Prop firm (proprietary trading firm)
A prop firm, in the retail futures sense, is a company that sells access to a trading account under a written set of rules: the trader pays for an evaluation, trades the firm's simulated or funded account within drawdown and loss limits, and receives a share of the profits as payouts.
Senzoukria · Glossary · Updated September 2026
The model in one paragraph
Historically a proprietary trading firm traded its own capital with salaried or profit-sharing traders. The retail model that the word now usually refers to is different: the firm sells an evaluation, often called a challenge, on a simulated account. A trader who reaches the profit target without breaching the drawdown rules is moved to a funded stage, which at many firms is still a simulated account whose results the firm chooses to pay out from its own funds. The firm's revenue comes from evaluation fees, resets, monthly subscriptions and activation fees as much as from any trading it does itself.
Every part of that arrangement lives in the account agreement. The rules that decide whether a trader passes or fails are numerical, so they can be written down, entered into software and tested against a trading record.
Rules that define an account
| Profit target | Net profit required to pass the evaluation |
|---|---|
| Maximum drawdown | How far balance or equity may fall from its reference, and how that reference moves |
| Daily loss limit | Loss allowed in one session, and whether breaching it ends the day or the account |
| Consistency rule | Ceiling on how much of total profit one day or week may represent |
| Position limits | Maximum contracts, and whether micros count against the cap |
| Trading days | Minimum days before passing or before a payout, maximum days before expiry |
| Payouts | Profit split, caps on early withdrawals, days between requests |
| Fees | Evaluation price, reset, monthly subscription, activation, withdrawal |
Connecting third-party software
Whether an order-flow platform may be connected depends on the firm, the account stage, the connection method and what the software is used for. Some firms issue their own Rithmic credentials, which an external application can use for market data and, where permitted, order routing; others bundle a proprietary web platform with no external data path. Data access, manual order routing, automation and copy trading are four separate permissions, and none can be inferred from another.
- Ask the firm which data credentials a given account stage actually receives.
- Confirm whether historical data is enabled on the evaluation account, not only live data.
- Get written confirmation for the specific function intended: analysis only, manual orders, or an automated strategy.
In Senzoukria
The Connections manager labels an account of kind Prop firm and treats a funded account specially: order routing is off by default and always off on a funded account until it is enabled with an explicit confirmation that mentions the real drawdown. The Prop firm rules form in the Results space records the parameters of a specific account, evaluation and funded sections separately, and the Prop firm simulation replays a backtest or a journal through those rules to count how accounts, not equity curves, would have fared. The card Should I buy this evaluation reads from the same saved rules. The autopilot requires an acknowledgement that the firm allows automated trading on that account before it can be armed.
Related
- Orderflow software on prop firm accounts
- Evaluation account
- Funded account
- Trailing drawdown
- Compare platforms and firms
- Rithmic footprint software
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Frequently asked questions
- Is a funded prop firm account a real brokerage account?
- At many firms the funded stage remains a simulated account: the firm pays the trader's share from its own funds and may or may not copy the trades to a live account. The agreement states which is the case. For the trader the distinction matters less than the rules, which apply identically to both.
- Can I use my own order-flow software on a prop firm account?
- Only if the firm issues data credentials that an external application can use and its rules permit third-party software at your account stage. Firms that bundle a web-only platform cannot feed a desktop tool at all. Read-only use, manual routing and automation are separate questions; ask each one and keep the written answer.
- What does the evaluation fee buy?
- Access to a simulated account governed by the firm's rules for a limited period, plus the data feed that comes with it. It does not buy a funded account: that depends on reaching the target without a breach. Resets, monthly subscriptions and activation fees may apply on top and belong in any cost calculation.