A proprietary trading firm — a prop firm — puts up the trading capital and lets a trader use it in exchange for a share of the profits. In the retail market that almost everyone means today, you first pay for an evaluation: you trade to a profit target without breaking a loss limit, and if you pass you are given a funded account. The firm carries the losses, which is why it writes the rules.
By Jonathan Jean-Philippe, founder of DealPropFirm · 18 September 2026
This is the distinction everything else follows from. A broker holds your money and executes your orders: the capital at risk is yours, so the broker has little reason to care how you trade. A prop firm risks its own capital and pays you a share of what you make.
Because the firm carries your losses, it sets limits: a maximum drawdown, usually a daily loss limit, often rules about trading through news releases or holding positions over the weekend. Traders tend to read those rules as fine print. They are not fine print — they are the product. Two firms advertising the same profit split can be completely different propositions once you read how each one measures a loss.
Proprietary trading is a firm trading its own capital for its own profit, rather than executing orders on behalf of clients. The term covers two worlds that share a name and very little else.
The institutional version is a trading desk inside a firm that hires traders as employees, pays them a salary and a bonus, and gives them the firm’s balance sheet to work with. You apply for a job, and the barrier is the hiring process.
The retail version — the one that sells evaluations online — extends the same idea to independent traders who are not employees. There is no salary, no interview, and no job. You buy an evaluation, and the firm’s judgement of you is expressed entirely through rules rather than through a hiring decision. When an article says that prop firms have existed for decades, it is describing the first world in order to justify the second. Both are real. They are not the same business.
From two sources. The interesting question is not which one a firm uses — most use both — but which one it leans on.
Most people who buy a challenge do not pass it, and that fee is revenue whether they pass or not. Retries and resets are revenue too. This income arrives immediately and does not depend on anyone trading well.
Whatever is left after the trader’s split — commonly 10% to 20%. This income only exists if funded traders survive long enough to withdraw, and it compounds with the ones who last.
The two create opposite incentives, and that is the single most useful thing to understand about the industry. A firm living off the first benefits from rules that are hard to survive and from traders who keep re-buying. A firm living off the second needs its funded traders to stay funded. Nobody advertises which they are. But the drawdown rules are a decent proxy, because they are where the difference is actually implemented — and they are published.
You pay a fee tied to the account size you want, then trade to a profit target without breaking a loss limit. Some firms ask you to do this once, some twice with a lower target on the second pass, and some fund you straight away at a higher price. Pass, and you move to a funded account where you can withdraw a share of what you make.
Three details decide how hard that actually is, and none of them is the profit target: how the maximum drawdown is measured, whether a daily loss limit applies and what triggers it, and whether a consistency rule caps how much of your total profit a single day may represent. The last one catches people who have already passed every other test.
To see how a specific set of rules plays out against your own numbers, the challenge tracker runs them for you, including the drawdown model of each firm it covers.
A drawdown limit is the level your account may not fall below. The whole question is whether that level moves, and if so, when it is recalculated. Here is how it breaks down across the 28 evaluation programs we checked at 21 firms, each read from the firm’s own documentation:
| Model | Programs | What it means for you |
|---|---|---|
| Static drawdown | 16 | The loss limit stays where it started. Profit raises your cushion and never raises the floor. Simplest to plan around: once you are ahead, you are genuinely ahead. |
| Trailing, recalculated at the session close | 9 | The floor moves up with your closed balance, once a day, after the session ends. Your floor is fixed for the whole trading day, so you always know it before you place a trade. |
| Trailing, recalculated intraday | 2 | The floor follows your equity as it moves, including profit you are still holding. A spike you never banked can permanently raise the level you must stay above. |
The bottom row is the one worth slowing down for. When a trailing drawdown recalculates intraday, it follows your equity rather than your balance — so profit you are still holding, and may never bank, can permanently raise the floor you have to stay above. Traders describe this as being stopped out by their own good trade, and they are describing it accurately.
Where this is approximate: of the 12 trailing programs above, 1 does not state its recalculation moment clearly enough in public documentation for us to classify it, so it is counted in the trailing total but in neither recalculation row. And these figures describe the 28 programs we have checked, not the whole industry — they are a documented sample, not a census.
The full firm-by-firm table, with a source link and a verification date on every row, is published on the challenge tracker. The mechanics are explained at length in prop firm drawdown rules explained. Last verified 2026-08-23.
Across the firms tracked on this site the trader’s share runs from 75% to 100%, and 90% is by far the most common figure — 15 of the 31 firms quote it.
