You’re already trading. Now it’s time to go pro. Most traders fail prop challenges because they focus on finding the perfect strategy instead of mastering trading psychology.
In this guide, you’ll discover the six-step plan for passing the challenge, getting funded, and trading with confidence.
Key Findings
- Becoming a prop trader involves passing an evaluation to demonstrate consistency, discipline, and risk management, not just profitability.
- Evaluation programs typically require achieving a profit target without breaching daily or overall drawdown limits.
- Traders can access substantial funding (e.g., $50,000+) by paying a one-time evaluation fee, often refundable upon success.
- No formal licenses are required for remote evaluation.
- Funded accounts allow traders to grow capital without the constraint of shrinking account balances due to withdrawals.
- A high-profit split (usually between 70% and 100%) is offered to successful traders, making the model financially scalable.
- Soft skills — such as emotional resilience, structured routines, and coachability — are just as critical as technical analysis.
- Selecting the right firm means evaluating fee structures, refund policies, risk rules, and support systems before making a commitment.
What Is Proprietary Trading?
Proprietary trading (or prop trading) traditionally refers to a firm using its own capital to make trades for direct profit.
“A proprietary trading firm invests its own capital and balance sheet to conduct self-promoting financial transactions.”
— Investopedia.
But in today’s retail-access model, the best prop firms for retail traders like City Traders Imperium let you trade simulated capital during an evaluation before funding you with real capital. Once you prove consistency, you’re funded with real capital and keep a percentage of profits.
Unlike retail trading, where you risk your own funds, prop firms let you scale up using their capital, under clearly defined rules.
How Prop-Firm Funding Works
Today’s prop trading platforms have transformed the way traders access capital. You no longer need to relocate, rent a desk, or pay thousands in monthly fees.
Challenge vs. Instant Funding
Most traders are familiar with Challenge-based models. You pay a one-time fee, take on a challenge, and if you meet the profit target without breaking any risk rules, you earn a funded account.
However, some firms (like CTI) also offer Instant Funding, where you can skip the challenge entirely, for a slightly higher fee, and start trading live capital right away.
Challenge Funding
This is how most prop traders get started. You pay a one-time fee and tackle either a one-step or two-step challenge where the firm tests your risk management and ability to stay profitable.
The rules are pretty straightforward: hit your profit targets, don’t breach the drawdown limits, and trade for the minimum required days.
It takes some effort to qualify, but the upfront cost is lower than that of instant funding. Some prop firms refund your challenge fee with your first withdrawal, so you’re basically trading for free once you pass.
This route works well for traders who want to prove they can handle the pressure before being entrusted with substantial capital.
Instant Funding
Want to jump straight into trading a funded account?
Instant Funding allows you to skip all Challenge steps and start immediately on a live funded account, although you’ll pay a bit more upfront for the privilege.
There’s no need to meet profit targets or pass any test before trading real capital. While this appeals to confident traders who want to get stuck in right away, the lack of a proving stage means you’re under pressure from day one.
In terms of a Refund, you’ll get a profit share from the first level, instead of the refund.
Still, if you’re experienced and ready to trade live capital without jumping through hoops, it’s the fastest path to funding.
Quick Comparison | ||
|---|---|---|
Feature | Evaluation | Direct Funding |
Upfront Cost | Lower one-time fee | Higher one-time fee |
Challenge Required? | Yes | No |
Payout Eligibility | After passing and meeting the prop firm requirements | Eligible once funded, based on the prop firm requirements |
Ideal For | Traders looking for higher drawdown limits | Traders looking for faster scaling plans |
Psychological Pressure | Lower due to the higher drawdown limit | Higher due to the lower drawdown limit and slightly higher fee |
Speed to Funding | Slower – must complete challenge(s) | Faster – access funds immediately |
What Are the Fees a Prop Trader Would Need to Pay?
With today’s proprietary trading firms, the fees are considerably cheaper than they used to be. That’s mostly because you no longer have to travel to a prop trading firm or pay monthly fees for a desk.
One-Time Fee
In this case, the Prop Trader would pay an initial fee upon sign-up.
