Are Prop Firms Worth It in 2024, April (2024)

There’s no simple “yes” or “no” answer to whether prop firms are worth it because it depends on many factors. Which prop firm? Which broker do they use? What are their trading restrictions? How much must traders pay in fees?

There’s also the matter of the traders themselves—not everyone will benefit from a prop trading firm, depending on where they are in their trading journey.

Let’s explore the world of prop trading.

What is Prop Trading?

There are several categories of prop firms, and I’m going to focus on the following category:

Proprietary trading firms, or “prop firms,” are financial firms that allow traders to use the firm’s capital for trading in exchange for a percentage of the trading profits.

Prop firms are located worldwide, in the U.S., U.K., E.U. nations, and the Middle East. For example, Top Step, SurgeTrader, Funder Trading, and E8 are in the U.S., and Ascendx is in London, UK. SabioTrade is based in Ireland, while FundedNext is based in the UAE. One of the very first prop firms in existence, FTMO, founded in 2005, is based in the Czech Republic, an E.U. nation.

How Does Prop Trading Work?

The best prop firms give traders capital a live account and let them keep 80-90% of their profits, depending on the firm. However, first, the trader must pass an evaluation.

The Evaluation Process

The prop firm tests the trader’s profitability on a demo account with targets to meet before going live. What are the evaluation targets? They can include:

  1. Profit target.

The trader must grow the account by a specified percentage of the initial demo balance.

  1. Maximum drawdown.
  • The prop firm stops the evaluation process if the account is down by a certain percentage from the initial deposit. 8-10% is a typical maximum allowable drawdown.
  • Prop firms generally include balances from closed and open trades in maximum drawdown.
  1. Maximum daily loss limit.
  • Suppose the account is down by a certain percentage or dollar amount within the day. In that case, the prop firm prevents the trader from continuing that day.
  • The limit normally includes the value of closed and open trades.
  1. Minimum and maximum number of trading days.

Some prop firms want to see traders hit the profit target within a specified range of days to demonstrate consistency.

  1. Maximum winning day.

The best day cannot exceed a certain percentage of the profit target to ensure reaching the profit target through a series of winning days, which increases the likelihood of repeating their results.

What Happens After the Evaluation Process?

After passing the evaluation, the trader gets a live account with a pre-determined balance. Prop firms generally continue the same risk management rules from the evaluation phase when in the live phase.

Payout Policy

Prop firms have policies setting the terms for paying out profits. Typically, they allow traders to choose the frequency of payouts and pay traders within a few days of a payout request.

Which Markets Can I Trade with Prop Firms?

Many prop firms allow a range of markets, including Forex, metals, equities, and crypto. Some prop firms specialize in futures only.

What are the Prop Trading Costs?

The evaluation fee is usually the only cost. It ranges from a couple hundred to a couple of thousand dollars. Prop firms charge more if the trader wants a higher starting balance with the live account. Most prop firms allow traders to make multiple attempts without paying the fee again.

Some prop firms charge an additional monthly fee during the live account stage.

How Much Money Can I Make in Prop Firms?

Traders Receive a Percentage of the Profits (Often 80-90%)

A few prop firms will start traders at a lower percentage and then increase it as they show continued profitability.

Traders Can Make an Unlimited Amount Through Prop Trading

Successful traders can receive payouts in the tens and hundreds of thousands of dollars, sometimes more. For example, FTMO’s highest payout to a single trader is $1.2m at the time of writing.

Realistically, the profits depend on the initial balance, ranging from $10k to $200k. Most prop firms vary the entrance fee depending on the trader's starting balance.

Can I Lose Money in Prop Trading?

The only money a trader can lose is the entrance fee. Otherwise, the prop firm carries all the risk. This is one of the biggest advantages of trading a prop trading.

Pros and Cons: What are the Potential Risks and Rewards of Trading with a Prop Firm?

Pros: Rewards

  1. Profit earning potential. The biggest reason traders consider a prop firm is access to more capital and keeping a high percentage of the profits.
  2. The structure a prop firm gives. Profit targets and risk management rules help traders succeed because they provide an external structure they cannot ignore.
  3. Support. Prop firms offer online education and even performance coaches for one-on-one support. Many prop firms let their traders help each other. It’s easy to network with other traders online, but I only talk to successful traders in a prop firm.

Cons: Risks

  1. Trading restrictions. Some prop firms apply restrictions that may not suit everyone’s trading style. For example, some do not allow open positions on weekends or during big news events. Check that the rules are consistent. For example, I know one prop firm that allows weekend trades in the evaluation phase but not with the live account.
  2. The evaluation fee. This is usually the only financial cost.
  3. Broker restrictions. Traders must use the prop firm’s broker. This does not have to be a negative issue if the broker is good. Less reputable prop firms use brokers with poor execution or arrange an increased spread from which they take a payout from the broker, negatively affecting performance.
  4. The psychology of a larger balance. Some traders are psychologically unprepared to handle a larger balance size on a live account.

Should I Use a Prop Firm or Higher Leverage?

Some jurisdictions, e.g., the U.S., the E.U., UK, Canada, and others, have maximum leverage levels. Using a prop firm is better if I can’t get higher leverage. Some traders are comfortable accessing higher leverage if it means giving up strong regulation. Still, I do not like the idea of compromising regulation.

Bottom Line

Prop firms are an excellent source of accessing further capital to increase profit potential. Passing a prop firm’s evaluation means reaching a profit target while staying within its risk management rules. Prop firms require traders to use their brokers, which can be positive or negative depending on the broker. The support and regulations can be excellent for success if they are open enough.