Which is exactly why the split is the least informative number on a pricing page. When almost everyone offers the same figure, it stops distinguishing anything. A 90% split on an account you cannot keep is worth less than an 80% split on one you can, and the drawdown rule — not the split — decides which of those you have bought.
The model is legal and unremarkable. Firms have staked traders with their own capital for as long as trading floors have existed, and paying someone a share of the profit instead of a salary is not a trick.
What is genuinely uneven is the execution, and it is uneven firm by firm rather than across the category. Some firms have paid traders continuously for years. Others have changed rules retroactively, delayed payouts, or closed with balances outstanding. Asking whether prop firms are legitimate is like asking whether restaurants are clean: the only answerable version of the question names one.
Four things are checkable before you pay, and all four are things a firm controls:
How we apply those checks, and what we refuse to rank on, is written out in how we rank prop firms.
A proprietary trading firm — a prop firm — puts up the trading capital and lets a trader use it in exchange for a share of the profits. In the retail market that most people mean today, you first pay for an evaluation: you trade to a profit target without breaking a loss limit, and if you pass you are given a funded account. The firm takes the downside risk, which is why it sets the rules, and you keep the larger share of what you make.
A broker holds your money and executes your orders; the capital at risk is yours. A prop firm risks its own capital and pays you a share of the profit. That difference drives everything else. A broker has little reason to limit how you trade. A prop firm carries your losses, so it sets a drawdown limit, a daily loss limit and often rules on news trading or holding overnight. Those rules are not fine print — they are the product.
From two sources, and firms differ in how much they lean on each. The first is evaluation fees: most people who buy a challenge do not pass, and that fee is revenue. The second is the firm's share of the profits made by traders who do pass, typically 10% to 20%. A firm that depends mostly on the first has an incentive to set rules that are hard to survive; a firm that depends mostly on the second needs its traders to last. Reading the drawdown rules tells you more about which kind you are dealing with than any marketing page.
The model itself is legal and ordinary — firms have staked traders with their own capital for as long as trading floors have existed. The risk is firm-specific, not category-wide, so the question is only answerable one firm at a time. The things worth checking are concrete: does the firm publish payout proof, are the drawdown rules stated precisely enough to verify, has it changed those rules retroactively, and does it have a track record longer than a promotional cycle.
Proprietary trading is a firm trading its own capital for its own profit, rather than executing orders for clients. The institutional version employs salaried traders on a desk. The retail version — the one that sells evaluations online — extends the same idea to independent traders who are not employees: you use the firm's capital under its rules, and you are paid a share of the profit rather than a salary.
Sometimes, and it is worth asking before you pay. Many retail firms run both the evaluation and the funded account in a simulated environment, and cover payouts from their own balance sheet rather than from market profits. Others route funded traders to a live account. Neither is automatically better for you — a payout is a payout — but it changes who bears the risk, and a firm that will not answer the question directly has told you something.
Across the firms tracked on this site the trader's share runs from 75% to 100%, and 90% is the most common figure. Treat a headline split as the least informative number on a pricing page: a 90% split on an account you cannot keep is worth less than an 80% split on one you can. The drawdown rule decides whether you reach a payout at all.
A drawdown limit that moves up as your balance grows, so the floor follows your gains instead of staying at the starting balance. It matters far more than most traders expect, and the detail that matters is when it recalculates. Of 28 evaluation programs checked across 21 firms, 12 use a trailing drawdown: 9 recalculate at the end of the session, 2 recalculate intraday. The intraday version can move your floor on unrealised profit you never banked.
Entry-level accounts generally start in the tens of dollars and the largest accounts run into the low thousands, before any discount. Price tracks account size much more than quality, and a discount code changes the fee without changing a single rule. The cost that actually matters is the cost of the attempts it takes you to pass, which depends on the rules, not the sticker.
Some traders do. Most do not, and the firms that publish figures put the pass rate on a first attempt in the single digits to low tens of percent. We do not have verified, comparable pass-rate data across firms, so treat any precise industry-wide number — including ones quoted confidently elsewhere — as an estimate rather than a measurement. What can be checked is whether a specific firm pays the traders who do pass.
The drawdown figures on this page are counted from a table of 28 evaluation programs across 21 firms, each row carrying a link to the firm’s own documentation and the date it was last read (2026-08-23). The profit split range is read from the firms tracked on this site. Both are recomputed whenever the underlying data changes, so this page cannot drift away from the tables it quotes.
More questions, answered one by one, on the prop firms FAQ.