Then, the prop trader would undergo a Challenge (1-Step), Challenge (2-Step), or Instant Funding (No Evaluation) and hit the profit target to qualify and become a funded prop trader.
Usually, the more difficult the rules are, the cheaper the one-time fee is.
💡 Pro Tip: Newer prop firms may also offer cheaper fees; however, they are considered high-risk due to their newness and lack of experience or capital to handle payouts. Therefore, it’s always advisable to work with prop firms that have at least 3-5 years of experience in the industry to ensure you get paid, such as CTI. |
For example, programs with trailing drawdowns are much more difficult to pass. For this reason, many firms offer them at a lower price.
Therefore, you should always seek the funding rules that best suit your strategy before signing up with a prop firm.
One-Time Fee
This is the 100% No-Go to Funding option because you would be charged a monthly fee to access the account.
Technically, you need to pay the prop firm monthly to trade, which can add additional psychological and financial pressure.
The fees will vary depending on the size of the funded account. The bigger the account size, the higher the fee.
This model is usually more common with futures prop firms and prop firms that offer a trading desk at their office.
💡 Pro Tip: We suggest steering clear of monthly-fee prop firms. Why? Because paying rent just to use someone else’s money is a bad move. Miss a month? Take a break? You’re still getting billed. That’s not trading — that’s a subscription service with stress. |
How Much Do Prop Traders Make? How Do Prop Traders Get Paid?
Prop traders get paid by a profit share between the prop firm and the prop trader.
The profit share given to the profit trader can range from 50% to 100%, depending on the chosen prop firm.
For example, at CTI, our starting offer is a 70%-80% profit share, which increases to 100%.
Overall, the average salary of a prop trader in the US ranges from $ 100,000 to $ 500,000. It all depends on how successful your trades are. However, those salaries are typically paid to professional traders who have a proven track record of profitability.
Prop Firm Funded Account vs. Personal Account
Personal Account Trading
Access to Capital: Whatever you can afford to deposit.
The Reality: To make decent profits, you’d realistically need at least $50,000 in your account. That’s a lot of your hard-earned cash on the line.
Risk: If you lose 10%, that’s $5,000 of your money gone. Blow the account entirely? You’ve lost the full $50K of your own savings.
Growth: Every time you withdraw profits, your account shrinks, limiting future growth potential.
Prop Firm Funded Account
Access to Capital: $50,000 of the firm’s money (or more, depending on the program you choose).
The Reality: You get the same trading power as someone with $50K, but you only risk a few hundred dollars in fees.
Risk: Your maximum loss is the signup fee, typically $200 to $500. After that, the firm takes on all the trading risk.
Growth: Withdrawals don’t shrink your trading capital. Your account can continue to grow while you take profits.
To put it in perspective, with a personal account, you’d need to risk $50,000 of your own capital to trade at that level.
With a prop firm, you can access the same amount for just a $200 to $500 fee, providing massive capital efficiency without personal financial exposure.
💡 Pro Tip: Think in terms of efficiency, not ownership. With prop firms, you’re renting capital to generate returns, not tying up your own equity. That’s leverage without the debt. |
Do You Need a License to be a Prop Trader?
In the United States, if you’re trading securities for a registered firm, such as on a trading desk or as a market maker, you typically need to pass both the Securities Industry Essentials (SIE) and the Series 57 exams.
These are administered by the Financial Industry Regulatory Authority (FINRA) and are mandatory for roles involving proprietary trading of equities and convertible debt securities.
Here’s the good news: most retail-oriented prop firms like CTI don’t require any financial licenses.
Remote prop trading with challenge-based prop firms typically doesn’t require traditional financial licenses, as you’re trading a firm’s capital under their risk management rules, not providing investment advice to clients.
Step-by-Step Path to Becoming a Prop Trader
Here’s the proven 6-step plan that takes you from retail trader to funded professional:
1. Master the Basics
Before you even consider Challenges, get comfortable with your trading platform (MT4/MT5), understand market mechanics, and nail down your strategy. Ensure you’re prepared on both a technical and psychological level.
