Prop Firm Trading: Complete 2025 Masterclass
The ultimate guide to becoming a profitable proprietary trader. Learn how prop firms work, how to pass evaluations, manage risk like a pro, master trading psychology, and scale to a 6-figure trading business.
What is Proprietary Trading?
Proprietary trading (prop trading) is when you trade financial markets using a company's capital instead of your own money. You pass an evaluation to prove your skills, then receive $25k-$200k+ in trading capital. You keep 70-90% of the profits you generate.
Trade with Firm Capital
Access $25k-$200k+ without risking your own savings
Limited Personal Risk
Only risk the evaluation fee ($100-$600), not your life savings
High Profit Splits
Earn 70-90% of trading profits - keep most of what you make
Professional Platforms
Access to premium platforms, data feeds, and trading tools
Scalability
Grow from $50k to $200k+ accounts, run multiple accounts simultaneously
Trading Community
Connect with other funded traders, share strategies, learn together
The prop trading industry has exploded since 2020. There are now 50+ firms offering funded accounts to retail traders. The model benefits everyone: firms get profitable traders, traders get capital they couldn't access otherwise.
The 5-Step Evaluation Process
Step 1: Choose Your Firm & Account
1-2 daysSelect prop firm based on your trading style and budget
- Research 3-5 firms that match your needs
- Compare rules (static vs trailing drawdown)
- Choose account size ($25k for beginners, $100k+ for experienced)
- Check profit splits and payout terms
- Read recent reviews and payout proofs
Step 2: Purchase Evaluation
1 dayPay evaluation fee and receive login credentials
- Cost ranges from $100-$600 depending on firm and size
- Some firms offer refundable fees after first payout
- Look for discount codes (10-20% off)
- Receive demo account with evaluation rules
- Read all rules thoroughly before trading
Step 3: Pass Phase 1 (if 2-step)
10-30 daysMeet profit target without violating rules
- Typical target: 8-10% profit
- Daily loss limit: 3-5% (don't violate)
- Max drawdown: 8-10% total
- No minimum/maximum days (varies by firm)
- Focus on consistency, not speed
Step 4: Pass Phase 2 (if 2-step)
10-30 daysVerify consistency with lower profit target
- Typical target: 4-5% profit
- Same daily loss and max drawdown limits
- Proves you can repeat success
- Some firms have 1-step process (easier)
- Stay disciplined - don't rush
Step 5: Get Funded
1-3 daysReceive funded account with real capital
- Sign agreement and compliance documents
- Receive funded account credentials
- Same rules apply (daily loss, max drawdown)
- Start earning 70-90% of profits
- First payout typically after 14-30 days
Understanding Evaluation Rules
Profit Target
Amount you must earn to pass evaluation
Typical Value
8-10% for Phase 1, 4-5% for Phase 2
Strategy
Don't rush. Take 20-30 days if needed. Quality over speed.
Daily Loss Limit
Maximum you can lose in a single day
Typical Value
3-5% of account balance
Strategy
Set hard stop at 2-3% daily loss. Stop trading immediately if hit.
Maximum Drawdown
Total maximum loss from starting balance or highest point
Typical Value
8-10% (static) or trailing from highest balance
Strategy
Static drawdown is easier. Always know your max loss threshold.
Minimum Trading Days
Required number of days you must trade
Typical Value
3-5 days minimum (some firms have none)
Strategy
Trade when setups appear, not to meet day requirements.
Consistency Rule
Limits how much profit can come from single best day
Typical Value
Best day can't exceed 30-50% of total profit
Strategy
Spread profits across multiple days. Avoid one huge winner.
5 Risk Management Principles
1. Never Risk More Than 1% Per Trade
Why
One bad trade won't destroy your evaluation
How To
If $100k account, max risk = $1,000 per trade. Calculate position size based on stop loss distance.
Example
Trade ES futures: Risk $1k, stop loss 10 points = 10 contracts max (1 point = $50/contract)
2. Risk 0.5% Until Profit Cushion
Why
Start ultra-conservative to build buffer
How To
First week, risk only 0.5% ($500 on $100k account). After 3-5% profit, increase to 1%.
Example
Build $3k profit first (6 trades), then increase position sizes
3. Max 3-5% Total Daily Risk
Why
Protects you from single bad day violating rules
How To
If trading 3 positions, risk 1% each = 3% total. Stop trading after 3 losers.
Example
Lose $1k, $1k, $1k = -$3k (-3%). STOP for the day.
4. Minimum 1:2 Risk/Reward Ratio
Why
Need fewer winners to be profitable
How To
If risking $500, target minimum $1,000 profit. Ideally 1:3 or better.
Example
40% win rate with 1:3 R/R = profitable. 40% win rate with 1:1 R/R = losing.
5. Track Every Trade
Why
Data reveals patterns and mistakes
How To
Journal: Date, setup, entry, exit, R/R, emotion, lesson learned.
Example
After 20 trades, realize: "I lose money trading before 9:30am" = stop doing it
5 Psychology Traps & Solutions
⚠️ Revenge Trading
After a losing trade or bad day
Immediately jumping back in, over-leveraging to "make it back"
Set rule: After 2 consecutive losses, 30-minute break. After 3 losses, done for the day.
Trader loses $1k on first trade, immediately risks $3k trying to recover, hits daily limit.
⚠️ FOMO (Fear of Missing Out)
Market moving without you, seeing others profit
Chasing trades, entering without setup, bad entries
Remind yourself: "There's always another trade." Wait for YOUR setup.
ES rips up 20 points. You chase at top. Reversal -$2k loss. Waited = no trade.
⚠️ Over-Trading
Boredom, need for action, trying to hit target faster
Taking low-quality setups, trading during slow times
Set max trades per day (3-5 for day traders). Quality > quantity.
