What is prop trading?

Proprietary (prop) trading firms provide traders with capital to trade in exchange for a share of the profits. Instead of risking your own money, you trade the firm's capital after passing an evaluation that proves your skills.

The typical process: pay a one-time evaluation fee, trade a demo account within specific rules (profit target, drawdown limit, daily loss limit), and if you pass, you receive a funded account where you keep 80% or more of the profits.

Step-by-step: Getting funded

Choose your prop firm

Look for: static drawdown (more forgiving than trailing), unlimited time limits (no pressure), fast payouts (1-2 days), and markets you actually trade. Read the rules carefully before paying.

Select your evaluation

Most firms offer 1-step and 2-step evaluations. 1-step has a single, higher profit target. 2-step has lower targets per phase but takes longer. Choose the account size you're comfortable managing.

Trade within the rules

The rules exist to prove you can manage risk. Focus on not breaching the drawdown first, profit second. Most traders who fail breach the max drawdown, not the daily loss limit.

Hit the profit target

Don't rush. With unlimited time, you can trade at your own pace. Consistency beats aggression. A 0.5% daily return on a $50K account reaches a 10% target in about 20 trading days.

Get funded and paid

Once you pass, you receive a funded account. Trade the same way, follow the same rules, and request payouts on your profits. The best firms pay within 1-2 days.

Common mistakes that cause failure

Oversizing positions - Using too much leverage relative to the drawdown limit. Size so that your worst-case loss stays well within the daily limit.
Revenge trading - Having a losing day and trying to make it back immediately. This is the #1 cause of blown evaluations.
Ignoring the daily loss limit - The daily limit resets at midnight UTC. If you're down for the day, stop trading. Come back tomorrow.
Trading without a plan - Know your entries, exits, and position size before placing a trade. If you wouldn't take the trade in a live account, don't take it in the evaluation.
Rushing to hit the target - With unlimited time, there's no reason to force trades. Let the market come to you.

Tip: Treat the evaluation exactly like a funded account. If you can't pass the evaluation trading normally, you won't be profitable with real capital either. The evaluation is designed to filter out gambling behaviour, not skilled trading.

Understanding drawdown types

Static drawdown is calculated from your starting balance. If you start with $50,000 and the max drawdown is 6%, your stop-out level is always $47,000 regardless of how much profit you make. This means winning trades don't tighten your drawdown.

Trailing drawdown is calculated from your peak equity. If your account peaks at $55,000, the drawdown is measured from that peak. This means you can breach even after being in significant profit if you give back too much.

Static drawdown is more trader-friendly. At Mizora, all evaluations use static drawdown.

How much can you realistically earn?

A funded trader who averages 3-5% monthly return on a $50,000 account with an 80% profit split earns:

3% monthly return: $50,000 x 3% x 80% = $1,200/month
5% monthly return: $50,000 x 5% x 80% = $2,000/month

With scaling, that same trader on a $200K account at 3% monthly: $200,000 x 3% x 80% = $4,800/month.

These are realistic numbers. Traders who consistently earn 5-10%+ monthly are in the top percentile and may be invited to in-house teams.

Free ways to start

If you're not ready to pay for an evaluation, there are free ways to begin:

Free trial accounts - Mizora offers a free $50K demo account to test the platform and your strategy
Tournaments - The Mizora Cup is free to enter with 100 evaluation prizes for top performers
Paper trading - Practice on any free demo account until your strategy is consistently profitable

How to get funded as a trader.