Is joining a prop firm worth it?

Yes, it can be if the prop firm is reputable and has good terms.

What is the success rate of prop firms?

Prop firms find successful traders regularly, and success depends on the individual trader.

Do people actually make money with prop firms?

Yes, many traders do.

Are trading prop firms good?

Many reputable prop firms have allowed traders to make a lot of money.

Can you make a living trading with prop firms?

Yes, it is possible.

What happens if you lose money in a prop firm?

The prop firm can stop you from trading their money.

Is prop trading risky?

The prop firm carries the risk because it is their capital.

Are Prop Firms Worth It in 2024, April (2024)


Are prop firms really worth it? ›

Prop firms are an excellent source of accessing further capital to increase profit potential. Passing a prop firm's evaluation means reaching a profit target while staying within its risk management rules. Prop firms require traders to use their brokers, which can be positive or negative depending on the broker.

What are the best futures prop firms for 2024? ›

The top futures prop firms are TopStepTrader, Jane Street, FTMO, 3Red Partners and The Trading Pit. Jane Street and 3Red Partners are very secretive about their fees and profit splits but they do offer some of the best technology and high-frequency trading.

Can you make a living with prop firms? ›

Prop trading can be lucrative, with earnings tied to a profit-sharing ratio. Unlike traditional brokers relying on commissions, prop traders' income directly links to generated profits. Ratios vary, often ranging from 75/100 to 90/100, offering flexibility based on experience and strategy.

What is the return of a prop trader? ›

Although extremely tough, if 5% of trades are routinely made each month, the annual return for the trader is 60%. It is a lot given that the most successful traders typically generate a 20–30% profit annually. With a 100k account, 60% would translate to 60.000 dollars, with the trader making roughly 48,000 dollars.

What is the success rate of prop firms? ›

The Success Rate Of Prop Firm Traders

Therefore, the assertion that about 95% of traders fail is not far from being true! We can then conclude that there is only about a 5% success rate among prop firm traders.

Which is the most trusted prop firm? ›

The most popular prop trading firms and funded programmes
  • Axi Select.
  • FTMO.
  • The Forex Funder.
  • E8 Markets.
  • True Forex Funds.
  • The 5%ers.
  • Funded Next.

What is the future of prop firms? ›

Prop firms that operate in strict adherence to regulations are likely to have a more stable and sustainable business model. Additionally, this situation may prompt prop firms to diversify their trading strategies and explore alternative markets and platforms.

What are the top 5 prop firms in the world? ›

In the world of prop trading, these five firms - SabioTrade, The5ers, T4TCapital, Topstep, and Fidelcrest - stand out as pioneers, each contributing to the ecosystem in its unique way.

What are the top 5 futures prop firms? ›

Futures Prop Firms – The Best For 2024
  • Topstep. Rating: 4.9. REVIEW. Topstep is a Futures prop firm, located in Chicago, Illinois, USA. ...
  • Apex Trader Funding. Rating: 4.9. REVIEW. Apex Trader Funding is a Futures prop firm, located in Austin, Texas, USA. ...
  • The Trading Pit. Rating: 4.8. REVIEW.

What are the negatives of prop firms? ›

Foreign Exchange Specialist at FTMO.
  • Strict Risk Management Rules and Trading Guidelines: ...
  • Profit Sharing: ...
  • Profit Targets During the Evaluation Period: ...
  • Limited Control Over Capital and Payouts: ...
  • Lack of Regulatory Oversight: ...
  • High Leverage and Margin Requirements: ...
  • Financial Risk and Capital Exposure:
Feb 11, 2024

What are the risks of prop firms? ›

Financial loss – the deposit of prop traders is not insured and may be exposed to fraud and other business risks. This is due to loose regulation, which is why prop traders usually deposit what they can afford to lose – a rule that you should always stick to.

What are the disadvantages of prop firms? ›

👎 Prop Trading Cons
  • Proprietary Firms Are Less Regulated Than Retail Brokers: Most prop trading firms that provide remote trading are not regulated at all. ...
  • Risk of Losing Money: ...
  • Proprietary Trading Fees are High: ...
  • Prop Trading is Mostly Day Trading: ...
  • Proprietary Firms Can Steal Your Intellectual Property:
Nov 15, 2023

How many traders pass prop firms? ›

The article from Lux Trading Firm provides slightly different results. According to it, 4% of traders, on average, pass prop firm challenges. But only 1% of traders kept their funded accounts for a reasonable amount of time.

How much does the average prop trader make? ›

Prop Firm Trader Salary

The salary of a prop trader can vary greatly depending on several factors such as experience, performance, and the size of the firm. On average, a junior prop trader can expect to earn anywhere between $50,000 to $100,000 per year, while a senior trader can make upwards of $500,000 annually.

What happens if you lose money prop trading? ›

When you are trading with a prop firm, your losses are usually limited to the foregone risk of your challenge/account fee. You are generally not liable for the prop firm's lost funds.

Are prop trading firms profitable? ›

Proprietary trading occurs when a financial institution trades financial instruments using its own money rather than client funds. This allows the firm to maintain the full amount of any gains earned on the investment, potentially providing a significant boost to the firm's profits.

What percentage do prop firms take? ›

A prop trading firm looks to recruit talented traders and fund them with the company's capital. The funds that a trader makes, is then split between the trader and the company. The profit share is between 50 – 95%, with the trader taking the lion's share.

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