Trading glossary

Prop firm (funded account): meaning in trading

A prop firm lets you trade its capital for a share of the profits, usually after you pass a paid evaluation.

You pay a fee, trade a demo account under strict rules (a profit target, a daily loss limit and an overall loss limit), and if you pass you get a funded account and a share of the profits, often 80%.

Most people who buy a challenge don’t pass, usually because they break a rule rather than because their strategy can’t win. Many prop firm accounts are simulated, and the firms are generally not regulated by the FCA, so read the rules and check the firm carefully before you pay.

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