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FTMOTop pick
Czech Republic • 9+ yrs
9.0
Lowest fee$155
Starts at$10,000
Max alloc$400,000
PayoutsOn demand after 14 days
- Top Markets
- ForexIndicesCommodities
- Top Platforms
- MT4MT5
Challenge Type
1-Step Challenge, 2-Step Challenge
Educational Guide
The Complete Guide to Proprietary Trading
Proprietary trading (prop trading) is when a firm uses its own capital to trade financial markets, sharing profits with skilled traders. This guide covers everything from how to get started and pass prop firm challenges, to understanding fees, taxes, and regulations.
Last reviewed:
•By:BrokerAnalysis Research Desk
•Fact-checked by:BrokerAnalysis Editorial Team
The Complete Guide to Proprietary Trading
Proprietary trading (prop trading) is when a firm uses its own capital to trade financial markets, sharing profits with skilled traders. This guide covers everything from how to get started and pass prop firm challenges, to understanding fees, taxes, and regulations. FTMO currently leads this shortlist based on our prop-firm review score.
5 min readUpdated April 2026
Table of Contents
What Is Proprietary Trading?
Proprietary trading is when a financial firm provides its capital to traders who have demonstrated their skills through an evaluation. Unlike traditional investing where you use your own money, prop trading lets you access funded capital from $5,000 to $400,000 and share in the profits you generate.
The modern prop trading industry has grown significantly, with firms like FTMO paying out over $160 million to traders worldwide. Today, anyone with an internet connection and trading skills can apply for a funded account.
Pros and Cons of Prop Trading
Advantages
Access to significant trading capital without personal risk
Keep 80%–100% of profits you generate
Low capital requirements to start (as low as $25)
Access to advanced trading tools and platforms
Trade remotely from anywhere in the world
Opportunity to develop professional trading skills
Exposure to multiple financial markets
Flexibility to adjust strategies based on market conditions
Disadvantages
Risk of losing evaluation fees if you fail challenges
Intense pressure and psychological stress to perform
Strict rules around drawdown and risk management
Challenge pass rates are typically 10%–20%
Constant need to stay updated with market developments
Some firms have complex or restrictive trading rules
Risk of overtrading and excessive risk-taking
Extended screen time can become exhausting
How to Start Prop Trading
- Choose a Prop Trading Firm — Research firms based on your preferred markets (futures vs. forex), profit splits, challenge fees, and platform support. Start with our comparison of the best firms.
- Select an Account Size — Choose based on your budget and experience. Start smaller ($10K–$25K) if you are new to prop trading, and scale up as your skills improve.
- Purchase an Evaluation — Pay the one-time or monthly fee to begin the challenge. Watch for promo codes that can save up to 80% off.
- Pass the Challenge — Hit the profit target while staying within the maximum drawdown and daily drawdown limits. Follow all trading rules carefully.
- Get Funded — After passing, receive access to a funded live trading account with the firm's capital.
- Earn and Withdraw Profits — Trade consistently, generate profits, and request withdrawals based on the firm's payout schedule.
Tip: Check our promo codes page before purchasing any challenge. Active codes can save you 20–50% off evaluation fees.
Is Prop Trading Legal?
Yes, prop trading is legal in most countries worldwide. Prop firms operate as service providers offering evaluation programs and funded accounts. While they are not regulated like traditional brokers, reputable firms operate transparently with clear rules, verified payouts, and positive industry reputations.
However, regulations vary by country. Traders should check their local laws and tax obligations before participating in prop trading programs.
Costs and Fees
Prop trading costs include evaluation fees (ranging from $25 to $1,800+ depending on account size), potential monthly subscriptions, and platform/data fees. Many firms refund the challenge fee with your first profit split, and promo codes can significantly reduce initial costs.
Important: Never invest money you cannot afford to lose. Challenge fees are non-refundable if you fail, and typical pass rates are only 10–20%.
Taxes on Prop Trading
Prop trading profits are generally taxable income. Since you are classified as an independent contractor (not an employee), you are responsible for reporting and paying taxes on your prop trading earnings. Consult a tax professional in your jurisdiction for specific guidance on how prop trading income should be reported.
