What is prop trading and how does it work
In short: Prop trading means trading a firm's capital for a share of the profit. Retail prop firms usually sell a challenge: the trader pays a fee, trades an evaluation account under strict rules (daily loss and overall drawdown limits) and, if they pass, gets access to a funded account.
How the challenge works
You must hit a profit target without breaking the limits — for example, never losing more than 5% in a day or 10% overall. Break a rule and the challenge is failed; the fee is not refunded.
A realistic view
Most participants fail. Prop trading does not replace skill; it only gives more capital to someone who already controls risk. Before buying a challenge, trade by the same rules on a virtual account.
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Trading on financial markets carries a risk of losing money. This material is educational and is not investment advice.
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