Frequently Asked Questions

A proprietary trading firm (prop firm) provides traders with capital to trade financial markets in exchange for a share of the profits. Traditional prop firms typically hire traders as employees or contractors who work in an office using the firm's capital.

However, modern online prop firms work differently - they allow remote traders worldwide to access funded trading accounts after passing an evaluation process. These firms provide the capital (typically $10,000 to $400,000), while traders keep a significant percentage of the profits (usually 70-90%).

This arrangement benefits both parties - traders can access more capital than they personally have, while prop firms can leverage skilled traders without risking their evaluation process.

Yes, many online prop trading firms are legitimate businesses, but as with any industry, there are varying levels of quality and some potential scams. Reputable prop firms have:

• A verifiable business history and corporate structure
• Transparent evaluation processes and trading rules
• Evidence of actual payouts to successful traders
• Clear terms and conditions without hidden clauses
• Reasonable evaluation fees relative to account sizes

At PropTraderTools, we verify these factors for all firms we review. Our ratings and recommendations focus on firms with proven track records of fair treatment and reliable payouts to traders.

Online prop trading firms typically generate revenue through three main channels:

1. Evaluation fees: Income from traders purchasing evaluation challenges. Since many traders don't pass the evaluation, these fees represent a significant revenue stream.
2. Profit splits: Keeping a percentage (typically 10-30%) of profits generated by successful funded traders.
3. Trading activity: Some larger firms may have institutional arrangements with liquidity providers, receiving commission rebates or reduced trading costs based on volume.

Most established prop firms aim to identify and retain profitable traders for long-term relationships where both the firm and trader benefit from the trader's success. This creates a sustainable business model beyond just collecting evaluation fees.

Prop trading is best suited for:

• Experienced traders who have developed consistent strategies but lack sufficient capital
• Disciplined risk managers who can follow strict trading rules and control emotions
• Full or part-time traders looking to scale their trading business with external capital
• Those comfortable with performance-based income rather than fixed salaries

Prop trading may NOT be appropriate for:

• Complete beginners with no trading experience
• Those who cannot afford to lose their evaluation fee
• Traders with inconsistent strategies or poor risk management
• Those needing immediate guaranteed income

Successful prop traders typically have at least 6-12 months of trading experience before attempting evaluations.

The key differences between prop trading and regular retail trading include:

• Capital access: Prop traders use the firm's capital (often 10-40x more than they could personally invest), while retail traders use only their own money.
• Profit structure: Prop traders keep 70-90% of profits without investing personal capital, while retail traders keep 100% of profits but risk their own money.
• Rules and restrictions: Prop traders must follow specific trading rules (maximum drawdown, holding periods, etc.), while retail traders have complete freedom.
• Evaluation process: Prop traders must pass assessments to prove their skills, while retail traders can begin immediately.
• Platform access: Some prop firms offer institutional-grade tools and lower trading costs than retail platforms.

Many successful traders maintain both prop accounts and personal trading accounts to leverage different advantages of each approach.

Prop firm evaluations are designed to test trading skills, risk management, and psychological discipline. These typically follow one of three models:

1. Two-Phase Model: The most common format, requiring traders to pass two consecutive stages:
   • Challenge Phase: 10-15% profit target with strict drawdown limits (usually 5-10% max)
   • Verification Phase: Similar rules with lower profit targets to demonstrate consistency
2. One-Phase Model: A single evaluation with specific profit targets (usually 8-12%) and risk limits
3. Instant Funding: Immediate account access with higher initial fees and often stricter trading rules or reduced initial capital

Most evaluations include specific rules around:

• Maximum daily and overall drawdown limits
• Minimum trading days requirements
• Maximum time periods to achieve targets
• Restrictions on specific trading activities (news trading, overnight positions, etc.)

After successfully completing the evaluation, traders receive a funded account with the firm's capital where they keep a percentage of profits.

Profit targets and drawdown limits vary between firms, but typical ranges include:

Profit Targets:

• Challenge Phase: 8-15% of account balance
• Verification Phase: 5-10% of account balance
• One-Phase Models: 8-12% of account balance

Drawdown Limits:

• Maximum Daily Drawdown: 4-5% of initial balance
• Maximum Overall Drawdown: 8-10% of initial balance

Many firms offer multiple account types with different risk parameters:

• Normal/Standard: Balanced profit targets and drawdown limits (e.g., 10% profit target, 10% max drawdown)
• Aggressive: Higher profit targets with more generous drawdown limits (e.g., 20% profit target, 15% max drawdown)
• Swing: Lower daily drawdown restrictions but stricter overall drawdown limits, designed for position traders

These parameters are designed to identify traders who can generate consistent returns while managing risk effectively.

