GLOSSARY · PROP FIRMS

What is prop firm?

A prop firm, short for proprietary trading firm, gives traders an account to trade in return for a share of the profits. In the retail model you pay for an evaluation, trade under the firm's rules and, if you pass, receive a funded account that pays you most of what you make, usually 80% to 90%.

Also called: Proprietary trading firm · Prop trading firm · Funded trading firm · Prop firm account · What is a prop firm · What are prop firms · What is prop firm trading

How does a prop firm work?

You pay a fee and trade an evaluation account, often called a challenge, under the firm's rules. Reach the profit target without breaking a loss limit and you receive a funded account, on which you are paid a share of the profit. At the firms we checked, evaluations and most funded accounts are simulated: FTMO describes its accounts as "demo accounts with fictitious funds". The payouts are real money, paid by the firm. What you put at risk is the evaluation fee.

What rules do prop firms set?

Three rules do most of the work. A maximum loss limit, which every firm we checked sets; a daily loss limit, which most set; and a profit target for the evaluation. Most firms add minimum trading days, consistency rules, restrictions around news releases and bans on high-frequency trading, latency arbitrage and copying trades between accounts. Breaking a rule usually ends the account however profitable it is. See daily drawdown, trailing drawdown and profit target, or the full prop firm rules guide.

Why do US traders use prop firms?

Retail trading of spot gold and forex CFDs is largely closed to US residents, while prop firm evaluations are not, so prop firms are one of the few routes to trading gold this way from the US. The catch is the platform. FundedNext states that "MetaQuotes services are not available to clients located in the United States", The5ers offers US-based clients TradingView only, and Alpha Capital says "MetaTrader 5 is not available to U.S. residents". FTMO serves US clients through an affiliated entity at ftmo.oanda.com. Futures prop firms are the other route: Topstep, for example, is "a Futures-only program". See MT5 brokers for US traders.

Prop firm rules compared

One standard program at each of five firms, from each firm's own rules pages, read in September 2026. Percentages are of the starting balance. Rules change often, so check the firm's page before paying.

Firm and program	Profit target	Daily loss limit	Maximum loss	MetaTrader 5 for US residents
FTMO 2-Step	10%, then 5%	5%	10%, static	Served through ftmo.oanda.com; platforms not confirmed
FTMO 1-Step	10%	3%	10%, trails the end-of-day balance	As above
FundedNext Stellar 2-Step	8%, then 5%	5%	10%, static	No
The5ers High Stakes	10%, then 5%	5%	10%, static	No (TradingView only)
Alpha Capital Pro 8%	8%, then 5%	4%	8%, static	No
Topstep 100K Trading Combine	$6,000	$2,000, optional	$3,000, trails the end-of-day balance	Futures only, on its own platform

How do you choose a prop firm?

Your platform, where you live. Confirm the firm offers the platform you trade on to residents of your country. Several do not offer MetaTrader 5 in the US.
Whether your strategy is allowed. Trading bots, news trading, holding over the weekend and copying trades are each restricted somewhere. A bought trading bot can be ruled out entirely: The5ers requires you to own the source code of any EA you run.
How the maximum loss is measured. A static limit stays fixed at the starting level; a trailing one follows your gains up. Trailing is harder for any strategy that gives back open profit. See maximum drawdown.
When the daily limit resets. FTMO resets at midnight Central European time, others at their own server midnight, rarely yours.
The payout terms. The profit split, the wait for a first payout and any consistency rule decide how much of a good month you actually receive. See payout split.

Common questions

What is a prop firm?

A proprietary trading firm that gives traders an account to trade in return for a share of the profits, usually after the trader passes a paid evaluation.

Are prop firm accounts real money?

Usually not. At the firms we checked, evaluations and most funded accounts are simulated. The payouts are real money, paid by the firm.

How do prop firms make money?

Traders pay evaluation fees, and the firm pays a share of simulated profits to those who pass. Firms do not publish how their income splits between fees and anything else.

Can US residents use a prop firm?

Yes. FundedNext accepts US traders and FTMO serves them through ftmo.oanda.com, but MetaTrader 5 is often unavailable to them: FundedNext, The5ers and Alpha Capital say so. Futures firms such as Topstep are the other route.

Do prop firms allow trading bots?

Some do, with conditions that differ by firm and account size. FTMO allows EAs; FundedNext allows them only below $50,000; Topstep only through its own paid API; Alpha Capital only approved risk-management EAs.