What Are Prop Firms?
Proprietary trading firms (prop firms) provide traders with funded accounts in exchange for a share of profits. Instead of risking your own capital, you trade with the firm's money.
Popular prop firms include FTMO, Funded Next, The Funded Trader, and MyForexFunds.
How Prop Firm Challenges Work
Most firms follow a 2-phase evaluation:
Phase 1 (Challenge)
- Profit target: 8-10%
- Maximum daily loss: 5%
- Maximum total loss: 10-12%
- Time limit: 30 days (some unlimited)
- Minimum trading days: 4-5
Phase 2 (Verification)
- Profit target: 5%
- Same loss rules apply
- Time limit: 60 days
- Minimum trading days: 4-5
Strategy for Passing
1. Focus on Consistency
Don't try to hit the profit target in one or two trades. Aim for 0.5-1% daily gains over 10-15 trading days.
2. Risk 0.5-1% Per Trade Maximum
With a 10% max drawdown and 5% daily loss limit, you need to be conservative:
- On a $100K account, risk $500-$1,000 per trade
- This gives you 10-20 chances before hitting max drawdown
- Use our prop firm calculator to check your margins
3. Trade Your Best Setup Only
This isn't the time for experimentation. Use your most backtested, highest win-rate strategy.
4. Trade During High-Probability Sessions
Focus on London and New York sessions when liquidity and volatility are optimal.
5. Avoid News Trading
Major news events create unpredictable spikes. Close positions before high-impact news or avoid trading on those days.
Common Mistakes That Fail Challenges
- Over-sizing positions to hit targets quickly
- Revenge trading after a losing day
- Trading every day instead of waiting for quality setups
- Ignoring the daily loss limit — this is an instant fail
- Not tracking drawdown in real-time
Recommended Pairs for Challenges
- XAUUSD (Gold): High volatility, clear trends
- EUR/USD: Most liquid, tightest spreads
- GBP/JPY: Strong trends, good risk-reward
- US30 (Dow Jones): Clear structure, strong trends
After Passing: Funded Account Rules
Once funded, rules typically include:
- 80-90% profit split in your favor
- Same daily/total loss limits
- Monthly payouts (bi-weekly with some firms)
- Scaling plans for consistent performance
Key Takeaways
- Treat the challenge as a consistency test, not a profit race
- Risk 0.5-1% per trade maximum
- Trade only your best setups during optimal sessions
- Track daily drawdown religiously
- Avoid news and over-trading
Quick answer
Prop firms offer funded accounts up to $400K+. Here's exactly how to pass their evaluation challenges.