This introductory section covers definition and illustrative examples of terminology commonly used by futures trading prop firms. It is recommended that you go through the entire section to be able to understand the rules, restrictions and other details set by individual prop firms to choose the right firm for your success.

Prop Firm Terminology - "THE BASICS"

Simulated environment (Sim)

One unique feature in futures prop firms is that traders are tested in a simulated environment (orders not sent to exchange, but trading happens with live market data with no delays) at the evaluation stage. After passing evaluation, some firms keep traders in sim and allow them to receive payouts while others move you to a live account immediately. The common goal in the evaluation stage, regardless of the prop firm, is for the trader to reach the respective profit target for the account without breaking any of the rules set by the prop firm.

Cost Factor

There are 4 types of cost to consider before choosing a prop firm:

1. Evaluation fee

2. Activation fee

3. Market data fee

4. Trading platform fee

Attn: Before you sign up for the first time with any prop firm make sure you are a citizen / resident of a country which is not in the prop firms prohibited list. Click here to access the list of Prohibited Countries for different prop firms. Traders can also find this information on the respective prop firm website.

Most firms offer some type of discount for the evaluation but activation fee is usually fixed. Firms which move you to live account expect you to pay a fee for market data.

TIP: If you are on a tight budget, pass the evaluation at a slower pace (take the whole month), for example by making profits with just trading 1-2 micros at a time, to lengthen the time between expenses while you develop your trading strategies.

Nevertheless, there are much more important factors such as the drawdown amount, type of drawdown, daily loss limit and payout restrictions than the cost of evaluation. If you are a new trader, do not worry too much about scaling and stick to trading only 1 micro (longer duration) or 1 mini (shorter duration) at a time. Once funded, you may want to use the same strategy that you used in evaluation and build the account slowly. As funded accounts cost 5x the cost of evaluation accounts, you need to exercise more caution to avoid blowing up the account. Another word of caution in a funded account is not to rush to payout requests and lower your drawdown. Nevertheless do take payouts, but in smaller amounts while leaving some to increase your account balance. As you build confidence with more winning days and a greater balance cushion, you could slowly begin to scale up by adding more contracts to your trade.

Most firms offer free trading platform license. If traders prefer additional trading platforms or features, they will have to pay additional fee for these. It is not uncommon for seasoned traders to opt for features like level 2 data at an additional cost. However, platforms like Ninja Trader, Tradovate, and Quantower are sufficient for novice traders.

Drawdown

Prop firm trading options differ mainly in how much loss you are allowed (drawdown) before you reach your profit target. Drawdowns move up as your P&L (Profit & Loss) increases (trailing). Drawdowns are calculated differently based on the type. Consider the following examples:

• Opening Account Balance: 100,000

• Drawdown amount: 3,000

• Drawdown balance: 97,000 (100,000 - 3,000)

Note: The account balance should never drop below the drawdown balance intraday irrespective of the type of drawdown calculation.

Remember, the commission costs are taken into consideration for drawdown and daily loss limit calculation.

End of day trailing drawdown (EOD): As the balance increases the drawdown balance moves up (trails). If a trader makes 1,000 and closes the day, the drawdown balance moves to 98,000 (101,000-3000), before the start of the next trading session. On the next day if the trader loses 500 (account balance is now 100,500), and closes the day, the drawdown balance remains the same, but the drawdown limit is reduced to 2500 (100,500-98,000).

In funded accounts the trailing stops and the drawdown becomes static when the trader accumulates profits equal to drawdown (3,000). The account balance would be 103,000 and the drawdown balance is fixed at 100,000 (e.g. Bulenox). Some firms freeze the drawdown balance after they accumulate profits of $100 plus the drawdown amount (e.g. Apex). Some firms freeze the drawdown balance in evaluation too (e.g. Tradeday).

Live trailing drawdown: The drawdown is calculated live which includes realized and unrealized P&L (profit and loss). For example in a 100,000 account, the drawdown balance starts at 97,000. After you enter a trade, and when it is working in your favor with an unrealized profit of 1000, the account balance increases to 101,000 and so does the drawdown balance to 98,000 (101,000-3000). And you as you are waiting longer based on your bias, if the market drops and your P&L is now 500 then account balance is 100,500 but your drawdown is still the same at 98,000. If you decide to close the trade at that point, your drawdown amount reduces to 2,500 (100,500 - 98,000). The disadvantage with this type of drawdown is that you are forced to close the trade earlier than you anticipated, and you will be tempted to enter into more trades to meet yout profit goal for the day.

