If you've been trading futures — or even just researching it — you've probably come across the term prop firm. But what exactly is a futures proprietary trading firm, and why are thousands of traders using them?
The Basic Idea
A futures prop firm (proprietary trading firm) provides traders with funded trading accounts in exchange for passing an evaluation. Instead of risking your own capital in the CME futures markets, you trade the firm's money and keep a percentage of the profits.
Here's the typical flow:
- You pay for an evaluation — usually a monthly subscription or one-time fee
- You trade a simulated account — hitting a profit target while staying within drawdown rules
- You get funded — the firm gives you a funded account (simulated or live)
- You trade and withdraw profits — keeping 70% to 100% of what you earn
Why Traders Use Prop Firms
The main appeal is leverage without personal risk. A $100K funded futures account might cost you $150–300 to evaluate, compared to the $5,000+ margin you'd need in a personal brokerage account.
Other benefits include:
- No personal capital at risk — your maximum loss is the evaluation fee
- Larger position sizes — trade 10, 15, or even 20+ standard contracts
- Structure and discipline — drawdown rules force risk management habits
- Scalability — many firms allow multiple funded accounts simultaneously
What to Look For
Not all prop firms are created equal. Here are the key differences that matter:
Drawdown Type
This is arguably the most important rule. Prop firms use different drawdown types that determine how much you can lose before breaching your account:
- EOD Trailing — the most common type. Your drawdown floor trails up at end of day
- Intraday Trailing — trails in real-time as your balance increases (stricter)
- Static — a fixed dollar floor that never moves (most lenient)
Some firms offer trailing drawdown that locks at your initial balance once you reach your profit target, effectively becoming static. This is a significant advantage.
Profit Split
How much of your funded profits do you actually keep? Splits range from 70/30 to 100/0 (you keep everything). Many firms offer tiered splits that increase as you withdraw more — for example, 80% up to $10K in lifetime payouts, then 90% after.
Trading Restrictions
Some firms prohibit automation, news trading, or holding positions overnight. If you use trading bots or trade around economic events, check these rules carefully.
Total Cost
The evaluation fee is just the start. Factor in activation fees, monthly platform fees, data fees, and reset costs. The true cost to get funded can be 2-3x the sticker price.
Getting Started
Ready to compare your options? FirmBase tracks the complete rulesets of every major futures prop firm in one place — browse all firms or use the comparison tool to see them side-by-side.
If you're unsure which firm fits your trading style, try the firm quiz for a personalized recommendation.