Our Academy is a good place to start
This means knowing how to place orders, manage positions, and navigate your platform with confidence and ease. Practice your risk management calculations until they’re second nature.
On the psychological side, to develop emotional control you need to stick to your plan when markets become volatile and accept losses without engaging in revenge trading.
Many traders fail evaluations not because of bad strategies, but because they crack under pressure.
2. Research and Choose Your Prop Firm
Research the prop firms that fit your goals and trading style.
Look for details such as their funding programs, profit splits, evaluation process, and trading rules to ensure they align with your objectives.
Compare fee structures, withdrawal policies, and scaling plans.
Check reviews from actual funded traders and avoid firms with unrealistic rules or poor payout histories.
Once you’re prepared, it’s time to select a funding program that suits your needs. Most prop firms offer evaluation processes to test your trading skills before providing access to capital.
These programs often include a demo phase, during which you trade virtual funds while meeting profit and risk targets.
3. Understand the Challenge Rules
Every firm has its own evaluation criteria — some offer 1-step challenges, others use 2-step Challenge models, or Instant Funding.
You’ll need to achieve a profit target (e.g., 10%) while avoiding violations, such as daily drawdown breaches. Read the fine print before you place your first trade.
Common rule violations that can lead to account closure include exceeding maximum daily loss limits, holding positions over weekends when prohibited, trading during restricted news, or reaching overall drawdown limits.
Each prop firm’s rules are different, so spend time understanding exactly what’s allowed and what isn’t before you risk your evaluation fee.
4. Start Your Evaluation Challenge
Sign up for your chosen program and begin trading the demo account. Focus on consistency over spectacular gains — prop firms want to see steady, controlled performance rather than taking big risks for big wins.
Stick to your predetermined risk per trade, typically 0.5-2% of account balance. Document your trades and maintain detailed records to ensure accurate tracking and analysis. Track your progress against both profit targets and drawdown limits daily
Demonstrate you can manage risk professionally.
5. Plan Your Trades
This is where preparation meets reality. Every trade matters, and the temptation to overtrade or engage in revenge trading will be intense.
Stay disciplined, stick to your plan, and remember that consistency beats heroics. Take breaks when you’re emotional, and never chase losses. The firms are watching how you handle drawdowns as much as your P&L.
6. Pass the Challenge and Get Funded
Once you successfully complete the evaluation requirements, you’ll gain access to live capital and the opportunity to trade for a share of the profits. This is where your journey as a professional prop trader truly begins.
💡 Pro Tip: Want to know if your risk plan will survive the challenge? Try our Risk of Ruin Calculator to see how many losses your system can handle before blowing the account. |
Remote vs. Floor-Based Mentorship
The prop trading world has undergone significant evolution. While traditional floor-based trading still exists, remote prop trading has opened doors for traders worldwide.
Here’s how they compare:
Remote Prop Trading (Modern Model)
- Cost: Low barrier to entry – evaluation fees from $99-$1,000.
- Community: Online Discord groups, webinars, and virtual mentorship programs.
- Licence: No financial licenses required in most jurisdictions.
- Location: Trade from anywhere with reliable internet.
- Capital Access: Up to $100,000+ available through evaluation programs.
- Flexibility: Trade your own hours within firm guidelines.
Floor-Based Prop Trading (Traditional Model)
- Cost: High upfront costs – desk fees ($1,000-$5,000+ monthly).
- Community: Direct face-to-face mentorship and immediate peer support.
- Licence: Series 57/63 required in the US, plus ongoing compliance.
- Location: Must relocate to major financial centres (NYC, Chicago, London).
- Capital Access: Potentially higher limits, but harder to qualify.
- Flexibility: Fixed hours, office environment, strict supervision.
Remote prop trading democratizes access to professional trading capital. You can access funding opportunities without geographical constraints, expensive licenses, or relocating your life to Wall Street.
At CTI, we’ve built our entire model around this accessibility, giving skilled traders worldwide the opportunity to prove themselves and access significant capital, regardless of their location or formal qualifications.
Interview & Soft-Skill Tips
Getting funded isn’t just about passing the numbers game.