Intraday Drawdown based on Realized Trades (e.g. Funded Futures Network): If you close a trade with $800 in profits the account balance moves to 100,800 and the drawdown balance would become 97,800 (100800-3000). However, if you close the next trade with -$600 in losses then the account balance would become 100,200 but the drawdown balance would stay the same (97,800) because the drawdown balance moves only up and not down. But your drawdown is reduced to 2,400 (100,200 -97,800). The advantage of this type of drawdown over live trailing drawdown is that you can hold your trades longer and reach your intended profit target.

Daily loss limit

Apart from drawdown, some firms like Uprofit have a daily loss limit especially if they use EOD drawdown. This means that if your loss is equal to or greater than the daily loss limit, your session or account will be closed. Other firms like BluSky use a daily loss limit even if they employ live trailing drawdown. Most firms have a daily loss limit in both evaluation and funded accounts while some only have it in evaluation. For a 100,000 account, it is usually around 2,000.

Daily loss with trading shut down for the day: If you have an account with a 3,000 drawdown with a daily loss limit of 2,000 and your loss hits 2,000 intraday, the positions will be closed and you will not be able to trade for that day (e.g. Topstep). You can resume trading the next day, however, remember your drawdown will only be 1,000.

Daily loss with account closure: if you hit your daily loss limit, the account will be closed (e.g. Uprofit) and you will have to start a new evaluation. With these types of accounts, the daily loss limit is an important factor to consider when choosing the right firm and account than the actual bigger drawdown amount.

Closing Orders and Positions

All times are quoted in Eastern Standard Time (EST, New York)

Futures trading for popular products opens at 6pm Sunday and closes for the weekend at 5pm. On weekdays the market closes at 5pm and reopens again at 6pm.

Almost all firms allow you to open a position right at the open, which is at 6 pm. When it comes to becoming flat, each firm has their own rule. Examples of times listed are listed below:

• 4.10 pm - Topstep, Uprofit

• 4.50 pm - Tradeday

• 4.59 pm - Apex, Bulenox

Although some firms liquidate your positions automatically at their specified closing time, it is a good practice to close all trades a couple of minutes before that. You might lose your evaluation or funded account if you fail to do that. Specific information for each firm is under the section Market Close & News

Maximum Number of Contracts

The maximum number of contracts you can have open at any given time varies between account sizes and firms. Although some firms program the platform in such a way that any contract added to the maximum open positions is automatically rejected, it is a good idea not try to add more than the allowed contracts in the first place.

Also, some firms decrease (scaling) the number of contracts in the funded account compared to the evaluation account of the same size. So it would be wiser to pass the evaluation with the maximum number of contracts allowed in the funded account for a smooth transition to the funded account. On the other hand, few firms have scaling in evaluation too (e.g. FFN).

Not adhering to the maximum contract limit or scaling rule can lead to account closure.

Scaling rule while being funded

Some firms decrease the maximum number of contracts you can open per trade. The number of maximum contracts will increase/decrease with accumulated profits increase/decrease. Accumulated profit decreases can happen due to a loss or a payout which will affect the number of contracts you are allowed to trade.

For example the firm may specify, on a 100k account if your profit is between $2,001 and $3000, you can trade up to 5 contracts and if it is less than $1,500, you can trade only 3 contracts maximum.

Some firms let you scale up i.e. trade more contracts equivalent to the accumulated profits.

Choosing the right Futures Contract Expiry (Roll over)

Futures contracts have a quarterly expiry date. The expiry months are represented by an alphabet next to the instrument name (H-March, M-June, U-September, Z-December). For example, ESH24, expires on March (H) 2024. Firms expect you to be aware of trading the right Futures Contract, one with the highest volume and open interest (most liquid). Traders will need to rollover, i.e. sell the front month contract they were holding and buy a similar contract with a longer expiry. However, this wouldn't apply to prop firm trading as traders are required to close positions every day. One way of doing this is by adding both, the contracts expiring at the end of the month and, the contracts expiring further out to your watchlist in the trading platform to avoid trading less liquid contracts.

Not adhering to this rollover rule could lead to account closure.

News Trading Policy

News trading is defined as trading during news (which impact prices) release. It is better to be aware of this rule than to be sorry. Some firms send you notifications of upcoming news releases to alert you ahead of time while some expect you to know this on your own. If the firm does not post the news release dates and times, then it is better to look into sites like forexfactory, financial juice, etc.

