Prop trading firms

Institutional desks and retail evaluation models

Wall Street trading desks hire in-house staff, and company cash backs those hires, who also receive a base salary. Online prop firms set up their business differently. A timed trading test in a practice account is what an evaluation means, and you pay an upfront fee for it. Trading the markets never asks you to deposit savings of your own.

A prop trader clears the test by hitting a profit goal and never going past the loss limit the firm sets. Your loss limit has a name: the drawdown. It marks how low your balance can go before your test closes. Some firms charge an activation fee once you pass, before they open your funded trading account. Once funded, a fixed portion of your simulated gains (the profit split) stays with you, and you request payouts.

Some firms give you an instant funded account when you pay a higher upfront fee, and you can skip the test. A second group of firms splits the test into several phases, and a funded trading account is granted only after that.

How do prop trading firms make money?

At retail evaluation firms, most of the revenue comes from customer test fees, reset charges, and monthly renewal payments. You can't get refunds on evaluation and activation fees, according to Topstep's guide for beginners. Only 16.8% of Topstep Trading Combines were completed in 2025. A trader who breaks a rule and pays to restart is charged another fee by the firm, which takes no market risk.

Nothing here is investment advice. Evaluations run in simulated accounts, and most traders never reach a payout. Still, established firms pay users who succeed out of company revenue. According to Topstep, it has paid traders $1.5B+; FTMO reports $650M+ since 2015, and MyFundedFutures reports $300M+ in payouts.

US rules, court cases, and taxes

Retail evaluation providers don't count as regulated brokerages, since you trade simulated accounts rather than depositing live brokerage funds. Regulators still watch for fraud. In 2023, the CFTC sued My Forex Funds, saying that more than $310 million in fees came from 135,000+ customers. It alleged that the firm paid out about $137 million, plus what it lost when customers made money. Reuters reported that in 2025 a US District Judge threw out the 2023 case and made the agency pay attorney fees as a sanction.

Most US residents choose futures prop firms, since offshore foreign exchange platforms often restrict US sign-ups. Earning payouts in the US means the firm treats you as an independent contractor, so it sends Form 1099-NEC. Self-employed people generally owe self-employment tax under IRS rules when net earnings hit $400 or more.

Comparing the real cost of getting funded

The headline price doesn't show what you really spend before your first withdrawal. Paying once upfront can be cheaper than a low monthly plan that comes with an activation fee. Under Topstep pricing rules, the 50K Standard Path combine costs $49 per month, and adding the $149 activation fee pushes the total to $198. For $95 each month, you can select Topstep's option without activation instead. To compare the full rankings, see our list of the best prop firms.

Most tests finish with a rule breach, so include the cost of at least 1 reset in your budget. Check the minimum payout thresholds and withdrawal charges before buying a funded account test.

• Topstep 50K: $49 a month, $149 activation, $198 altogether; target $3,000, split 90%, payouts start at $125. See our Topstep review.
• Lucid Trading 50K: minimum payout $500, split 90%, reset $120 ($292 with 1 reset), fee $172, no activation, and money arrives in up to 2 working days. Read our Lucid Trading review for details.
• Tradeify 50K options: you pay $145 for the Growth fee with no activation, $95 for a reset ($240 with 1 reset), and $492 for a Lightning Funded instant account, 90% split. Check our Tradeify review.
• Take Profit Trader 50K: $170 each month plus $130 for PRO activation, $300 in total, an 80% split, and at least 3 test days. Withdrawals of $250 or less carry a $50 fee.
• MyFundedFutures 50K sets the minimum payout at $500. Pro payouts happen every 14 calendar days, and its $209 Rapid fee requires neither activation nor renewals.
• At Apex Trader Funding 25K, you pay a $167 fee and have 30 calendar days to pass. The split is 100%, the minimum payout is $500, and you can receive no more than 6 payouts.
• FundedNext Stellar 2-Step costs $299 at $50,000, or $549 at $100,000. It offers an 80% starting share, requires at least 5 trading days, and sends payouts within 24 hours. Read our FundedNext review.