GUIDE · BASICS
What is a prop firm? How a challenge works
A prop firm (proprietary trading firm) gives you a funded trading account after you pass an evaluation, called a challenge. You pay a fee, trade within fixed rules and, if you pass, keep a share of the profits made on the funded account.
Information only, not financial advice. Trading with leverage carries a high risk of loss, and a challenge fee is a cost you may not recover. Always check the conditions on the prop firm’s official website before buying.
Many retail prop firms state in their terms that funded accounts are simulated and that payouts are paid by the firm under its own rules. Read those terms before you buy.
The examples below come from our comparison: 442 challenges from 45 prop firms, read from official websites on October 19, 2026.
How does a prop firm challenge work?
You buy an evaluation account of a given size, for example $100K. To pass, you must reach a profit target without breaking the loss limits, sometimes within a minimum number of trading days. Then you receive a funded account with similar rules, and you can request payouts on its profits.
The rules you will meet
- Phases
- One-step, two-step or three-step evaluations. In our data: 280 one-step, 139 two-step and 14 three-step offers.
- Profit target
- The gain you must reach in each phase, as a percentage of the starting balance.
- Daily loss limit
- The most you can lose in a single day. Firms measure it differently, from balance or from equity: read the definition on the official site.
- Maximum loss (drawdown)
- How far the account can fall overall. Static drawdown is fixed at the start; trailing drawdown follows your highest balance or equity. In our data: 180 offers with static drawdown, 199 with a trailing type.
- Minimum trading days
- The minimum number of days with at least one trade before a phase can be passed.
- Time limit
- The maximum time to complete a phase. Many offers have none.
- Profit split
- Your share of the profits on the funded account, for example 80%. Some firms raise it over time.
- Payout frequency
- How often you can request a payout, and after how many days from the first trade.
How much does a prop firm challenge cost?
For a $100K account, list prices in our comparison range from $159 to $1,590 across 35 prop firms (read on October 19, 2026). The fee is not the whole cost: add resets, activation fees and the attempts you expect.
Some prop firms refund the fee with the first payout: 106 of the 442 offers in our comparison say so.
How do you get paid by a prop firm?
When the funded account is in profit, you request a payout under the firm’s rules: minimum days, minimum amount and frequency. Methods vary: bank transfer, card, crypto or platforms such as Rise. Only crypto payouts from a published wallet can be checked publicly.
Risks to know before you buy
- The challenge fee is a cost you may not get back.
- Breaking a single rule, even by mistake, usually ends the account.
- Rules change: prices, targets and payout terms are updated by the firm. We track changes on the official pages.
- Trading with leverage carries a high risk of loss. Nothing on PropArena is financial advice.
How to choose a prop firm
Start from your market (forex and CFDs, futures or crypto), your budget and the account size. Then compare the rules side by side and check how the firm pays, and what of it can be verified.