Recommended Prop Trading Firms
| Prop Firm | Score | Max Capital | Profit Split | Action |
|---|---|---|---|---|
FTMO Verified 2026 | 9/10 | $200,000 | 80% | |
 Instant Funding Verified 2026 | 8.8/10 | $200,000 | 80% | |
 The Trading Pit Verified 2026 | 8.7/10 | $250,000 | 80% | |
 City Traders Imperium Verified 2026 | 8.6/10 | $100,000 | 80%–100% | |
 SabioTrade Verified 2026 | 8.5/10 | $200,000 | 80% | |
 Earn2Trade Verified 2026 | 8.5/10 | $400,000 | 80% | |
 Think Capital Verified 2026 | 8.5/10 | $100,000 | 80%–90% | |
 FundedNext Verified 2026 | 8.4/10 | $200,000 | 80%–95% | |
 UProfit Verified 2026 | 8.4/10 | $200,000 | 80% | |
 The5%ers Verified 2026 | 8.4/10 | $4,000,000 | 80%–100% |
Showing 1 to 10 of 40 firms
40 Firms matches
Instant FundingReviewed
United Kingdom • 2+ yrs
8.8
Lowest fee$75
Starts at$1,250
Max alloc$2,500,000
Payouts14 days after first trade, then weekly (Instant); on demand on evaluation models
- Top Markets
- ForexIndicesCommodities
- Top Platforms
- MT5cTrader
Challenge Type
Instant Funding, 1-Phase, 2-Phase, 3-Phase
The Trading PitReviewed
Liechtenstein • 2+ yrs
8.7
Lowest fee$99
Starts at$10,000
Max alloc$5,000,000
PayoutsMonthly
- Top Markets
- ForexFuturesIndices
- Top Platforms
- MT5Match Trader
Challenge Type
1-Step Challenge, 2-Step Challenge, Futures Challenge
City Traders ImperiumReviewed
United Arab Emirates • 8+ yrs
8.6
Lowest fee$29
Starts at$2,500
Max alloc$4,000,000
PayoutsWeekly and on-demand via VIP tiers; bi-weekly on standard instant accounts
- Top Markets
- ForexIndicesCommodities
- Top Platforms
- MT5Match-Trader
Challenge Type
1-Step Challenge, 2-Step Challenge, 3-Step Challenge, Instant Funding
Earn2TradeReviewed
United States • 6+ yrs
8.5
Lowest fee$150
Starts at$25,000
Max alloc$400,000
PayoutsMonthly
- Top Markets
- Futures
- Top Platforms
- NinjaTraderTradovate
Challenge Type
Trader Career Path, Gauntlet Mini
SabioTradeReviewed
Cyprus • 3+ yrs
8.5
Lowest fee$119
Starts at$20,000
Max alloc$200,000
PayoutsWeekly
- Top Markets
- ForexIndicesCommodities
- Top Platforms
- SabioTrade Platform (Web-based)
Challenge Type
1-Step Challenge
Think CapitalReviewed
Australia • 2+ yrs
8.5
Lowest fee$59
Starts at$5,000
Max alloc$600,000
PayoutsBi-weekly by default; weekly payouts available with add-on
- Top Markets
- ForexIndicesCommodities
- Top Platforms
- ThinkTraderTradingView
Challenge Type
Lightning (1-Step), Dual Step Intraday, Dual Step Swing, Nexus (3-Step)
FundedNextReviewed
United Arab Emirates • 2+ yrs
8.4
Lowest fee$32
Starts at$6,000
Max alloc$300,000
PayoutsBi-weekly
- Top Markets
- ForexIndicesCommodities
- Top Platforms
- MT4MT5
Challenge Type
Express, Evaluation, Stellar 1-Step, Stellar 2-Step
The5%ersReviewed
Israel • 10+ yrs
8.4
Lowest fee$39
Starts atHigh Stakes
Max alloc$4,000,000
PayoutsWeekly
- Top Markets
- ForexIndicesCommodities
- Top Platforms
- MT5cTrader
Challenge Type
Hyper Growth (1-Step), High Stakes (2-Step), Bootcamp (3-Step)
Top One TraderReviewed
United States • 3+ yrs
8.4
Lowest fee$35
Starts at$5,000
Max alloc$300,000
PayoutsFirst payout after 14 days, then every 14 days; weekly add-ons available on some models
- Top Markets
- ForexIndicesCommodities
- Top Platforms
- MatchTraderTradeLocker
Challenge Type
1-Step Challenge, 2-Step Challenge, Instant Funding, Instant Prime
UProfitReviewed
United States • 5+ yrs
8.4
Lowest fee$149
Starts at$50,000
Max alloc$200,000
PayoutsMonthly
- Top Markets
- Futures
- Top Platforms
- TradingViewNinjaTrader
Challenge Type
1-Step Evaluation
Alpha Capital GroupReviewed
United Kingdom • 3+ yrs
8.3
Lowest fee$39
Starts at$5,000
Max alloc$400,000
PayoutsBi-weekly or on demand depending on plan
- Top Markets
- ForexIndicesCommodities
- Top Platforms
- MT5cTrader
Challenge Type
Alpha Pro, Alpha Swing, Alpha One, Alpha Three
Sources & References
- Our methodology for ranking trading providers— BrokerAnalysis
- Editorial policy and research standards— BrokerAnalysis
- Data sources used across reviews and comparisons— BrokerAnalysis
- FTMO review and rules— BrokerAnalysis
- Instant Funding review and rules— BrokerAnalysis
- Prop category guide: guide— BrokerAnalysis