Best trades = 9:30-11:30am. Trading 1-3pm = chopped up by low volume.
⚠️ Moving Stop Loss
Trade going against you, "hope" it comes back
Moving stop further away, letting losses grow
NEVER move stop loss further away. Accept loss and move on.
Risk $500 with stop. Down $500, move stop to $1,000 loss. Down $1,000, move again. Lose $2,500.
⚠️ Euphoria After Big Win
One great day, big winner
Overconfidence, taking more risk, feeling invincible
Stick to plan. One good day doesn't change risk rules. Stay humble.
Make $5k on Monday. Tuesday risk 3% per trade instead of 1%. Lose it all back.
6 Mistakes That Kill Evaluations
1. Trading Before Mastering Demo
Impact: Fail evaluation, waste $300-$600
Fix: Spend 2-3 months on demo. Prove 3 months consistent profit before paying for evaluation.
2. Choosing Wrong Firm for Your Style
Impact: Struggle with incompatible rules
Fix: Match firm rules to your strategy. Scalpers need different firms than swing traders.
3. Rushing to Hit Profit Target
Impact: Over-trading, violation, blown account
Fix: Take full 30-60 days allowed. Slow and steady wins.
4. Ignoring Consistency Rule
Impact: Hit profit target but fail due to single big day
Fix: Spread profits across multiple days. Take partial profits on big winners.
5. Changing Strategy Mid-Evaluation
Impact: Confusion, losses, inconsistency
Fix: Trade ONE proven strategy. If it works on demo, stick with it.
6. Not Reading All Rules
Impact: Violate rule you didn't know existed
Fix: Read ALL rules 3 times. Screenshot them. Check before every trade.
4-Stage Scaling Strategy
Stage 1: First Funded Account
3-6 monthsGoal: Stay funded, get first payout, prove consistency
- Risk 0.5-1% per trade maximum
- Trade your proven strategy only
- Withdraw first payout (proves it works)
- Build 3 months of consistent profits
- Learn firm's payout process
Stage 2: Scale Account Size
6-12 monthsGoal: Request larger account or add 2nd account
- Apply for account increase (many firms offer this)
- Or purchase 2nd evaluation with same firm
- Keep risk per account the same (1% max)
- Diversify to different instruments if possible
- Maintain withdrawal schedule
Stage 3: Multi-Firm Diversification
12-24 monthsGoal: Run 3-5 accounts across different firms
- Add accounts from 2-3 different firms
- Reduces risk of single firm issues
- Different rules = different opportunities
- Consider hiring VA for admin tasks
- Optimize tax strategy (LLC, etc.)
Stage 4: Professional Prop Trader
24+ monthsGoal: Full-time income, sustainable business
- Run 5-10 funded accounts
- Build team (if desired)
- Create systems and processes
- Consider prop firm partnership deals
- Mentor/educate others (additional income)
Frequently Asked Questions
How much money do I need to start prop trading?
You need $100-$600 for your first evaluation, depending on the firm and account size. Start with $100-$200 evaluations (Apex, E8 Funding) to minimize risk while learning. However, you should first practice on demo for 2-3 months (free) before spending any money.
What's the success rate for prop firm evaluations?
Industry-wide, 10-15% pass on first attempt, 30-40% pass within 3 attempts. Main reasons for failure: over-leveraging, revenge trading, and not following rules. With proper preparation (demo trading, risk management, psychology), you can dramatically improve your odds.
How much can I realistically earn with prop firms?
Beginner ($50k account): $1k-$3k/month. Intermediate ($100k account): $3k-$10k/month. Advanced (multiple $100k+ accounts): $10k-$50k+/month. This assumes 10% monthly returns (achievable but not guaranteed) with 80-90% profit splits. Income grows as you scale accounts.
Which prop firm is best for beginners?
Apex Trader Funding or E8 Funding. Both offer: low cost ($127-$199), simple rules, static drawdown (easier), and forgiving evaluation criteria. Start with $25k-$50k account size for lowest pressure and cost.
How long does it take to get funded?
Timeline varies: Phase 1 evaluation (10-30 days) + Phase 2 evaluation (10-30 days) + funding approval (1-3 days) = 21-63 days total. Some firms have 1-step evaluations (faster). Don't rush - taking full time allowed increases success rate.
What happens if I fail an evaluation?
You lose the evaluation fee ($100-$600). Some firms offer: free retakes (FTMO), discounted retries (20-50% off), or refundable fees after funding. Learn from mistakes, take a 2-week break, then try again with same or different firm.
Can I trade prop firms part-time?
Yes! Many funded traders work full-time jobs. Day trading requires 2-6 hours during market hours. Swing trading requires 1-2 hours anytime. Forex/crypto allows 24-hour flexibility. Match trading style to your schedule availability.
Do I need a trading strategy before starting?
ABSOLUTELY YES. Don't pay for evaluation without proven strategy. Develop and test strategy on demo for 2-3 months. Prove 3 consecutive months of profit (even if small). Have clear entry rules, exit rules, and risk management plan.
What's the difference between 1-step and 2-step evaluations?
1-step: Single phase, higher profit target (10-15%), faster but harder. 2-step: Two phases (8-10%, then 4-5%), more forgiving, proves consistency. Beginners should choose 2-step for higher success rate.
Can I scale to multiple prop firm accounts?
Yes! Most successful traders run 3-10 accounts for diversification. Strategy: Master one firm first, get funded, then add second account. Slowly build portfolio. Manage risk across all accounts combined (don't over-leverage because you have multiple accounts).
Ready to Start Your Prop Trading Journey?
Use our tools to find the perfect prop firm and start your path to becoming a funded trader.