Prop firm rules explained

A prop (proprietary) firm lets you trade their capital after you pass an evaluation or meet instant-funding criteria. You are bound by their rulebook: maximum loss per day and overall, profit targets, allowed products, and behavior rules (e.g. no hedging across accounts where prohibited).

Rules differ by program (1-step vs 2-step), account size, and asset class (forex CFDs vs futures). The same brand may use different parameters for each product line.

Daily drawdown caps how much you can lose from a defined baseline in a single session or calendar day. Exceeding it typically fails the account immediately.

Maximum / total drawdown is a ceiling on peak-to-trough loss over the life of the phase. It may be static (fixed from initial balance) or trailing (moves with your equity high-water mark). Trailing rules are easy to misread — check whether the trail updates intraday or at end of day.

Some futures programs express risk in minimum account balance or contract terms instead of a single percentage. Always map the firm’s definitions to your position sizing.

Evaluation (challenge) phases require you to hit a profit target while respecting drawdown and often minimum trading days. Passing unlocks a funded or sim-funded stage with new rules (scaling, payout thresholds, or consistency).

Reset / retry policies vary: some offer free retries, discounted repeats, or hard failure with full repurchase. Promotions change frequently.

Time limits may apply per phase; others are unlimited but still enforce inactivity clauses.

Payouts usually start after a minimum profit buffer, a waiting period, or identity verification. Methods often include bank transfer, crypto, or third-party payout partners.

Profit split (e.g. 80/20 or 90/10) applies after the firm’s share. Some programs increase split with loyalty or scaling milestones.

Tax and compliance are your responsibility; firms are not tax advisors.

Many firms require balanced performance: a single huge winning day might not count toward the target, or may violate a "consistency" metric. Rules are defined in dashboards or PDFs — there is no universal formula.

Minimum trading days force a spread of activity before phase completion. Weekend holding and news-window trading may be counted differently per program.

Common restrictions include news trading around high-impact releases, weekend / overnight holding limits, martingale or aggressive averaging-in, copy trading / trade copiers, and operating multiple accounts to hedge the same exposure.

Gambling-style behavior (e.g. lottery trades without a plan) can violate conduct clauses even if drawdown limits are not hit.

Firms may restrict traders by country or region due to regulations or banking. Lists change — confirm at registration and checkout.

KYC / AML checks are standard before payouts. Use accurate personal data matching your payment method.

Programs specify platforms (e.g. MT5, cTrader, TradingView bridge, NinjaTrader) and allowed symbols. Trading restricted instruments or using unapproved bridges can breach rules even if P&L is positive.

Leverage, commissions, and swap treatment are set by the firm or liquidity provider — compare them alongside headline challenge fees.

1. Download the current rule PDF and save a copy with the date.
2. Confirm drawdown type (static vs trailing) and how equity is measured.
3. Note profit target, minimum days, and any consistency rule.
4. Check news / weekend / copy policies for your style.
5. Verify payout schedule, split, and verification steps.
6. Confirm your country is eligible and payment rails work for you.

Use our comparison table, prop firm lists, and each firm's profile for structured fields. Nothing here is legal or financial advice.