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If you’ve ever wondered what a prop firm is, you are not alone. The world of proprietary trading can seem confusing at first, especially for beginner traders, but it can be way less confusing once you understand the basics. Let’s break down what prop firms are, how they operate, and why they could be a great opportunity for traders.
*A proprietary trading firm (commonly called a prop firm) provides traders with access to its own capital for trading, sharing profits based on performance.
Instead of risking your life savings for your trading goals, prop firms let you purchase an evaluation where you can prove your skills and focus on performance. When you win, prop firms like Topstep will allow you to keep up to 90% of the profits. On the other hand, if things don’t go your way, your downside is limited to your initial fees. You’ll never be on the hook for more than you put in. You bring the skill. They bring the capital.
For beginners, a prop firm can be one of the best ways to build real trading experience and grow potential profits without needing a large personal bankroll. But it’s not just about funding. The right prop firm helps you build discipline, manage risk, and trade within a structured environment. For example, Topstep has built a system and community that supports those habits at every step. We’ll break that down in another article.
Traders used to have to risk their life savings to learn to trade. By trading at a prop firm, you can build the habits and discipline needed to be successful in the markets without going “all-in.” You can experience the emotions of winning and losing BEFORE putting your hard-earned money at risk. The risk is limited, but the profits are not.
A futures prop firm specializes in trading futures contracts. Futures are standardized agreements to buy or sell something (like oil, gold, etc.) at a set price on a specific date in the future That might sound complicated, but Futures trade a lot like stocks, except you can trade them nearly 24 hours a day and you can make money whether the market goes up or down.
Here’s how it works, with Topstep as your first and best example:
Step 1: The Evaluation (Topstep’s Trading Combine®)
This first step is known as a prop firm evaluation, where you prove your skill in a simulated environment. At Topstep, this happens in the Trading Combine®, a real-time, simulated evaluation built to test your trading skills, not your luck.
The rules are clear: hit the profit target, stay within your maximum loss limits, and show consistency. If you break a rule, you can reset and try again.
Step 2: Earn a Funded Account
Pass the Trading Combine and become a funded trader through Topstep’s Express Funded Account.
The Express Funded Account (XFA) is a Funded Evaluation. You can manage up to five Express Funded Accounts at once, and the rules are the same; steer clear of the Maximum Loss Limit, but now the profits are real. Yeah, you read that right: simulated trading, with real profits.
Step 3: Take Your Payouts
Once you earn a funded trading account, you can start requesting payouts after just five winning days of $200 or more. Topstep processes payouts quickly, usually in as little as 1-3 business days. The program is straightforward: you show them you can trade, you earn, you get paid.
Step 4: Keep Going, Keep Growing
The journey doesn’t end there. At Topstep, the goal isn’t just to get you funded; it’s to help you become the kind of funded trader who can (and will) stay funded, take consistent payouts, and keep leveling up. Stick to what got you there, and show you’re ready for a Live Funded Account, and our Risk Team will call you up. (Or after five payouts, we’ll call you up to the Big Leagues)
Step 5: Thrive in Live
It’s not called the Big Leagues for nothing. These traders are proven to be the best, and Topstep backs them with up to $150,000 in real money. You’re trading in real markets, no profit targets, the sky is the limit, and you keep 90% of the profits. And if that’s not enough, Topstep allows Traders to earn over $250,000 in performance bonuses just for… performing.
BECOME A TOPSTEP TRADER
If you are looking to build real trading experience with structure, support, and resources to help you sharpen your skills, a prop firm might be right up your alley.
But not all prop firms are built the same.
If you’re looking for the best prop firm for Futures, Topstep delivers. You’ll have access to TopstepX, the #1 Futures Trading Platform built by traders, for traders. TopstepTV makes sure you’re never trading alone and you’ve got good company while you’re at it. There’s a help center with details on top of details if you ever have a question, and there are real people on the Support Team that you can call if you can’t find an answer.
If you’re ready to really make progress in your trading journey, Topstep is where you want to be.
Traders keep 100% of their profits up to $10,000 in withdrawals. After reaching that threshold, the split becomes 90/10 (90% to trader, 10% to Topstep)
Topstep evaluates traders through a simulated program called the Trading Combine®, where participants must meet profit targets, stay within loss limits, and show consistent performance. No real money is at risk during this phase—only the evaluation fee. If successful, traders earn a funded account and can keep up to 90% of their profits, all while trading real markets with Topstep’s capital.
Yes, prop firms can be legitimate. Reputable prop firms like Topstep are well-established and operate transparently, offering real opportunities for skilled traders to access capital and earn profits without risking their own savings.
