Trading term

What is Prop firm?

A prop firm (proprietary trading firm) here means a company that sells trading challenges: you pay a fee, trade a simulated account under strict loss rules, and if you hit a profit target the firm pays you a share of your simulated profits.

The name comes from proprietary trading, where a firm trades its own money with its own staff. The firms that advertise to retail traders work differently. You pay a fee for a challenge, often between about €90 and €1,000 depending on the account size, or a monthly subscription for futures firms.

The challenge is a demo account. You must reach a profit target, such as 10% of the account, without breaking a maximum daily loss or a maximum overall loss. Pass and you get a funded account, which at most firms is still simulated. The firm then pays you a share of the simulated profit, typically 80% to 90%.

Most buyers never get paid. Data from FPFX Tech covering 100,000 traders at ten firms found that 14% passed a challenge and 7% ever received a payout.

For example

A trader pays €540 for a $100,000 challenge. They need a $10,000 profit, then another $5,000 in a second phase, without the account ever falling $10,000 below where it started or losing $5,000 in one day. One bad day ends it, and the fee is gone.

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Why it matters to you

A challenge caps what you can lose at the fee, which is far less than a $100,000 account. But the rules are tight enough that most people fail, and many buy challenge after challenge. The fee is the real cost, and it's paid far more often than any reward.

⚠ The average reward isn't what the average buyer gets

Firms often advertise an average reward of several thousand dollars. That's the average among people who were paid. Everyone who failed got nothing and isn't in the number, so it says very little about your odds.

Frequently asked questions

Do prop firms give you real money?

Usually not at first. Most firms that sell challenges use demo accounts for both the challenge and the funded stage, and pay you a share of the simulated profit themselves. A few may later move strong traders to a live account.

What percentage of traders pass a prop firm challenge?

Data from FPFX Tech across ten firms found 14% passed and 7% ever received a payout. Individual firms report anywhere from about 5% to 10% passing.

Are prop firms regulated?

Usually not. They sell challenges rather than investment services, so in most countries there's no financial regulator or compensation scheme behind them.

Read the full guide

Getting startedProp Firm Challenges: What They Cost and How Many Traders Get Paid (2026)We priced the FTMO and Topstep challenges and read the industry's own data. Of every 100 people who buy one, 7 are ever paid.8 min read

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