Most prop firms require traders to go through an evaluation or assessment phase before providing access to the firm's capital. This process typically involves:
Demo Trading: Traders trade on a simulated account under specific rules and targets.
Performance Targets: Achieving a certain profit target without violating risk management rules.
Time Constraints: Completing the evaluation within a set number of days or trades.
Upon successful completion of the evaluation, traders receive access to a funded account with the firm's capital. The amount of capital provided often depends on the trader's performance during the evaluation.
Prop firms and traders agree on a profit-sharing arrangement. Common splits range from 50/50 to 80/20, with the larger percentage typically going to the trader as an incentive.
Evaluation Fees: Traders often pay a fee to participate in the evaluation process. This fee may be one-time or recurring.
Platform Fees: Some firms charge for the use of their trading platforms or data feeds.
Refundable Deposits: In some cases, evaluation fees are refundable upon meeting specific criteria.