Many prop trading firms conduct interviews or assess your soft skills to ensure you’re not just profitable, but also professional and coachable.
Common Interview Questions Prop Trading Firms Might Ask
- “What’s the biggest trading mistake you’ve made — what did you learn?”
- “Why do you want to trade our capital instead of your own?”
- “Do you have a daily or weekly trading routine?”
- “How do you handle a string of losing trades without revenge trading?”
- “Describe your risk management process in detail.”
- “What’s your plan if you hit maximum drawdown limits?”
Discipline
Trading discipline means sticking to your plan when everything inside you wants to do the opposite.
It’s closing a position at your predetermined stop loss even when you’re “sure” the market will turn around. It’s walking away from the computer when you’ve reached your daily loss limit, instead of trying to recover.
Prop trading firms seek traders who can consistently follow rules, not just when it’s convenient. Your ability to stick to position sizing rules, honour stop losses, and resist FOMO trades shows them you can handle their capital responsibly.
Communication
You might think trading is a solo activity, but working with a prop trading firm means you’re part of a team. You need to communicate clearly about your trading performance, any issues you’re facing, and your overall progress.
Many firms have community aspects where traders share insights and support each other — CTI’s Discord community has over 25,000 members, including hundreds of funded traders.
Your ability to contribute positively shows maturity that firms value.
Risk Tolerance
This one’s tricky because it’s not about being fearless or reckless. Proper risk tolerance means understanding exactly how much you can afford to lose on any single trade and being completely comfortable with that amount.
It’s about accepting that losses are part of the business without letting them affect your emotional state or decision-making process.
Firms want traders who can take calculated risks without becoming paralysed by fear or overconfident from wins. You should be able to put on a trade knowing you might lose, sleep well that night, and wake up ready to trade again regardless of the outcome.
💡Pro Tip: Review your own trading psychology like you’d review a chart. Spot patterns in your behavior, not just your trades. That’s where real edge begins. |
Pros & Cons of Being a Prop Trader
Becoming a prop trader can be a great opportunity to maximize your trading potential without risking your own capital. But is it right for you? Here’s an honest breakdown.
✅ ADVANTAGES | ⚠️ POTENTIAL PITFALLS |
✔️ Access to Larger Capital Skip the years of building a track record – modern prop trading firms only require passing an evaluation to access significant capital. | ❌ Steep Learning Curve Success isn’t overnight. You need to master strategies, develop emotional resilience, and hone risk management skills in a competitive environment. |
✔️ Limited Personal Risk After paying evaluation fees, you’re not liable for trading losses – the firm manages risk while you focus on performance. | ❌ Digital Isolation Online platforms lack the immediate mentorship and camaraderie of physical trading floors, though communities help bridge this gap |
✔️ Accelerated Profit Potential Turn small personal accounts into substantial income streams by trading larger capital while risking only evaluation fees. | ❌ Tough Competition You’re competing against experienced traders who’ve already established themselves – it requires discipline and focus to succeed. |
✔️ Structured Improvement Good prop firms (like CTI) have realistic rules that enforce proper risk management, making you a more disciplined trader. | 📋Strict Rule Compliance |
✔️ Withdraw Without Shrinking Unlike personal accounts, withdrawals don’t reduce your trading capital – accounts can grow exponentially while you take profits. | 🎯 Evaluation Pressure Psychological pressure during challenges can cause overtrading or revenge trading – many fail due to emotions, not strategy. |
Prop Trader FAQs
Do I need a license to be a prop trader?
Answer: Most retail-oriented prop firms don’t require a FINRA Series 57/63, but floor-based desks in the U.S. do.
How much does a funded account cost?
Answer: Evaluation fees range from $99 to $1,000, depending on account size and whether the fee is refundable.
What profit split can I expect?
Answer: Common splits are 70/30 or 80/20 in favor of the trader once profit targets are met.
How risky is prop trading?
Answer: You trade firm capital, but rule violations can forfeit fees and earned profits; always treat drawdown limits as hard stops.
How are prop-trading profits taxed?
Answer: In most jurisdictions, profits are treated as self-employment or capital-gains income — consult a local tax adviser.