Evaluation fees vary widely based on account size, evaluation model, and firm. Typical ranges include:

Two-Phase Evaluation Models:

• $10,000 Account: $50-$200
• $25,000 Account: $100-$300
• $50,000 Account: $200-$500
• $100,000 Account: $400-$900
• $200,000 Account: $800-$1,500

One-Phase Evaluation Models: Generally 15-30% higher than comparable two-phase models

Instant Funding Options: Typically 30-100% higher than standard evaluation fees

PropTraderTools offers exclusive discounts on many firm evaluations, typically ranging from 10-20% off the standard prices.

If you fail a prop firm evaluation, the specific consequences depend on the firm's policies:

• Standard Policy: Most firms require purchasing a new evaluation at the full price if you fail either phase of the evaluation process.
• Free Reset Option: Some firms offer one-time free resets if you fail close to the end of your evaluation (e.g., after achieving 8% of a 10% profit target).
• Discount Offers: Many firms provide discounts (typically 10-25% off) for second attempts.
• Extension Options: Some firms allow purchasing time extensions if you haven't hit drawdown limits but are running out of time.

If you fail an evaluation, we recommend:

1. Thoroughly analyzing what went wrong before attempting again
2. Considering starting with a smaller account size to reduce the evaluation fee
3. Utilizing any free demo challenges to practice before paying for another attempt
4. Using PropTraderTools discount codes to reduce the cost of your next attempt

Most successful funded traders failed at least 1-3 evaluations before passing, so persistence and learning from mistakes are essential.

Different trading styles can succeed in prop evaluations, but some approaches are better suited to typical evaluation rules:

• Day Trading: Often most compatible with evaluation rules due to limited overnight exposure, controlled risk, and frequent opportunities. Works well with daily drawdown limits.
• Swing Trading: Can be successful with firms offering "swing account" options that allow overnight positions and have less strict daily drawdown limits.
• Scalping: Can work well for achieving consistent small gains, but may face challenges with trading costs and execution quality.
• Position Trading: Generally less suitable for evaluations due to time constraints and drawdown restrictions.

Regardless of style, successful evaluation strategies typically share these characteristics:

• Strict position sizing (usually risking 0.5-2% per trade)
• Clear stop loss implementation on every trade
• Consistency in approach rather than looking for home runs
• Adaptation to evaluation-specific rules

Many traders develop a specific "evaluation strategy" that differs from their normal trading approach - focusing on meeting the challenge requirements safely rather than maximizing returns.

Prop firms typically offer a range of account sizes to accommodate different trader needs and experience levels:

• Entry-Level Accounts: $5,000 - $10,000
• Mid-Range Accounts: $25,000 - $50,000
• Advanced Accounts: $100,000 - $200,000
• Professional Accounts: $300,000 - $400,000 (less common)

Some firms offer accounts as large as $1,000,000, but these typically require proving success with smaller accounts first.

Scaling Programs: Many firms offer account scaling, where successful traders can increase their account size over time:

• Typically 25-50% increases after consistent profitability (e.g., 3-6 months)
• Some firms allow scaling up to 4x the initial account size
• Often requires maintaining specific performance metrics

For new prop traders, we generally recommend starting with smaller account sizes ($10K-$25K) to minimize evaluation fees while developing consistency. You can always scale up later as you demonstrate success.

Profit splits vary between firms but typically range from 70% to 90% for the trader. The industry standard is 80/20 (80% to the trader, 20% to the firm).

Typical profit split structures:

• Standard Split: 80% trader / 20% firm (most common)
• High Split: 85-90% trader / 10-15% firm (competitive offerings)
• Tiered Split: Increasing percentages based on performance or loyalty (e.g., starting at 75%, increasing to 90% over time)

Profit split considerations:

1. Higher splits aren't always better if other conditions (drawdown limits, time constraints) are stricter
2. Some firms with lower splits offer better trading conditions or platform features
3. Consider the total package (profit split, account size, scaling opportunities) rather than just the split percentage

When evaluating profit splits, verify there are no hidden fees, minimum thresholds for withdrawals, or unexpected deductions that could impact your actual take-home percentage.

