, MyFXBook verification, and trader forums for genuine payout proof.
Step 2: Understand the Evaluation Process
Most firms require traders to pass a multi-step evaluation before providing capital. Typical rules include:
- Profit Targets: 8–10% gain in 30 days.
- Drawdown Limits: 5% daily max loss and 10% overall loss.
- Minimum Trading Days: At least 5–10 days to prove consistency.
Some firms also offer instant funding accounts, but usually with lower leverage or stricter rules.
Step 3: Pay the Challenge Fee
Challenge fees typically range from $100 to $1,000 depending on the account size (e.g., $10k to $200k evaluations). Many reputable firms refund this fee if you pass and receive a funded account.
Warning: Avoid firms demanding unusually high upfront fees without transparent rules.
Step 4: Pass the Evaluation
To succeed in evaluations, discipline is crucial:
- Stick to a proven and tested trading strategy.
- Risk only 0.5–1% per trade.
- Respect minimum trading days; avoid overtrading to meet targets quickly.
- Avoid trading during high-impact news events unless explicitly permitted.
Step 5: Trade a Funded Account
Once you pass, you’ll gain access to a funded account with the firm’s capital:
- Profit Splits: Typically 70–90% in favor of the trader.
- Scaling Programs: Some firms increase capital allocations up to $2M for consistent traders.
- Withdrawals: Profits are generally paid monthly or bi-weekly.
Risks and Scams to Watch Out For
- Fake Firms: Some set impossible rules so you fail and they keep the fees.
- No Regulation: Most prop firms are unregulated; perform your own due diligence.
- Closures: MyForexFunds, once a major firm, halted operations after regulatory actions—showing why diversification and caution are vital.
Practical Tips for Success
- Practice on a demo account that mirrors the firm’s rules before taking the challenge.
- Keep a detailed trade journal to track performance and mistakes.
- Focus on consistency over flashy wins.
- Treat the evaluation like a job interview—discipline matters more than one lucky trade.
Conclusion
How to start a prop trading account is more than a sign-up form. It’s a process that demands patience, strategy, and strict risk management. By choosing a reputable firm, respecting the rules, and avoiding scams, traders can leverage prop firms to turn their skills into a funded trading career.
