What is a prop firm? A proprietary trading firm, or prop firm, gives traders access to a trading account in exchange for following its rules. Traditional prop firms hired traders onto a desk to trade the firm’s own capital. The prop firms most retail traders meet today work differently: you pay for an evaluation, prove you can reach a profit target without breaking loss limits, and then trade a funded account where you keep a share of the profit.
This guide explains each stage, what is real and what is simulated, and how crypto-focused firms differ from forex firms. We use QATS figures as worked examples because we can source them exactly; every firm publishes its own numbers, and you should read them before you buy.
What is a prop firm? Traditional desks vs evaluation-based firms
The term comes from proprietary trading: a bank or trading company trading its own money rather than clients’ money. Classic prop desks recruit traders, train them, allocate capital and keep a large share of the profit. Getting a seat usually means interviews, a training period and often an office.
Evaluation-based prop firms, sometimes called funded-trader programs, opened the idea to anyone with an internet connection. Instead of an interview, you buy an evaluation, also called a challenge or combine. The written rules replace the hiring manager: if you reach the target while staying inside the drawdown limits, you qualify.
Stage 1: the prop firm evaluation (challenge)
An evaluation is a trading account with a fixed starting balance and a written set of rules. The common ingredients are a profit target, a daily loss limit, a maximum loss (drawdown) and a minimum number of trading days. Some firms add a consistency rule so that one lucky day cannot pass the account, and many evaluations have no time limit.
On a QATS Crypto evaluation those rules are a 10% profit target, a 4% daily loss limit, a 6% end-of-day trailing maximum loss that stops trailing at the starting balance, a 40% consistency rule and 2 minimum trading days. On a $10K account that means making $1,000 of net profit without losing $400 in a single day or falling through the maximum-loss floor. Some firms split the evaluation into two phases with lower targets; QATS evaluations are 1-step.
Stage 2: the funded account and its rules
Pass the evaluation and the firm opens a funded account, usually after you accept a funded-account agreement. The funded account has its own rules, often including a tighter daily limit, and a payout schedule that decides when you can request a share of profit. Breaking a rule on the funded account typically closes it, and you start again with a new evaluation.
At QATS, the server first confirms that every objective is met; you then accept the QATS Prop Terms and Funded Account Schedule to activate the funded account. It is a separate account with fresh counters, and evaluation profit does not carry over as withdrawable profit.
Stage 3: profit split and payouts
The profit split is the share of eligible profit you keep. Published splits commonly sit around 80% to 90%, but eligibility decides when you are actually paid: required winning days, a minimum request, the share of profit released per request and caps on early payouts. Identity verification before the first payout is common.
QATS publishes its payout terms on every plan card: 80% profit split, 5 winning days before a payout request and a $100 minimum request. Each request can release up to 50% of eligible profit, and your share is calculated on the released amount.
What is simulated and what is real
This is the part marketing pages often blur. At most evaluation-based prop firms the evaluation is a simulated account: orders are filled against real market prices, but no capital is placed on an exchange. Many firms run the funded stage in simulation too and pay traders a share of simulated profit as performance payouts.
At QATS, the evaluation and initial funded stages are simulated, and the account size is a program nominal rather than cash you can withdraw. Payouts are real payments made under the plan’s eligibility rules, identity verification and a finance review. Trading real capital on an exchange is a separate, selective step with its own approval and terms.
| Stage | What you do | What you pay or receive | Simulated? |
|---|---|---|---|
| Evaluation | Reach the target inside the risk rules | You pay the evaluation fee | Yes |
| Funded account | Trade under funded rules and build payout eligibility | An activation fee, if your plan has one | Yes, at the initial stage |
| Payout | Request a share of eligible profit | You receive a real payment | No |
| Live capital | Trade a real exchange account | Firm capital, after separate approval | No |
Crypto prop firms vs forex prop firms
Many well-known online prop firms grew up on forex platforms such as MetaTrader and offer crypto as CFDs, often with low leverage. Crypto-native firms model exchange perpetual futures instead: contracts with funding rates, 24/7 trading and prices from exchange order books.
QATS is in the second group, with 17 crypto perpetuals and 33 TradFi perpetuals simulated on Binance and Bybit market data, and crypto leverage up to 20× on BTC and ETH, 10× on large caps and 5× on other coins.
Is a prop firm right for you?
A prop evaluation suits traders who already have a process and want to trade a larger account than their savings allow, with the cost of failure capped at the fee. It is a poor substitute for learning the basics.
- You have a written strategy and a risk plan you already follow on a demo or small personal account.
- You accept that the evaluation fee is lost if you break a rule.
- You are comfortable trading inside hard daily and maximum loss limits.
- You read the full rules, terms and payout schedule before paying, not only the plan card.
- You test first: QATS offers a free sandbox with virtual funds and the same server-side risk checks.
Frequently asked questions
01Do prop firms give you real money?
Usually not at first. Most firms run evaluations and the initial funded stage in a simulated environment and pay a share of simulated profit as real performance payouts. Live capital, where a firm offers it, is a separate step with its own approval.
02How much does it cost to join a prop firm?
It depends on the firm, account size and billing model. A QATS Crypto evaluation is priced from $49 a month or $69 once, on the option with a $149 activation fee charged after you pass. The exact price, rules and payout terms are shown on each plan card before purchase.
03Are prop firms worth it?
They can be for traders with a tested process who want a larger account than their own savings allow, with losses capped at the fee. If you are still learning, start on a sandbox or demo account first.
04Is a prop firm the same as a broker?
No. A broker executes orders with money you deposit. A prop firm sells an evaluation, sets the rules and pays you a share of eligible profit on its account; you do not deposit trading capital.
Educational content, not investment advice. QATS evaluations and initial funded accounts are simulated; payouts depend on eligibility, verification and the applicable agreement.