Features of trading in futures prop trading firms

The choice of a specific market or trading segment is often determined by trading experience. For example, forex traders often choose prop firms focused on the currency market. At the same time, there are more general solutions – futures prop trading firms, which provide access to funded accounts for trading futures contracts. These contracts are available across different asset categories and expand earning opportunities.

How working with futures prop trading firms helps a trader increase income

The main challenge faced by independent traders is the lack of sufficient trading capital. If we take a trading system with an average return of 12–15%, then with a deposit of just $1000, the profit in monetary terms would not exceed $150. Obviously, this is far from a result that could turn trading into a primary occupation. Because of this, many traders eventually become disillusioned with the idea of achieving financial freedom through market trading.

Why does this happen? In practice, trading is not that different from a regular job in many respects. Here are just a few examples:

• A trader devotes a significant amount of time to trading. The higher the return, the more time must be spent on market analysis and monitoring.
• There’s a need to trade at specific times, almost like following a schedule. This is due to the operating hours of trading platforms.
• Reading the news and tracking key releases. The more a trader is immersed in the current market context and news flow, the better they understand the outlook.

A trader faces a difficult question – should they quit trading due to small returns, or try to combine it with a full-time job? In practice, the second option often proves nearly impossible: efficiency drops, and the trader ends up abandoning trading anyway. The only real solution is additional funding. This brings us to the option of a funded trading program. It’s the best opportunity to gain access to capital without taking on personal risk or responsibility for the outcome.

Here, it’s worth briefly referring back to the past and explaining what is a prop trading desk. The idea of dividing capital into several portions and allocating them to different traders appeared a long time ago. But trading prop firms introduced a fundamental shift in the cooperation model – traders no longer simply received a salary for executing orders from a desk manager. Instead, they started trading independently. As a result, they were paid not a salary but a share of the profits.

Modern futures prop firms follow the same principle. They have capital and create hundreds of accounts for individual traders. The balances of these accounts usually exceed $6,000. On average, a funded account holds about $20,000. Now imagine you’re trading not with $1,000 of your own money, but with a funded account containing $15,000–20,000. Your potential income increases many times over, and you have the opportunity to continue scaling up the balance. Some accounts can even reach several million dollars. The account belongs to the futures trading prop firm, but you use these funds to trade and earn profits. That is how do funded accounts work. The number of such companies around the world is growing every year, and the industry is expanding rapidly.

How cooperation with futures prop trading firms is structured

These companies are interested in attracting traders to manage their capital. Traders generate profit, and a portion of that profit is taken by the proprietary trading firm. That is the way how do prop firms make money. They simply take up to 50% of a trader’s income. However, in most cases, the firm’s share does not exceed 20% – everything depends on the terms of cooperation with the prop firm futures. A few important points are worth noting:

• Cooperation is based on a formal agreement.
• The agreement clearly states that the trader is not liable for any losses.
• All terms of cooperation and additional conditions are known in advance – there are no surprises.

This means that a trader in prop firm trading futures is fully protected from a legal standpoint. They know the exact working conditions beforehand and understand that they won’t be held financially responsible for any losses. If the trader violates the terms, the account is simply canceled – without any financial consequences for the trader.

The challenge in futures prop trading firms: what it’s for and how it works

One of the most important aspects of the cooperation process is trader selection. To gain access to a funded account, you need to prove to the company that you’re capable of generating profits. That’s what the prop firms challenge is for. In simple terms, it’s a specific trading task with set parameters that must be completed on a special prop firm demo account. What are the typical conditions of the challenge? Here are the main points:

• A final trading result during the test period of around 7–11%. This proves that your trading is profitable.
• Drawdown limits – both daily and overall. These limits may be around 5% per day and up to 13% for the full period.
• Consistent trading, confirmed by a smooth growth in profit over a required number of trading days.

Any trader can participate in the challenge. It’s important to note, however, that you must pay to prove your skills. You can’t just buy funded account in futures prop trading – everything works through a challenge and a demonstration of your trading ability. This is true for forex proprietary trading firms, prop firms for futures trading, and even crypto funded account opportunities – they all require a challenge first. If you successfully meet the challenge requirements, the company will offer you a contract, and you’ll begin trading on a funded account.

