THE RULEBOOK · EVERGREEN

What Is a Prop Firm?

A prop firm gives traders evaluation accounts and profit splits instead of salaries. That's the model in one sentence. The rest of this page is about the parts nobody puts on the landing page.

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1. The model

Proprietary trading firms historically hired traders with the firm's own money. The modern "prop firm" you see advertised everywhere does something different: it sells an evaluation. Pass it and you trade a funded account with a profit split. Fail it and the fee is gone.

  1. Buy a challenge. A fee (often $50-$500 for a small account) buys you an evaluation.
  2. Trade against rules. A profit target, a max drawdown, a daily loss limit, sometimes a consistency rule.
  3. Pass, get "funded". A funded account with a profit split, typically 50-90% in your favour.
  4. Meet payout conditions. Consistency, minimum trading days, minimum withdrawal, and the firm pays your share.

Everything after step one is governed by the rulebook, not the marketing page.

2. The part nobody advertises

The funded account is simulated in almost every case. There is no real trading book, no real money at risk beyond your evaluation fee, and the payout is a performance-based reward. That is not a scandal, it is the business model: evaluation fees pay the firm, and payouts are the marketing budget that brings the next batch of buyers.

It matters because it explains the incentives. The firm profits from fees, resets and repeat purchases. The rules exist to filter risk, and some firms write them to filter revenue too. That is why the Monster reads the rulebook before anything else.

3. The rules that decide your fate

Five rules decide whether you pass, get paid, or lose the account. Each is linked to a plain-English explainer:

Rule Why it matters
Max drawdown Static or trailing. Trailing follows your high-water mark and can eat an account hours after a big win.
Daily loss limit End-of-day or intraday. The same 5% is a completely different rule depending on when it is measured.
Consistency rule No single day over 30-40% of your profit at payout. The most misunderstood rule in the industry.
Minimum trading days Hit the target in two days and you still wait until the day count is met. Those extra days are risk days.
News restrictions A ban that is never on the pricing page. Event traders must check the rulebook before buying.

4. Evaluation, instant funding, and the difference

The classic model is the evaluation: pay, pass one or two phases, get funded. One-step vs two-step is the structural choice. Instant funding flips it: pay and you start funded immediately, with no evaluation phase. Instant is not a hack. The risk is just transferred: you skip the challenge fee but face the full drawdown exposure at once, often at a higher entry price.

5. What a prop firm is not

  • Not a job. No salary, no benefits, no guarantee of work.
  • Not a broker. Prop firms are not regulated like brokers, and they are not the entity holding your money.
  • Not an investment. The evaluation fee is the price of a test, not a deposit with interest.
  • Not a payout guarantee. Passing the evaluation earns a right to trade under rules, not a right to profit.

6. A worked example

Take a typical two-step forex evaluation (the shape FTMO, FundingPips and FundedNext all use):

  • Buy a $100k challenge for a few hundred dollars.
  • Phase 1: hit a 10% profit target without breaching a 10% max drawdown or 5% daily loss.
  • Phase 2: hit a 5% target on a fresh account under the same limits.
  • Funded: trade a simulated $100k with an 80/20 split, scaling to 90/10.
  • Payout: you must complete the minimum trading days, and no single day can exceed the consistency cap.

The marketing page shows the 80/20 split and the profit target. The rulebook decides everything else. Read the FTMO review to see the catch in full.

7. How to evaluate any prop firm

  1. Is the account simulated? Assume yes. Ask anyway.
  2. Static or trailing drawdown? End-of-day or intraday daily loss? These two answers change the difficulty massively.
  3. What does a reset cost? The lifetime price of failing is the number most budgets forget.
  4. Which entity runs it? "Regulated" usually means very little for the challenge itself. Check the legal entity.
  5. What are the payout conditions? Consistency, minimum days, minimum withdrawal, payment methods.

Every one of those is answered in the Monster's reviews, scored against a public methodology with receipts.

8. The current landscape

The firms the Monster has eaten so far, by Monster Score:

  • FTMO - 8.5 · MONSTER APPROVED
  • Topstep - 8.4 · DECENT, WITH CATCHES
  • FundingPips - 8.3 · DECENT, WITH CATCHES
  • The5ers - 8.2 · DECENT, WITH CATCHES
  • Tradeify - 8.2 · DECENT, WITH CATCHES

Rankings: best prop firms, best futures prop firms, best forex prop firms. Verified offers: Monster Deals.

9. The short version

A prop firm is a paid evaluation business with a profit-split prize. Treat the fee as the cost of a test, read the rulebook before you pay, and treat every marketing claim as unverified until it survives contact with the terms. The Monster's whole job is doing that reading for you.