A proprietary trading firm trades its own capital. That is the whole definition, and everything else follows from it. A bank's trading desk is proprietary when it trades the bank's money rather than a client's. A modern online prop firm is the same idea sold at retail scale: the firm carries the capital and the risk, and it recruits people to direct that capital in exchange for a share of what they make.
The part that confuses people is the entry fee, so it is worth being precise about what it pays for. You are not buying an account. You are buying an assessment — a structured, rule-bound test of whether you can produce a return without exceeding a loss limit. Passing it is what gets you the account.
Why a firm would do this
A trading desk's scarcest input is not money. Capital is comparatively easy to raise; people who can reliably extract a return from it are not. Traditional desks solved that with a hiring pipeline — interviews, references, a junior seat, two years of watching. That process is slow, geographically narrow, and expensive per candidate.
An evaluation is a different filter for the same problem. It is open to anyone, it costs the firm almost nothing to run, and it measures the only thing that matters: what the person actually does with a live-behaving account under a live-behaving constraint. A CV cannot fake a drawdown curve.
Capital is easy to raise. People who can reliably extract a return from it are not. The evaluation is a filter for the scarce half.
Where the money comes from
Two places, and an honest firm will say so. The first is evaluation fees — most people who attempt an assessment do not pass it, and those fees are revenue. The second is the firm's share of what funded traders produce.
The ratio between those two is the single most useful thing to know about any prop firm, because it tells you what the business is optimised for. A firm that lives entirely on failed evaluations has a quiet incentive to write rules that are hard to survive by accident. A firm that earns from its funded traders has the opposite incentive: it wants people to pass, and then to keep trading.
That is why the published terms matter more than the marketing. Look at whether the drawdown is static or trailing, whether the daily loss resets on balance or equity, whether trading days are capped, and what the split is — ours is set by the plan, and on Edge it starts at 80% and rises to 95% as you scale. Those four numbers describe the deal. Everything else is presentation.
Simulated accounts, real payouts
Accounts at retail prop firms are almost always simulated, and that is not a catch — it is the mechanism. Your orders run against a demo environment fed by live pricing. No capital of yours is at market risk, and no capital of yours can be lost, because none of it is deployed.
What is real is the payout. The firm treats your simulated performance as the measurement, and pays a share of the corresponding result. If a firm is vague about this distinction, that vagueness is the thing to worry about, not the simulation itself.
What a funded trader is
A funded trader is someone the firm has issued a funded account, either by passing its evaluation or, on an instant plan, by buying an account that is funded at purchase. The funded account is still simulated. What changes is that profit made on it can now be paid out, at the split the plan publishes.
Take a $10K Edge 1 Step, which costs $114. The evaluation is one phase: a 10% profit target ($1,000), a 4% Max Daily Loss ($400) and a 7.5% Max Loss ($750). Reach the target with three days that each closed at +$50 or more, without touching either loss limit, and you are a funded trader on that account. From then on, $1,000 of payable profit at the 80% split is an $800 payout once the payout conditions are met, and the split rises to 95% as you scale.
Every plan publishes its own version of those numbers: the CFD accounts on MetaTrader 5 and the futures accounts on Volumetrica, where the split is 90%.
Prop firm or broker: three differences
- Whose money is at risk. At a broker, your deposit, all of it. At a prop firm, the fee you paid: no capital of yours is placed at market risk, and the Max Loss ends the account before there is a negative balance to fund.
- Where the orders go. A broker executes your orders or passes them on. At WhitePips no order you place is sent to an exchange or broker; the accounts are simulated, fed by live pricing.
- Who sets the rules. A broker's rules are mostly about margin. A prop firm's rules are the product: profit targets, daily and maximum loss limits and conduct rules, published for every plan.
The full side-by-side, with the same $10,000 move at each, is in prop firm or broker.
What to check before you buy anything
- The drawdown type. Static and trailing behave completely differently once you are in profit, and the difference decides more evaluations than any other single rule.
- The daily loss limit, and what it is measured against — closed balance or floating equity — and when it resets.
- Whether there is a time limit. A deadline turns a risk-management exercise into a race, and a race is where people over-size.
- The payout terms: the split, the cycle, the minimum trading days, and whether the fee comes back.
- The restricted list. Check your own country appears nowhere on it before you pay.
Every one of those is published on each plan here, and the full text is in the trading rules. Sizes run $2.5K–$200K across both lines, and each line has its own terms — a futures account is not a CFD account with different branding.