As of May 2026, a prop firm (proprietary trading firm) is a company that funds traders with its own capital. The trader trades with the prop firm's money without risking their own, and keeps between 70% and 90% of the profits generated. Access is either through an Instant Funding model (direct access, like RaiseMyFunds) or through a challenge (performance test over 30 to 90 days, like FTMO).
Definition of a prop firm
Definition
A prop firm, short for "proprietary trading firm", is a company that allocates its own capital to selected traders. These traders generate profits by trading the financial markets (forex, indices, commodities, cryptocurrencies) and share those profits with the prop firm according to a defined percentage called the profit split.
The prop firm model solves a concrete problem: many traders have the skills to be profitable but lack the capital needed to trade at scale. The prop firm provides the capital, the trader provides the expertise.
The prop firm market has exploded since 2020, growing from a few dozen players to several hundred. Today, the best prop firms manage hundreds of millions of dollars in capital allocated to traders in over 180 countries.
How does a prop firm work?
The operation of a prop firm is based on three key elements.
1. Access to capital. The trader accesses a funded account either directly (Instant Funding) or after passing an evaluation process (challenge). Account sizes range from $5,000 to $400,000 depending on the prop firm and the trader's level.
2. Trading rules. Each prop firm defines rules that the trader must follow: maximum drawdown (maximum allowed loss), consistency rule, tradable instruments, trading hours. These rules protect the prop firm's capital.
3. Profit split. The trader keeps between 70% and 90% of the profits generated. The remainder goes to the prop firm. Payouts are generally monthly, with a minimum often set at $500 or $1.
The two prop firm models
Instant Funding
Direct access without challenge
The trader directly purchases a funded account without passing an evaluation. Access to capital is immediate after profile validation. Best suited for experienced traders.
Example: RaiseMyFunds - Instant Funding, accounts from $50K to $400K, FSCA regulated.
Challenge
1 or 2-step evaluation
The trader must demonstrate profitability over a period of 30 to 90 days before accessing capital. More selective but can offer a higher profit split.
Example: FTMO - 2-step challenge, profit split up to 90%, accounts from $10K to $200K.
Advantages of a prop firm
Advantages
Access to significant capital without risking your own money
Ability to scale your profits with accounts up to $400,000
Generous profit split between 70% and 90%
Discipline reinforced by drawdown rules
Professional infrastructure (MT5, fast execution)
Potentially high income for profitable traders
Points to consider
The majority of prop firms are not officially regulated
Drawdown rules can be restrictive
Challenge fees can be lost if the evaluation fails
The market includes unreliable players, so choose carefully
Psychological pressure can be higher than with personal trading
Glossary of key terms
Profit split
Percentage of profits the trader keeps. An 80% profit split means the trader keeps 80% and the prop firm keeps 20%. Generally ranges from 70% to 95% depending on the prop firm.
Drawdown
Maximum allowed loss on the account. Daily drawdown limits the loss on a single day (often 5%). Overall drawdown limits the total loss on the account (often 8 to 10%). RaiseMyFunds has no daily drawdown.
Instant Funding
A prop firm model without a prior challenge. The trader gets direct access to a funded account. RaiseMyFunds is one of the only regulated prop firms to offer this model.
Challenge
A 1 or 2-step evaluation process the trader must pass before accessing capital. Duration: 30 to 90 days. FTMO is the benchmark for the 2-step challenge.
Consistency rule
A rule requiring profits to be regular and not concentrated on a single day. RaiseMyFunds has no consistency rule, giving the trader more freedom.
KYC (Know Your Customer)
Identity verification required by the prop firm. At RaiseMyFunds, KYC is only required at the time of the first profit withdrawal, not when opening the account.
Ready to choose your prop firm? Check out our complete comparison of the best prop firms in 2026.
Four criteria are essential for choosing a prop firm in 2026.
Regulation. This is the most important criterion. A prop firm regulated by an official financial authority offers real protection for the trader. RaiseMyFunds is FSCA regulated . The vast majority of prop firms (FTMO, FundedNext, etc.) are not regulated.
Access model. Instant Funding or challenge? If you have a proven strategy and want immediate access, Instant Funding is ideal. If you want to validate your strategy in a structured framework, the challenge is better suited.
Drawdown rules. Daily drawdown is the most restrictive rule. If your strategy can generate significant losses on a single day before recovering, avoid prop firms with a strict daily drawdown.
Payment reliability. Check the prop firm's payment history on forums and Trustpilot. A solid track record over several years is a sign of trustworthiness.
Frequently asked questions
A prop firm (proprietary trading firm) is a company that funds traders with its own capital. The trader trades with the prop firm's money without risking their own, and keeps between 70% and 90% of the profits generated through a profit split. Prop firms allow skilled traders to access significant capital without investing their own money.
The trader accesses a funded account either through Instant Funding (direct access without evaluation, like RaiseMyFunds) or through a challenge (performance test over 30 to 90 days, like FTMO). They then trade with the prop firm's capital while following defined drawdown rules, and share the profits according to a profit split generally between 70% and 90%.
A prop firm funds the trader with its own capital. The trader does not risk their personal money and shares the profits. A forex broker provides access to the financial markets where the trader trades with their own capital, usually with leverage. The two models are complementary: the prop firm for scaling without personal capital, the broker for controlling your own account.
Prop firms are legal in most countries. Their level of safety varies depending on whether they are regulated or not. RaiseMyFunds is regulated by the FSCA, which provides an official guarantee. The majority of prop firms are not regulated, which implies a higher level of risk. It is recommended to choose a prop firm with a solid payment track record.
The profit split is the share of profits the trader keeps. An 80% profit split means the trader keeps 80% of the profits and the prop firm retains 20%. The profit split ranges from 70% to 95% depending on the prop firm. At RaiseMyFunds, it ranges from 70% to 85% depending on account size.
Prop firms are generally not suitable for beginner traders. They are designed for traders with a proven strategy. For beginners, it is recommended to start by trading on a demo account or a real account with a forex broker, develop a profitable strategy over several months, and then consider a prop firm once the strategy is validated.