How to Become a Prop Trader

Welcome to this straightforward guide on how to become a prop trader. Proprietary trading offers the chance to access large capital, earn from performance, and scale your trading career without risking your own funds. But to get started, you need to understand how prop firms work, how the challenge model functions, and what’s expected from you as a trader.

Let’s break down everything you need to know — from how prop traders make money to the role of education in your success.

What Is a Prop Firm?

A prop firm (short for proprietary trading firm) is a financial company that allows individual traders to trade using the firm’s capital. Instead of investing their own money, traders pass an evaluation phase to prove they can trade profitably within strict risk parameters.

Once funded, they receive a share of the profits they generate. Prop firms benefit by allocating capital to skilled traders without hiring them full-time. The model is performance-based, scalable, and built around risk control. This is how firms like PROP365 operate.

How Do Prop Traders Make Money?

Prop traders make money by passing evaluations and trading funded accounts under set risk guidelines. After a profitable period, they receive weekly or bi-weekly payouts.

Prop traders make money by:

• Passing the firm’s challenge (e.g., hitting a profit target within risk limits)
• Receiving a funded account
• Trading profitably while sticking to rules
• Getting regular payouts (weekly or monthly)

For example, at PROP365:

• A trader passes a challenge with a 10% profit target and a 5% daily loss limit
• They get funded with up to $200,000
• They earn 80% of profits on every payout

So if you earn $5,000 in a month on a funded account, you keep $4,000, and the firm gets $1,000.

Challenges and Risks

The challenge phase is where most traders fail. Here’s why:

• Overtrading – Pushing too hard to hit the target.
• Lack of discipline – Ignoring risk rules.
• Poor strategy – Using inconsistent or untested methods.

Prop trading isn’t just about making money—it’s about managing risk under pressure. Traders need emotional control, a defined plan, and strict execution to succeed.

Profit Sharing Plans

Once funded, traders earn a percentage of the profits. Common profit splits include:

• 70/30 (trader/firm)
• 80/20
• 90/10 (for high performers)

Firms may increase the split over time or offer bonuses based on consistency. Some also provide faster payouts or allow for scaling up to $1 million+ in capital.

Membership Fees

To access a prop firm’s challenge, traders typically pay a one-time evaluation fee. These vary by account size. Most reputable firms, like PROP365, refund the fee once the trader becomes funded and reaches their first payout milestone.

Education: Why It Matters

Succeeding in prop trading takes more than just luck or experience. Education makes the difference.

PROP365 offers a structured video online trading academy that helps traders sharpen their skills before and during the challenge. The academy covers:

• Platform walkthroughs (e.g., TradeLocker, MT4/MT5)
• Risk management strategies
• Trading psychology
• Technical analysis basics
• Challenge preparation tips

By studying these lessons, traders increase their chance of passing on the first try. It also builds habits that lead to long-term success, not just one-time payouts.

Final Thoughts

If you’re ready to trade seriously and want to grow without using personal capital, learning how to become a prop trader is a smart step. The model rewards discipline, risk control, and results — not how much you can invest upfront.

Choose a prop firm that provides clear rules, fair payouts, and strong educational resources. Whether you’re just starting or refining your strategy, a platform like PROP365 can help support your growth with both capital and training.