How does a modern online prop firm work?
Quick answer
A trader buys an evaluation, trades a simulated account under fixed rules, and either breaches a rule or reaches the profit target. Traders who pass receive a funded account and a share of the profits it makes. The firm earns from evaluation fees and manages the cost of paying traders who succeed.
Detailed answer
The typical lifecycle has five stages:
- Purchase. The trader picks an account size and pays a fee on the firm's website.
- Provisioning. The firm creates a trading account and sends the trader login details for its trading terminal.
- Evaluation. The trader trades under rules such as a profit target, a daily loss limit, a maximum loss limit and minimum trading days. Software checks those rules continuously.
- Pass or breach. Breaking a rule ends the account. Reaching the target with every rule respected passes it.
- Funded stage. The trader gets a new account and requests payouts on its profits, subject to the firm's payout terms.
Behind this sit a website and checkout, a payment provider, KYC before payouts, support and the trading platform itself. On PropExecutor, stages two to four run inside the platform: bulk account creation, credentials, a branded terminal and a rule engine that checks every account on every price tick.
PropExecutor team · Updated