What's a prop firm? Funded trading in plain English
A prop firm hands you an account funded with its money. Pay a fee, pass a test, then keep most of what you make.
Short version
Prop means proprietary trading. The firm wants traders who don't blow up accounts. So instead of asking you to deposit big money, it charges a one-time fee for a test: the challenge.
You trade a demo account with clear rules: make X% profit, don't lose more than Y%. Pass and you get a funded account. You keep a share of the profit, usually 80–90%.
Where the money comes from
Most firms keep you on a simulated account even after you're funded, and pay your profit from their own pocket. Their real business is fees, because lots of traders fail.
That's exactly why picking a firm that actually pays is the big decision. Time in business and Trustpilot ratings are your best clues.
What you risk
Only the fee. Blow the account and you owe nothing else. Plenty of firms even refund the fee with your first payout.
A $100,000 challenge usually runs $300–650. See today's prices on our cheapest prop firms list.
Should you try?
Yes if you trade to a plan, know your risk per trade and can sit through losses without throwing your rules away. New? Practise on demo first and read how to pass a challenge.
Your questions, answered
Prop firm or broker?
Different things. A broker holds your money and runs your orders. A prop firm sells you a test and splits the profit on its account.
Can I lose more than the fee?
No. The fee is the most you can lose.