Some firms let you trade during evaluation, but not in funded; others never want you to trade during evaluation or when being funded.

Some let you trade news if your regular trading time falls in the time of the news release, but they do not want to see a pattern where you only trade during these release times.

Firms have a cut-off time as to when to trade around major news release time. The usual cut off time is 1 to 2 minutes before and after release time.

Although you can make quick profits during news release, it is very risky as it can blow your account in one trade.

Not adhering to this rule will lead to account closure. Specific information for each firm is under the section Market Close & News

Consistency

Be aware of what the firm expects of you when they mean being a consistent trader. Consistency is usually quantified as a set percentage of your accumulated profit or target. For example, a 30% consistency means that your best (profit) day should not exceed 30% of the profits accumulated (or the profits target).

Some firms expect consistency during evaluation, funded, or both stages.

Some expect the trading days to be x% of the best day.

Not following this rule does not lead to closure of the account, but rather the trading day where consistency was not met will not be counted to pass an evaluation or to take a payout. In other words, you will have to trade for more days. Being mindful saves your time.

Rules get harder in the funded than in evaluation

The ultimate goal of any trader is to make money by trading. Firms are strict about how you trade and achieve that. Some firms are strict about certain things while other firms may focus on a different set of parameters. Being mindful of policies across different firms is key to receiving payouts, even if firms suddenly add more rules to match industry standards. The lists prepared for each prop firm on this website are not all inclusive. I have gathered this info by delving into FAQs, terms and conditions, official discord posts, etc. of each prop firm. Also, some wording pertaining to policies can be ambiguous which can make traders interpret them incorrectly. If you are not sure what they mean, it is better not to do it or clarify the matter with support. A few examples are listed below:

• Number of trades - some don't want you to trade more

• Trading less than __ seconds. It can be 10 seconds, 1 minute etc.

• Tight bracket orders, trying to capture a few ticks

• Using automated trading systems (bots) either fully or semi.

• Adding positions to a losing trade.

• Taking maximum position size, gambling practices

• Hedging, short in micro and long in mini; or long in NQ and short in RTY.

• Being inconsistent with regards to the number of trades, position size, trading times, etc.

• Not using stop loss

• Using bidirectional strategies

• Copy trading

• Using VPS / VPN, or misleading IP address

• Trading in concert with individuals or a group

• Multiple limit orders at the same price

• Scalping

• Being reckless, erratic

Payout conditions to be met

These are conditions set by the firms that have to be met before a trader can request a payout in the funded account. Some firms are very restrictive while some are less, especially in the early months after being funded. Some general expectations are as follow:

• Having traded set number of days in a similar manner

• Being consistent. Best day cannot be more than a set percentage of total profits. Some require any day to be x % of best day.

• Win set amount of profits in a given day

• Accumulate profits equivalent to the drawdown amount and then request a payout

• Some firms have specific days or periods when you can request a payout while others let you request a payout any day.

• Firms may also have a cut-off time for payout request within a given day.

• Some let you take only x% of profits in the initial days / months of trading.

• Most firms have a minimum amount you can request

Payouts

Some firms approve your request and send money over in a couple of hours, while others take time and send a payout after a certain number of days (or period). You have to pick a firm which aligns with your trading style, payout frequency preference and payout methods preference. Some firms send payouts only once a month. Before choosing a firm, ask yourself if this would be okay for you?

Having said that, drawdown should be a key factor in your choice of firm to get funded and take a payout. Although cost of evaluation and activation (and market data fee) are important factors, sometimes these expenses are dwarfed when you take regular payouts (provided your firm allows frequent payouts).

Payouts are made through wire transfer, ACH, Zelle, Wise, Riseworks, Paypal, cryptocurrencies, etc. The methods available vary across firms.

About Me

I became interested in funded futures firms due to the fact that they offer the potential for retail traders to make decent money in the comfort of their home without having to pitch-in any capital. With so many firms offering great choices for retail traders, I wanted to provide a summary of these firms in one site. I have included key points from each firm that a trader needs to comprehend at every stage of their trading journey based on my positive and negative experiences. Secondly, my experiences with futures trades have taught me to always avail discounts whenever they are being offered by prop firms. Such deals not only save you a lot of money but help you offset the cost of account blow-ups.