A proprietary trading firm — a prop firm — trades its own capital rather than clients' money. The modern retail version does it at arm's length: instead of hiring traders onto a desk, the firm runs a simulated evaluation, and traders who clear it get a simulated funded account and a share of the performance as real rewards.
That distinction matters, so it is worth stating up front rather than burying it: at almost every retail prop firm, including FundedAxe, the accounts are simulated. You are not placing orders into a live client book. You are trading a simulated account under a rule set, and you are paid real money based on the simulated performance.
How the modern model works
You buy an evaluation
A one-time fee gets you a simulated account with a growth target and a set of risk limits. Some firms, FundedAxe included, let you start for a small entry payment and pay the rest only on a pass.
You trade to the target without breaching
Reach the growth target while staying inside the daily loss limit and the maximum loss. Those two limits — not the target — are what end most attempts.
You get a simulated funded account
Same platform, larger stakes, and now a reward split on what you produce.
You request rewards on a cycle
At FundedAxe that is 14 days after your first trade, then every 14 days, at an 80% split rising to 100% with the add-on.
Prop firm vs broker: not the same thing
| Prop firm | Broker | |
|---|---|---|
| Whose capital is at stake | The firm's | Yours |
| What you deposit | An evaluation fee | Your trading capital |
| What you can lose | The fee | Your deposit |
| How you are paid | A share of performance | You keep everything you make |
| Rules imposed on you | Growth target, daily loss, max loss | Margin requirements only |
The trade is straightforward: you accept rules and a split in exchange for not risking your own capital. If you have the capital and the discipline, a broker account keeps 100% of the upside. If you do not, a prop firm converts a small fee into access to a much larger account.
The three rules that decide everything
- Growth target — the gain you must produce to pass. Typically 4–10% per phase.
- Daily loss limit — the most you can lose in one day. The single most common cause of a failed evaluation.
- Maximum loss — the most you can lose overall. Ask whether it is static (fixed from your starting balance) or trailing (follows your equity up). Static is strictly better for a winning trader, and the difference is explained in static vs trailing drawdown.
The four evaluation models
Firms package the same idea in four shapes. The differences are real, and picking the wrong one for your strategy is the most common avoidable mistake at the buying stage.
| Model | How it works | Suits |
|---|---|---|
| One-step | A single growth target, then funded | Consistent traders who rarely have a large down day |
| Two-step | Two smaller targets across two phases | Most traders — the sensible default |
| Three-step | Three gentle targets, more phases | Steady, lower-variance strategies |
| Instant | No evaluation; tighter loss limits instead | Proven traders who value speed over price |
There is a fuller breakdown in one-step vs two-step challenges and instant funding vs evaluation.
What it costs, and the two pricing models
Every firm charges a one-time evaluation fee scaled to the account size. What differs is when you pay it.
- Pay upfront. You pay the full fee at checkout. Many firms refund it after a set number of payouts, so a trader who passes and keeps trading effectively pays nothing.
- Pay after pass. You pay a small entry payment — $9.99 at FundedAxe — and the rest of the fee is charged only when you pass. Failing costs you the entry payment and nothing else.
Neither is universally cheaper. Paying upfront wins if you pass on the first attempt; paying later wins across multiple attempts. The arithmetic is worked through in pay after pass vs paying upfront.
The vocabulary you need before reading a rule sheet
| Term | Plain meaning |
|---|---|
| Breach | Violating a rule, which ends the account |
| Static drawdown | Max loss fixed from your starting balance — it never moves |
| Trailing drawdown | Max loss that follows your equity upward as you profit |
| EOD | Daily loss measured on the closing balance, not intraday equity |
| Consistency rule | A cap on how much of your gain may come from one day |
| Reward / profit split | Your share of the account's performance |
| Scaling plan | How the account size grows with sustained results |
Thirty more terms are defined in the prop trading glossary.
How firms make money — and why it shapes the rules
Three revenue sources: evaluation fees, add-ons, and the firm's share of performance. The first dominates, which is why the incentive structure matters. A firm paid in full upfront earns the same whether you pass or not; a firm that only collects the main fee on a pass earns nothing from a failed trader.
Who prop trading suits
It suits traders with a tested edge and small capital — the account size problem is exactly what a prop firm solves. Below roughly $25,000 of risk capital, a funded account gives you position size you could not otherwise justify.
It does not suit traders still searching for a strategy: the rules will breach you before the learning curve pays off, and paying repeatedly for evaluations is an expensive way to practise. If that is you, trade small on a demo until your risk process is boring, then buy an evaluation. It also stops making sense above roughly $90,000 of risk capital, where 100% of your own account beats 80% of someone else's — the maths is in prop firm vs your own broker account.
What to check before you pay anyone
- Is the maximum loss static or trailing?
- Is the daily loss measured end of day or on intraday equity?
- Is there a consistency rule, and what is the exact threshold?
- Does any phase expire?
- When is the first reward request, and what is the cycle after that?
If a firm will not answer those five in writing before you buy, that is the answer. The full version is the 12-point checklist.
Start an evaluation for $9.99
Simulated accounts from $10,000 to $400,000, static drawdown in the evaluation, no time limit.
Frequently asked questions
What is a prop firm in simple terms?
A proprietary trading firm that backs traders with the firm's capital instead of taking deposits. You pass a simulated evaluation, get a simulated funded account, and keep a share of the performance as real rewards.
Do you use your own money at a prop firm?
No. You pay a one-time evaluation fee and the firm carries the capital risk. Your maximum loss is the fee itself.
Is prop firm trading real trading?
At most retail prop firms, including FundedAxe, the accounts are simulated — you trade live market data under a rule set rather than routing orders into a client book. The rewards paid on that performance are real money.
How much can you make at a prop firm?
It depends entirely on your account size and results. On a $100,000 simulated account at an 80% split, a 4% month produces roughly $3,200 in rewards. There is no guaranteed income and most traders do not reach a funded account.
FundedAxe evaluations and funded accounts are simulated. Traders do not trade real client capital; rewards are paid on simulated performance under the terms of the FundedAxe trader agreement.