Evaluation
The test phase. The trader must usually reach a profit target while respecting limits such as daily loss, maximum loss, drawdown and minimum trading days. Some firms use different names or divide the evaluation into several stages.
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Prop trading basics Basic process01 02 03 04 Market models Account values Core rules Other relevant rules Costs and payouts Advantages and disadvantages Account type Personal experience
Prop Firms – General.
Understand the prop-firm model.
Prop trading programmes give traders access to an account environment under predefined rules. Depending on the provider, trades may take place in a simulated environment or, less commonly, through a live account. A funded label therefore does not automatically mean that freely available company capital is being traded live.
This page provides a simple introduction to the most important concepts for anyone who has never explored prop firms before. It intentionally remains within the prop-trading context and does not explain trading strategies in detail. More in-depth explanations of trading, risk management and related terminology will be included in our courses. (Currently under development)
Important: Names, calculations and rules vary between providers and account types. The provider’s current terms and help centre always take precedence.
From evaluation to payout.
Activation
After passing, identity checks, agreements or an activation fee may be required before the next account is issued. Activation fees are particularly common in parts of the futures prop-firm market, but they are not used by every provider.
Funded account
The payout-eligible phase. Terms such as funded, performance, pro or express account may describe this stage. It may still be simulated. Profits can become eligible for withdrawal once the payout rules are met.
Instant funded
An account offered without a traditional challenge, or with a shortened qualification process. In return, entry costs, drawdown rules, profit splits or payout conditions may be more restrictive. Terminology differs between firms.
CFDs and futures.
CFD prop firms
A CFD is a leveraged derivative whose value follows an underlying market without giving the trader ownership of that asset. Position sizes are commonly expressed in lots. Depending on the platform, margin, leverage, spreads, commissions and overnight financing may affect the account.
- Often forex-, index-, commodity- or crypto-based
- Usually traded against the provider’s price feed or broker environment
- Daily loss and maximum loss are often monitored through equity
Futures prop firms
Futures are standardised exchange-traded contracts. Position size is stated in contracts. Many markets offer larger contracts as well as smaller mini or micro variants; the exact point and tick value depends on the instrument.
- Commonly based on exchange-listed futures
- Rules often refer to contracts, drawdown models and trading sessions
- Market data, platform and activation fees may apply
Numbers shown in the platform.
Balance
The account value after closed trades and booked costs. Open profits or losses are generally not yet included.
Equity
The current account value including unrealised profit and loss from open positions and, depending on the platform, costs such as commissions or swaps.
Margin and buying power
Margin is the amount required or reserved to maintain leveraged positions. Buying power describes the exposure available to the account. Neither value is the same as the permitted drawdown.
Lots and contracts
CFD position sizes are commonly expressed in lots; futures positions in contracts. Mini and micro futures are smaller contract variants. Their monetary value differs by instrument.
Realised and unrealised P/L
Realised P/L comes from closed trades. Unrealised P/L is the changing result of positions that remain open and may already count towards loss limits.
Account size
A label such as 50K or 100K usually describes the programme’s notional account size. The amount a trader can actually lose is determined by the loss limit and drawdown, not by the headline account size.
Targets and loss limits.
Profit target
The profit required to pass an evaluation. A challenge often has a fixed target, while the funded phase may have no passing target and instead uses payout requirements. Multi-step evaluations can set different targets for each stage.
Maximum loss and drawdown
The lowest permitted account value. A static limit remains fixed, while a trailing limit follows a new high according to the provider’s formula. Breaching the threshold can fail or close the account.
Intraday drawdown
A trailing threshold that can move during the trading session, sometimes using the highest balance or equity including open profits. It can therefore tighten before a trade is closed.
EOD drawdown
End-of-day drawdown is normally recalculated after the trading day using the provider’s specified closing value and becomes the applicable threshold for the next session. The threshold can still be enforced intraday.
Daily loss
The maximum loss allowed within one trading day. Depending on the rules, it may include closed results, open P/L, commissions and swaps. The reset time and time zone are essential.
Consistency rule
A rule designed to prevent one day or trade from making up too much of the total profit. It may apply during evaluation, before a payout, or both. The permitted percentage and calculation method differ by provider.
What should also be checked?
Minimum trading daysMaximum contract or lot sizeScaling planNews tradingOvernight and weekend holdingCopy tradingProhibited strategiesInactivity ruleTrading hours and time zoneReset or retry
What happens around the account.
Evaluation fee
The purchase price or recurring subscription for the test phase. A new fee or reset fee may apply after a failed attempt.
Activation fee
A one-time or recurring fee for creating the funded or performance account after passing. It is common in some futures programmes, but not universal.
Profit split
The percentage of an eligible payout retained by the trader. The split can change after certain payout or performance milestones.
Payout cap
A limit on the amount that can be withdrawn per request, payout period or account. Caps may vary by account size or increase over time.
Payout requirements
Possible requirements include minimum profitable days, a safety buffer, consistency, a minimum amount, waiting periods and a remaining account balance.
Additional costs
Depending on the firm, platform licences, exchange data, commissions, spreads, resets, reactivations or currency conversion may generate further costs.
A balanced view.
Possible advantages
- Lower personal capital requirement than independently funding comparable exposure
- Clear limits can encourage structured risk management
- Opportunity to receive payouts after meeting the rules
- Different programmes for different trading styles
- Simulated environment can limit direct market-capital risk
Possible disadvantages
- Repeated evaluations, resets and fees can become expensive
- Strict or complex rules can fail an otherwise profitable account
- Drawdown mechanics can create additional psychological pressure
- Rules, prices and payout conditions may change
- Provider, platform and payout counterparty risk remains
- Passing a challenge does not guarantee long-term payouts or profitability
Largest account ≠best fit.
Prop firms offer different account types with different drawdowns, daily limits, payout models, fees and trading restrictions. A suitable structure depends on personal trading frequency, holding time, risk tolerance, preferred markets and the ability to follow rules consistently.
Questions to ask before purchasing
- Do I fully understand how the drawdown moves?
- Are balance or equity used for the loss rules?
- Which fees apply before and after passing?
- What must be achieved before the first payout?
- Does the account permit my preferred trading times and holding period?
- What happens after a payout or a rule violation?
Understand the model before costs rise.
From my own experience, the most helpful way to begin was with a small account model. It allowed me to understand the fees, platform, drawdown mechanism and payout conditions before spending more money on accounts and related costs. This is not a general recommendation, but a personal lesson from my own journey.
I will also publish clear overviews of my personal prop-firm favourites in the BULLHAUS HUB. They will combine the most important rules, account models, costs and my own experience to make the providers easier to compare.
Note: This overview is for entertainment and general educational purposes. It is not financial or investment advice and does not recommend a provider or account type. Prop-firm terms can change at any time; always verify the current official rules before making a purchase.