The only exception is a specific category of challenges in an instant funding prop firm. But these aren’t very beneficial at the initial stage – they mostly serve as a way to get familiar with proprietary trading and to learn firsthand what is a funded account and how prop trading works in practice.

Why is participation in a challenge paid?

To understand the paid nature of challenges, you need to look at the situation from the company’s perspective. What is a prop firm? It’s an investor who invests in individual traders. The investor wants to allocate capital to someone confident in their skills and capable of generating profit for the firm. An uncertain trader won’t spend money to buy a challenge. This approach has proven highly effective. Challenges are purchased by those who are confident they can pass and receive a funded account in a prop firm for futures trading. The challenge can cost anywhere from $21 to $2,000. Its price mostly depends on the amount the trader expects to manage. The larger the funded account balance, the more expensive the challenge.

Scaling capital in futures prop trading firms

The initial funded account balance is just a starting point. Starting with $35,000, a trader can gradually grow their account up to a million. This process is called scaling. Just like with the challenge, the company sets certain conditions that, once met, will result in account scaling. Typically, the increase is between 30% and 60%, allowing a trader’s deposit to grow relatively quickly in futures prop trading firms. The scaling factor can vary depending on the forex prop firms themselves and the type of challenge selected within a specific company. The top 5 prop firms usually increase the account every 1–2 months by 40–50% when a 10–15% profit milestone is achieved.

Are there hidden trading restrictions in futures prop trading firms?

Traders often face restrictions not explicitly mentioned in the challenge conditions. These should be looked for in the general rules, typically provided in separate sections on the website. One of the most common restrictions is a ban on using EA for prop trading. This is often seen even in the best futures prop trading firms. Another common rule is time limits for each trade. One company may require closing all positions before the trading session ends, while another may ban scalping.

What conditions do futures prop trading firms offer?

When it comes to trading futures contracts, the conditions are often similar to those offered by the best forex funded account providers. This includes high leverage, a convenient platform, and even the list of available assets. An exception can be found in UK prop shop stock trading – in this case, the list of instruments is significantly broader than the standard CFD list. As for cooperation with the firm, here are the main conditions to consider:

• Size of the deposit after passing the challenge
• Percentage of profit that goes to the company
• Frequency and conditions for withdrawing funds

Note that the best prop firms for futures trading may implement IP address restrictions. If your IP address has been associated with one region for a long time and then changes, the company might ask for clarification. This is standard practice and not something to worry about. Simply explain the situation to the support team, and the issue will be resolved.

Can trading parameters be made more favorable?

Each year, the basic conditions of challenges across various firms become more and more similar. However, companies try to stand out by offering their own improvements, called Add-ons. What can be improved with these add-ons? For example, making it easier to pass the challenge. A best futures trading prop firm may increase the loss limit by 2–3% right away. This is a significant change that can play a decisive role. Read the descriptions on company websites and enhance your challenge with whatever seems convenient and beneficial. Add-ons are offered for an additional fee.

Advantages of trading in futures prop trading firms

Futures trading is most often focused on short-term trades. The corresponding trading parameters are usually described in the company’s terms. Scalping and intraday trading allow traders to earn more than with other strategies. In proprietary trading, a trader’s results can grow significantly, which is why futures contracts are so popular in this trading niche.

Disadvantages of trading in futures prop trading firms

A high number of trades can scatter a trader’s attention. This may result in miscalculating risk and potentially losing the account due to exceeding the drawdown limit. The drawdown conditions from the challenge remain unchanged after switching to a funded account, and it’s crucial to remember this. To avoid losing the account, traders must monitor the loss percentage during the trading day. If it’s nearing the threshold, it’s best to pause trading until the next day.

What should you pay attention to when choosing futures prop trading firms?

Choosing the right firm can be quite challenging. Today, there are hundreds of prop trading firms, and not all of the top ones will necessarily meet your personal criteria. A simple algorithm can help: evaluate the parameters that matter most to you and create a checklist. Usually, traders prioritize the challenge cost or the cost per $1,000 on a funded account. Next, determine the best balance between required profit and drawdown limits in the challenge, and check the availability of Add-ons. You can enter all these parameters in our ranking system, which will reduce your list of suitable prop firms to just a few options in a couple of clicks. The next step is to study each of those firms’ conditions. After that, you’ll be able to make an informed decision and choose the best option.