What is Prop Firm Trading And How Does It Compare To Personal Trading?

Introduction

If you’ve been exploring ways to grow as a trader, you’ve probably come across the term prop firm trading. But what exactly is it? And more importantly, how can it benefit you? In this blog post, we’ll break it all down in simple terms so you can decide if prop firm trading is the right path for you.

What is a Prop Firm?

A proprietary trading firm (prop firm) is a company that provides traders with capital to trade financial markets. Instead of using their own money, traders access the firm’s funds and share a portion of their profits with the company. This allows traders to maximize their profits without taking on personal financial risk.

How Prop Trading Firms Work

Prop firms work on a profit-sharing model.

Here’s a step-by-step breakdown:

Trader Gets Funded – The firm provides capital to the trader.
Trader Executes Trades – The trader uses this capital to trade in financial markets.
Profits are Split – The trader keeps a percentage of their earnings (usually between 70%-90%), while the firm takes the remaining share.

Many firms require traders to pass an evaluation before funding them, ensuring they have the skills to manage risk and generate profits consistently.

The Prop Trading Model

Prop firms differ from traditional hedge funds in a few key ways:

They use their own money – Unlike hedge funds that manage client investments, prop firms trade with their own capital.
Performance-Based Model – Traders must prove their ability before getting funded.
Different Account Options – Traders can start with smaller accounts and scale up as they hit performance milestones.

How Do Prop Firms Make Money?

Prop firms generate revenue in several ways:

Profit Splitting: The primary source of income comes from taking a cut of traders’ profits.
Evaluation Fees: Some firms charge traders to complete a challenge or assessment before getting funded.
Technology & Training Fees: Some offer premium software, data feeds, and mentorship programs for a fee.

Benefits of Trading with a Prop Firm

Advantages

✅ Access to Large Capital – Trade bigger without using personal funds.
✅ Lower Financial Risk – Losses are covered by the firm, not your own money.
✅ Professional Environment – Many firms offer advanced trading tools and educational resources.

Disadvantages

❌ High Pressure – You must meet the firm’s targets and risk limits.
❌ Limited Flexibility – Some firms restrict certain trading styles or strategies.
❌ Evaluation Process – You may have to prove yourself before getting funded.

Types of Prop Firms

Forex Prop Firms

Specialize in currency trading.
Favorable for traders who prefer high liquidity and 24-hour markets.

Multi-Asset Prop Firms

Offer a range of assets including stocks, indices, commodities, and cryptocurrencies.
Ideal for traders who want to diversify their trading strategies.

How to Choose the Right Prop Firm

1. Reputation & Regulation

Check for transparent policies and good trader reviews.
Ensure the firm follows regulations to avoid scams.

2. Profit Splits & Payouts

Some firms offer up to 90% profit split.
Look for firms with fast and reliable payouts.

3. Risk Management Rules

Be aware of daily loss limits and drawdown policies.
Avoid firms with excessive restrictions that could hinder your strategy.

4. Educational Resources & Support

Some firms provide mentorship, training, and webinars to help traders
succeed.

Everblue Trader – A Different Approach

At Everblue Trader, we take a gamified approach to prop trading. We offer:

XP points and badges as you progress.

Level-based trading system with increasing funding opportunities.
Tournaments and competitions to make trading more exciting.

Our goal is to make prop trading fun, competitive, and rewarding while still providing traders with capital and growth opportunities.

FAQs about Prop Firm Trading

What is a Prop Firm?
A proprietary trading firm provides traders with capital to trade and takes a share of the profits.

Do I Need Experience to Join a Prop Firm?
Not necessarily. Some firms welcome beginners, but you’ll need to prove your skills through an evaluation process.

How Much Money Can I Make in a Prop Firm?
Your earnings depend on the profit split and how well you trade. Some firms allow you to scale up to six or seven figures in funding.

Is Prop Trading Risky?
Yes, but since you’re using the firm’s capital, your personal financial risk is lower. However, poor performance can result in losing your funded account.

Does Everblue Trader Charge an Evaluation Fee?
No, Everblue Trader focuses on live trading accounts with no upfront fees. You progress by leveling up through performance milestones

How Does Everblue Trader’s Gamified System Work?
We use a level-up system where traders earn XP points, unlock achievements,
and increase their capital as they prove their trading skills.

What Makes Everblue Trader Different from Other Prop Firms?

Gamified trading experience with XP, levels, and badges.
No upfront evaluation fees – traders grow through performance.
Competitive trading environment with leaderboards and tournaments.

Conclusion

Prop firm trading is an excellent way to access capital, reduce financial risk, and grow as a trader. Whether you’re a beginner or an experienced trader, choosing the right firm can make all the difference. At Everblue Trader, we take a unique, gamified approach to make trading both profitable and engaging. Ready to level up your trading journey? Join Everblue Trader today!