For many traders, the biggest barrier to success isn’t skill… It’s capital.
Traditional trading requires a hefty investment, putting all those hard-earned personal savings at risk with no guarantee of returns. But what if you could trade with someone else’s money instead?
That’s exactly what prop trading firms offer. Instead of funding trades with your own money, you can access a firm’s capital—provided you can prove your skills through a prop firm challenge.
But before you jump into trading, it’s essential to understand how prop firms operate, from evaluations and funding models to risk management and payout structures.
This guide breaks it all down, so by the end, you’ll know exactly how prop trading works and why Falcon Funded is one of the best choices for traders looking to take their skills to the next level.
What Is a Proprietary Trading Firm?
A prop firm (or proprietary trading firm) funds traders with its own capital, allowing them to scale their trading activities without risking financial loss. In return, the firm takes a percentage share of the trader’s profits, which can vary across organizations.
In contrast to traditional trading, prop firms offer traders a set amount of money, risk rules, and structured payout plans. This opportunity is invaluable for beginners or those without ample funds who want to enter the trading market.
While this may sound too good to be true, reality shows that both prop firms and traders benefit from this mutual partnership. Skilled traders get a chance to secure higher profits, and firms receive a percentage of their success in return.
How to Get Started With a Prop Firm
Getting started with a prop firm is fairly simple, although it does require some preparation. We recommend starting with the following four steps to get the best possible outcome:
Choose the Right Prop Firm
Not all prop firms are born equal.
Some focus on forex trading, while others offer access to stocks, indices, or crypto. When selecting a firm, consider key factors such as profit splits, scaling opportunities, drawdown limits, and trading conditions.
Reliable prop firms like Falcon Funded usually offer traders clear risk parameters, flexible scaling options, and high-profit retention. While there is an evaluation process, it’s better to opt for an established firm to avoid scammy practices.
1. Understand the Evaluation Process
Most prop firms don’t freely distribute capital. If they did, they would be putting large amounts of capital at risk. Instead, traders are usually required to pass an evaluation to prove their profitability and risk management abilities.
Evaluations differ across firms, but they usually include a profit target, a maximum drawdown limit, a daily loss limit, and a set trading period.
2. Develop a Winning Strategy
To pass a prop firm evaluation with flying colors, you need a clearly defined strategy that balances profitability and risk control. We recommend proper risk management, adhering to a specific trading plan, and making consistent decisions instead of high-risk ones.
This is not the time to rely solely on intuition, given that many traders fail due to emotional trading and lack of discipline.
3. Manage Risk Like a Pro
Prop firms love traders who are great at managing risk, as this skill signifies that their capital will remain protected. Even after you’ve passed the initial evaluation, make sure to limit drawdowns by setting stop-losses, avoid revenge trading, and prioritize steady growth over gambling (prop firms don’t even want to hear that word).
4. Understand Payouts and Scaling Plans
Once you pass your evaluation and receive a funded account, you can start earning profits. Keep in mind that established prop firms like Falcon Funded tend to reward consistent traders with increasing capital limits, allowing them to grow without putting their personal finances at risk.
To succeed at this stage, ensure you clearly understand your chosen firm’s profit-sharing and scaling plan, and don’t hesitate to contact their support team for further clarification.
Prop Trading Mistakes to Avoid
Successful prop trading undoubtedly comes with experience. That said, we recommend keeping the following common pitfalls in mind to avoid being booted off the program before you’ve even started growing your capital:
- Underestimating risk rules
- Overtrading to hit targets quickly
- Ignoring the firm’s trading conditions
- Failing to adapt to changing market conditions
Final Thoughts
If you want to grow as a trader without risking personal capital, prop trading is a viable alternative. Instead of putting your own finances at risk, you gain access to a specific amount of your chosen firm’s funds, reducing some of the anxiety centered around the trading market.
That said, a successful partnership with a prop trading firm requires preparation, discipline, and an understanding of how the firm works.
Ready to get started on your trading journey? Falcon Funded provides traders with access to capital, allowing them to scale their trading careers without relying on those hard-earned savings to see you through.
With biweekly payouts and a transparent profit-sharing model, Falcon Funded means that successful scale traders keep more of their profits. Get started with Falcon Funded today to get the most out of your trades without putting your own money on the line.
