Glossary · Prop-firm trading

Prop firm

A company that lets a trader operate its capital after an evaluation, in return for a share of the profit and inside a set of loss rules.

A proprietary trading firm, in this market, sells an evaluation: a simulated account with a profit target and loss limits. A trader who reaches the target without crossing a limit is given a funded account on the same rules and paid a share of what it makes.

The rules are the business. A firm's daily loss limit, maximum loss, profit target, minimum trading days and news or consistency rules decide who is paid, and they differ from firm to firm and programme to programme.

Also called
funded trading firm, funding firm

See it at work

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