What is prop trading? The complete guide to futures prop firms
Prop trading means trading a firm's capital instead of your own. Modern futures prop firms sell you an evaluation for a monthly or one-off fee. Pass it by hitting a profit target without breaking the risk rules, and you trade a funded account where you keep most of the profit. This guide explains the whole model in plain language.
How a futures prop firm actually works
You pay for an evaluation account, for example a $50,000 account. You trade CME futures such as NQ, ES or Gold on a simulated balance. The firm sets a profit target (often around 6% of the account) and a maximum drawdown. Reach the target without touching the drawdown and you move to a funded or performance account.
On the funded stage you share profits with the firm, usually keeping 80–90% or more. Most firms make their money from evaluation fees, which is why the rules are strict and why most traders never get paid.
The rules you will meet everywhere
- Profit target — the amount you must make to pass.
- Maximum drawdown — how far the balance may fall before the account is closed. It can be trailing, end-of-day or static.
- Daily loss limit — some firms stop you for the day after a set loss.
- Consistency rule — no single day may make up more than a set share of total profit.
- Position limits — a maximum number of contracts, often scaling as you profit.
- News rules — some firms restrict trading around major releases such as CPI, NFP and FOMC.
- Flat by close — most firms require you to be flat before the daily futures close (around 16:10 ET).
Why most traders fail an evaluation
It is rarely the strategy. It is behaviour: oversizing after a loss, trading through news, giving back a winning day because there is still time left, and ignoring a trailing drawdown that follows the peak balance.
- Trading too large for the drawdown.
- Revenge trading after the first loss of the day.
- Holding through high-impact news and getting slipped past the stop.
- Not stopping once the target is reached.
How MFT helps you pass
MFT scans NQ, ES and Gold with five fixed, rule-based models and sends exact entry, stop and target levels. With TradersPost automation it can place the orders on your prop account and enforce the boring rules for you: flatten before red news, flatten before the daily close, cap open positions, block NQ and ES from hedging each other, and pause the account once your profit target is reached.
Prop account or your own live account?
Everything above works on a personal broker account too. MFT sends the same signals whether the destination is a Topstep, MyFundedFutures or Apex evaluation, or your own Tradovate or NinjaTrader account trading micro contracts. Read the full comparison in our guide on prop firms versus personal accounts.
Common questions
Is prop trading legit?
Established futures prop firms do pay out, but the business model relies on evaluation fees. Treat the fee as a cost of education and read every rule before buying.
How much does a prop firm evaluation cost?
Usually somewhere between roughly $50 and $300 per month depending on account size, with frequent discounts. Check current prices on the firm's own site.
Do I need experience to start?
You need a written plan and strict risk control. A rule-based model and automatic risk limits matter more than years of screen time.
Let MFT follow the rules for you
Five rule-based models on NQ, ES and Gold, exact levels, and optional automation to your prop or live account with news, close and profit-target protection.
Educational content only, not financial advice. Prop firm rules change — always confirm on the firm's site.