Course 3 Beginner

Prop Trading

How funded trading programmes work: challenges, rules, drawdown, profit splits and payouts, and how to judge a firm.

0 of 18 lessons

Module 1: What prop trading is

1
What Is Prop Trading?
Proprietary trading, or prop trading, means trading with a firm's capital rather than your own and keeping a share of the profit. In the modern retail version,...
2
Traditional vs Online Prop Firms
A traditional prop firm employs traders, trains them, gives them real capital and pays them a salary plus a share of profit. An online prop firm sells...
3
How Modern Prop Firms Work
A modern prop firm runs on four parts: an evaluation sold for a fee, a rule set enforced automatically by the trading platform, a funded stage where the trader...
4
Funded and Simulated Accounts
A funded account is the account a prop firm gives you after you pass its evaluation. At almost every online firm it is a simulated account: prices are real,...

5
What Is a Trading Challenge?
A trading challenge is a prop firm's evaluation: a simulated account you trade under a profit target, a maximum daily loss, a maximum overall loss and...
6
Evaluation Phases and Challenge Types
Evaluations come in three shapes. A two-step challenge asks for a larger target in phase one and a smaller one in phase two before funding. A one-step...
7
Instant Funding and Challenge Fees
Challenge fees are the price of an attempt and they vary with account size, challenge type and the firm, from under 100 dollars for a small two-step to over...

8
Profit Targets
A profit target is the percentage gain on the starting balance you must reach to pass a phase, typically 8 to 10 percent in a first phase and 5 percent in a...
9
Daily Loss Limits
A daily loss limit is the most an evaluation or funded account may lose in a single day, usually 4 or 5 percent of the starting balance. It is measured from...
10
Maximum Drawdown: Static and Trailing
Maximum drawdown is the most an account may lose overall before it is closed, typically 8 to 12 percent. A static drawdown is measured from the starting...
11
Minimum and Maximum Trading Days
A minimum trading days rule requires you to place trades on a set number of separate days, often four or five, before you can pass a phase, so that a single...
12
Consistency Rules and News Trading Rules
A consistency rule caps how much of your total profit can come from a single day or trade, commonly 30 to 50 percent, so that a payout cannot rest on one...
13
Weekend Holding and Automated Trading Rules
Weekend holding rules decide whether positions may stay open over the Friday close, and many firms forbid it because a Monday gap cannot be stopped out of....

14
Passing an Evaluation
Passing an evaluation is mostly a matter of not failing it. The traders who pass consistently risk a small fixed fraction per trade, stop for the day well...
15
Funded Stages and Scaling Plans
After the evaluation, most firms move you through funded stages: a first funded account, a scaling plan that increases the balance when you hit profit...
16
Profit Splits and Payouts
A profit split is the share of funded-account profit the trader keeps, typically 80 percent rising to 90 or more with scaling, and a payout is the process of...

17
How to Evaluate a Prop Firm
Evaluate a prop firm the way you would a broker, in order: the company's transparency and history first, then the rules, the drawdown type, the target, the...
18
Prop Trading Risks
The risks of prop trading are the fee you lose when a challenge fails, the profit you lose when a funded account breaches a rule, the possibility that the firm...

Every lesson's knowledge check plus a few extra questions, scored with feedback. Then continue to Course 4: Accounts, Platforms & Orders.