-- Originally posted on: https://www.maxoptionstrading.com/blog/top-50-questions-beginners-ask-about-futures-prop-firm-trading
Proprietary (prop) firm trading allows traders to access large amounts of capital by passing an evaluation. Below are the 50 most common questions beginners ask, categorized for clarity.
Section 1: The Basics
1. What is a futures prop firm? A company that provides traders with access to their capital to trade futures contracts. In exchange, the firm takes a percentage of the profits.
2. How do I get started? Choose a firm, select an account size, pay the evaluation fee, and meet the profit target without hitting the drawdown limit. This prop firm screener tool can help you pick one.
3. Is it a scam? Reputable firms (e.g., Apex, MyFundedFutures, Topstep) are legitimate. Always research reviews and payout proof before joining.
4. Can I trade with my own broker? Usually no. Most firms require you to use their specific platforms or licenses (like Rithmic or Tradovate).
5. Do I need to be a professional? No, these firms are designed for retail traders. However, you must follow their specific rules.
Section 2: Evaluations & Rules
6. What is an evaluation? A "demo" period where you must prove your skills by reaching a profit target while staying within risk parameters.
7. How long does the evaluation last? Most firms have a minimum number of trading days (often 1–10 days) but no maximum time limit.
8. What is "Drawdown"? The maximum amount your account can lose before it is failed.
9. What is Trailing Drawdown? A drawdown that moves up as your account balance increases. This is the most difficult rule for beginners to manage.
10. What is End-of-Day (EOD) Drawdown? A fairer version of drawdown that only updates at the close of the market day, ignoring intra-day peaks.
11. Can I have multiple accounts? Yes, most firms allow you to trade multiple accounts simultaneously using a trade copier.
12. What happens if I fail? You lose the evaluation fee. You can usually "reset" the account for an additional fee or wait for the next billing cycle.
13. What are "Consistency Rules"? Rules preventing you from making all your profit in a single "lucky" trade. Typically, no single day can account for more than 30–40% of your total profit.
14. Can I trade during news? It depends. Some firms allow it; others strictly forbid trading 2 minutes before and after high-impact news.
15. Can I hold positions overnight? Most firms require all positions to be closed by 4:59 PM EST. Holding overnight usually results in an immediate fail.
Section 3: Platforms & Technology
16. Which platforms are used? Tradovate, NinjaTrader, and Quantower are the most common.
17. What is Rithmic? A data feed provider that connects your platform to the exchange.
18. Do I need to pay for data? During evaluations, data is usually included. For "funded" accounts, there is often a monthly data fee ($80–$120).
19. Can I trade on my phone? Yes, if the firm supports Tradovate or mobile-friendly web platforms.
20. What is a Trade Copier? Software that replicates trades from one "master" account across multiple "slave" accounts.
Section 4: Funded (PA/XFA) Accounts
21. What happens after I pass? You move to a "Performance Account" (PA) or "Funded" account. You may have to pay a one-time activation fee.
22. Am I trading live capital? Usually not at first. Most firms use "simulated live" environments. If you are consistently profitable, they may move you to a live brokerage.
23. Is there still a drawdown in funded accounts? Yes. If you hit the drawdown limit in a funded account, the account is closed.
24. Can I lose more than I invested? No. Your liability is limited to the fees you paid the firm.
25. Do I get a certificate? Many firms provide digital certificates upon passing the evaluation.
Section 5: Payouts & Profit Sharing
26. How do payouts work? You request a withdrawal through the firm’s portal. Payouts are usually processed via Deel, Wise, or Crypto.
27. What is the profit split? Most firms offer an 80/20 or 90/10 split, where the trader keeps the majority. Some offer 100% of the first $10k–$25k.
28. How often can I withdraw? Usually once or twice a month, provided you meet the "minimum trading days" requirement between withdrawals.
29. Is there a minimum withdrawal? Yes, often $500 or $1,000 depending on account size.
30. What is a "Buffer Zone"? The amount of profit you must keep in the account to cover the drawdown before you can withdraw.
31. How are taxes handled? Traders are typically treated as Independent Contractors (1099 in the US). You are responsible for your own taxes.
32. Why was my payout denied? Usually due to a rule violation, such as failing the consistency test or trading during restricted news.
Section 6: Strategy & Risk
33. What is the best instrument to trade? NQ (Nasdaq) and ES (S&P 500) are the most popular due to liquidity.
34. Can I use EAs or Bots? Some firms allow them; others strictly forbid automated trading. Always check the Terms of Service.
35. What is "Scaling"? Increasing your position size as your account balance grows.
36. How many contracts should I trade? Beginners should start with Micros (MES/MNQ) to manage risk effectively.
37. What is the "Flipping" or "Gambling" rule? Firms discourage entering and exiting trades instantly just to clock a "trading day."
38. Can I hedge? Generally, no. Most prop firms do not allow simultaneous long and short positions on the same instrument.
39. What is a "Reset"? A fee-based service to restore a failed evaluation account to its starting balance.
40. Why do people fail? Lack of discipline, over-leveraging, and being "caught" by the trailing drawdown.
Section 7: Advanced & Miscellaneous
41. What is the "Daily Loss Limit"? An optional or mandatory setting that locks your account for the day if you lose a certain amount.
42. Are there hidden fees? Always check for activation fees, monthly data fees, and platform fees.
43. Can I trade from anywhere? Yes, as long as you aren't in a restricted country (often including North Korea, Iran, or Russia).
44. What is a "Static Drawdown"? A drawdown that stays at a fixed number (e.g., $1,000 below starting balance) and never moves up.
45. Can I change my account size? No. Once purchased, you must pass that specific size. To change, you must buy a new evaluation.
46. How do I contact support? Most firms use Discord or a help-desk ticket system.
47. Is there a holiday schedule? Yes. Prop firms follow the CME (Chicago Mercantile Exchange) holiday hours.
48. Can I trade multiple firms at once? Yes, many traders use one copier to trade across 2 or 3 different firms.
49. What is the "First Payout" rule? Often the hardest to reach, as firms may require 40 individual trading days before the first withdrawal.
50. What is the best piece of advice? Treat the evaluation like a real business. Don't rush; the market will be there tomorrow. Learn a strategy and stick to it.
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