Available markets vary by firm, but most prop firms offer access to several of these major market categories:

• Forex: Major, minor, and exotic currency pairs (available at most firms)
• Indices: Major global stock indices as CFDs or futures
• Commodities: Gold, silver, oil, natural gas, and agricultural products
• Futures: Equity index futures, commodity futures, interest rate futures
• Stocks/Equities: Individual company shares (less common, but growing)
• Crypto: Major cryptocurrencies (increasingly available)
• Options: Limited availability, primarily at specialized firms

Firms typically specialize in certain markets:

• Forex-Focused Firms: FTMO, MyForexFunds, The Funded Trader
• Futures-Specialized Firms: Topstep, Earn2Trade, OneUp Trader
• Multi-Asset Firms: FTMO, E8 Funding, Fidelcrest

When choosing a firm, ensure they offer good conditions (tight spreads, low commissions, quality execution) in the specific markets you want to trade. Trading costs and execution quality can vary significantly between firms, even when they offer the same markets.

Instant funding and traditional evaluation models represent different approaches to accessing funded trading accounts:

Traditional Evaluation Model:

• Requires passing one or two evaluation phases before receiving a funded account
• Lower initial fees compared to instant funding
• Full account size available upon passing evaluation
• Typically takes 1-3 months to complete the evaluation process
• Examples: FTMO, MyForexFunds standard challenges

Instant Funding Model:

• Immediate access to a funded account without evaluation phases
• Higher initial fees (typically 30-100% more than evaluation models)
• Often starts with reduced account size that grows as you meet performance targets
• May have stricter ongoing rules or lower profit splits
• Examples: Funded Next Instant, The Funded Trader Rapid

Some firms offer both options, allowing traders to choose based on their preferences, experience level, and time constraints.

Profit withdrawal processes vary between prop firms but typically follow these patterns:

Withdrawal Frequency:

• Bi-weekly: Most common schedule, with payouts every two weeks
• Monthly: Standard at many established firms
• Weekly: Offered by some firms as a premium feature
• On-demand: Less common but available at select firms

Withdrawal Process:

1. Trader requests withdrawal through the firm's dashboard/portal
2. Firm reviews trading activity to ensure compliance with rules
3. Firm calculates the profit amount based on agreed split percentages
4. Payment is processed via the chosen payment method
5. Account balance is reset to the original starting amount

Payment Methods: Most firms offer multiple options:

• Bank transfers/wire (most common but slowest)
• Electronic payment processors (Skrill, Payoneer, Wise)
• Cryptocurrency (increasingly popular)
• PayPal (limited availability)

Processing Times:

• Verification/approval: 1-3 business days
• Payment processing: 1-5 business days (depends on method)

Some firms have minimum withdrawal thresholds (e.g., $100) or maximum withdrawal limits per period.

Yes, profits earned from prop trading are typically taxable income in most jurisdictions. However, tax treatment varies significantly based on:

• Your country of residence
• Whether you're trading as an individual or business entity
• Your specific arrangement with the prop firm
• Local trading and income tax regulations

Common tax classifications for prop trading income:

• Self-employment income: Most common classification in many countries
• Business income: If trading through a corporate structure
• Capital gains: Less common for prop trading specifically
• Independent contractor/freelance income: In some jurisdictions

Many prop firms do not withhold taxes on payments, making it your responsibility to properly report income and pay any required taxes. Keep detailed records of all trading activity, withdrawals, and expenses related to your trading business.

Most prop firms accept a variety of payment methods for purchasing evaluations:

• Credit/Debit Cards: Visa, Mastercard, American Express (most common)
• Electronic Payment Services: PayPal, Skrill, Wise (formerly TransferWise)
• Cryptocurrency: Bitcoin, Ethereum, USDT (increasingly accepted)
• Bank Transfers: Wire transfers, ACH (less common for evaluations)

Important considerations:

• Credit card payments are typically processed instantly, allowing immediate access to the evaluation
• Cryptocurrency payments may offer discounts at some firms (typically 5-10%)
• Bank transfers usually have the longest processing times (1-3 business days)
• Some payment methods may have additional fees or currency conversion charges

Most established firms support at least 3-4 different payment options to accommodate traders worldwide. If you're using PropTraderTools discount codes, they typically work with all payment methods offered by the firm.

