What are PropFirms?

So you’ve heard of Forex, right?

Now imagine someone says to you:

“Hey, you seem like a decent trader. I’ll give you money to trade and if you make profits, we’ll split it.”

That’s basically what a prop firm does.

They’re called “proprietary” firms because they let you trade using their capital — and that’s exactly why traders love them.

See, most people don’t lose in trading because they’re bad; they lose because they’re undercapitalized.

They’re trading $100, trying to grow it into $10,000.

Hence they take oversized risks, panic in drawdowns, and eventually burn out.

Prop firms change that.

They say, “Forget about the money. Show us you can trade and we’ll handle the capital."

But of course, they don’t hand over the money blindly.

You’ll first go through a challenge — think of it like a test.

Hit the profit target, follow their trading rules, avoid big losses, and you qualify for a funded account.

Once funded, you get to trade with, say, $5,000 to $100,000+ of their capital.

If you make a profit, you get to keep up to 90% to 100% of it.

And even if you blow the account, you might lose your chance but not your savings because you’re not risking your own money in the first place.

It’s a win-win for you.

What are the benefits of Trading with a Prop Firm?

So now you understand what a prop firm is.

But you know what’s actually the best about trading with a prop firm?

The mindset shift. 

You're no longer trying to take wild risks to grow a tiny account.

You’re focused on consistency and discipline, because that’s what prop firms reward.

They actually want you to win.

Whereas, brokers don’t really care if you win or lose. 

They just want you to keep trading, because they make money from spreads and commissions. 

Prop firms, on the other hand, also make money if you’re profitable. 

So it’s in their interest to filter out reckless traders and support the ones who can trade smart.

And that is also why they give you rules, targets, drawdown limits, and tests because they want traders who can treat this like a business.

What You Need to Pay to Get Started?

When you join a prop trading firm, one of the first things you'll encounter is the challenge fee.

This is a payment you make to take a trading test or “challenge” that proves your skills — think of it like an entry ticket to show the firm you can trade responsibly and profitably.

The fee varies depending on the firm and the size of the account you want to manage. Usually, it ranges between a few hundred dollars.

At FundedFirm, the challenge fees vary based on account size and the step you’re on:

$5,000 account → Step 1 costs $69, Step 2 costs $59

$10,000 account → Step 1 costs $99, Step 2 costs $89

$15,000 account → Step 1 costs $135, Step 2 costs $125

$25,000 account → Step 1 costs $225, Step 2 costs $199

$50,000 account → Step 1 costs $335, Step 2 costs $299

$100,000 account → Step 1 costs $549, Step 2 costs $499

As evident as it gets, the challenge fees are peanuts compared to the account sizes.

Passing this challenge is important because it unlocks access to real company capital for trading.

If you succeed, you get to trade with the firm’s money and share the profits.

For an in-depth look at this process, visit One-Step Evaluation Prop Firms — it explains how FundedFirm’s single-step model works.

Keep in mind, the challenge fee is typically non-refundable, so you should prepare well before signing up.

Why do Prop Firms have Rules?

Every business has rules.

You can’t walk into a restaurant and just start cooking.
You can’t launch a company and ignore compliance.
You can’t run ads without budgets, goals, and systems.

Rules create structure. And structure protects you from chaos.

But in trading? That structure is often missing.

Because technically, no one forces you to follow any rules.

You can risk your whole account on one trade.
You can revenge trade. Overleverage. Overtrade.

You can ignore your plan. And nobody will stop you until your account hits zero.

The freedom that comes with trading is a gift, but also the greatest source of fear.

Because with that freedom comes unlimited ways to self-destruct.

Most traders fail because they can’t manage themselves inside that freedom.

And that’s why prop firms — with their rules, drawdown limits, targets, and structure — might feel restrictive at first, but they’re exactly what most traders need.

Because for the first time, you’re accountable.

You can’t go on tilt.
You can’t take reckless bets.
You’re being forced to act like a professional.

For more insight on how to stay calm and structured during funded challenges, check out How to Make Your Emotions Numb in Trading — it dives deep into trading psychology.

Example: FundedFirm Rules

Like, FundedFirm comes with its own set of rules:

3% daily drawdown and 6% max drawdown so you don’t trade recklessly.

The 30% rule so you don’t overleverage.

Minimum trading days so you don’t overtrade.

A 3-minute gap between trades so you don’t end up gambling.

These rules exist to protect you from the one person most likely to ruin your trades — you.

For a complete breakdown of how these parameters are applied in real evaluations, read One-Step Evaluation Prop Firms.

Is a Prop Firm Right for You?

Let’s not sugarcoat it — prop challenges are not easy to pass.

Hence, they are definitely not for two types of people:

Complete beginners.
If you don’t have a solid system or you’re still figuring out what a stop loss does, it's not right for you.
It’s not a place to learn trading, but a place to prove you can already trade.

People who love freedom more than structure.
The “I’ll do what I want” kind.
The “rules are suggestions” type.
You’ll get disqualified faster than you can say “drawdown.”

Because prop firms are built to reward discipline.

But if you’ve put in the work — if you’ve been trading with consistency — then prop firms are an opportunity.

An opportunity to scale without risking your own capital.
To finally get paid for being good, not just brave.

If you’re still deciding which one suits your style, explore Prop Firms for a side-by-side comparison of funding models and payout systems.