Payout processing times vary by firm and payment method, but typically follow these timeframes:

Overall Process:

1. Verification period: 1-3 business days (compliance checks)
2. Processing period: Varies by payment method (see below)

Method-specific processing times:

• Cryptocurrency: Fastest option - usually same day to 24 hours
• Electronic wallets (Skrill, Wise): 1-2 business days
• PayPal: 1-2 business days
• Bank transfers/wire: 3-5 business days (sometimes longer for international transfers)

Factors affecting payout speed:

• First-time withdrawals typically take longer due to additional verification
• Large withdrawal amounts may require additional security checks
• Some firms process payouts only on specific days of the week or month
• Technical issues or high volume periods can occasionally cause delays

Based on our verification and user reviews, FTMO, Funded Next, and E8 Funding consistently rank among the most reliable firms for timely payouts, while newer or less established firms may have more variable processing times.

PropTraderTools offers exclusive discounts with many major prop firms through our partnership programs. Here's how these discounts work:

1. Direct application: When you click "Get Discount" or "Claim Offer" on our site, you're directed to the firm's website with our discount code automatically applied at checkout.
2. No additional steps required: The discount is applied automatically - you don't need to manually enter codes or follow special procedures.
3. Same account experience: Accounts purchased through our discounts are identical to regular accounts, with all the same features and support.

Discount types we offer:

• Percentage discounts: Typically 10-20% off evaluation fees
• Fixed amount discounts: $25-$100 off, depending on account size
• Bonus features: Free resets, extended evaluation periods, or additional tools

All discounts are negotiated directly with the firms and are regularly verified to ensure they provide the best available offers. We update these discounts monthly and remove any that are no longer active.

Our comprehensive review methodology includes a multi-stage evaluation process:

1. Mystery shopping: We purchase evaluations anonymously to test the full trader experience
2. User feedback collection: We gather and verify testimonials from actual funded traders
3. Company verification: We investigate corporate structures, histories, and regulatory status
4. Payout verification: We confirm actual payment proof and interview traders about withdrawal experiences
5. Support quality testing: We evaluate responsiveness, knowledge, and helpfulness of customer service

Rating criteria (weighted scoring):

• Reliability & Trustworthiness (30%): Business legitimacy, payout consistency, transparency
• Trading Conditions (25%): Evaluation rules, platforms, available markets, execution quality
• Value Proposition (20%): Fee structure, profit splits, scaling opportunities
• Trader Experience (15%): Platform quality, analytics tools, educational resources
• Customer Support (10%): Responsiveness, knowledge, availability

All ratings are updated quarterly to reflect current conditions, and we immediately flag any identified issues with previously recommended firms. We maintain strict editorial independence, and while we do receive commissions from some firms, this never influences our ratings or reviews.

The Prop Firm Success Blueprint is our comprehensive guide designed to help traders successfully pass prop firm evaluations and maximize their earnings from funded accounts. This resource includes:

• Proven evaluation strategies: Step-by-step approaches for passing different evaluation models
• Risk management frameworks: Position sizing, drawdown management, and trade planning templates
• Psychological techniques: Methods for maintaining discipline and emotional control during evaluations
• Firm-specific guides: Tailored strategies for major firms (FTMO, Funded Next, etc.)
• Expert tips: Insights from traders who've successfully managed multiple funded accounts

The Blueprint is available free to subscribers of our weekly newsletter, which also includes:

• Industry updates and rule changes at major firms
• Exclusive discount codes and promotional offers
• Case studies of successful evaluation strategies
• Market insights relevant to prop traders

To receive the Blueprint, simply enter your email in any of the signup forms on our site. The guide will be delivered immediately to your inbox, along with the first issue of our weekly newsletter.

You can reach the PropTraderTools team through several channels:

• Email: support@proptradertools.com (response within 24 hours on business days)
• Contact Form: Available on our Contact page (similar response time to email)
• Live Chat: Available on the bottom right of our website during business hours (9am-5pm EST, Monday-Friday)
• Social Media: Direct messages on Twitter, Facebook, or Instagram (@proptradertools)

Our team is available to help with:

• Questions about prop firm recommendations
• Assistance with discount codes and special offers
• Feedback on the website and tools
• Partnership and business inquiries

For the fastest response, please include relevant details such as the specific prop firm you're asking about, your location, and any previous correspondence. We aim to respond to all inquiries within one business day.