How to Choose a Prop Firm
A practical checklist to match a firm’s rulebook and trading conditions with your strategy, time zone and payout needs.
Rulebook fit
- Daily loss and max drawdown (static vs. trailing) vs. your risk model.
- Min trading days and news restrictions vs. your schedule.
- EA/copy/hedge policies if applicable to your approach.
Trading conditions
- Spreads/commissions, slippage, and data quality.
- Allowed instruments and platforms (MT, cTrader, TV, NinjaTrader).
- Session hours and liquidity for your markets.
Payouts & scaling
- Payout frequency, methods, minimums and processing times.
- Scaling milestones and split improvements.
- Refund policy on passing (if offered).
Trust & transparency
- Clarity of ToS, change logs, and communication.
- Community feedback with context, not just star ratings.
- Support responsiveness and dispute handling.
Quick checklist
- Rules match my plan and time zone.
- Costs acceptable for my strategy’s edge.
- Payout method I can use; transparent timing.
- Scaling supports my growth pace.
Decision matrix (scoring rubric)
Score each firm 1–5 for the criteria below, then sum to compare:
- Rules fit (daily loss, DD model, min days, news policy).
- Trading conditions (spreads/commissions, execution, platforms).
- Payouts (frequency, methods, minimums, processing time).
- Scaling path and profit split improvements.
- Transparency and support quality.
Cost-of-edge calculator (concept)
Net expectancy ≈ (WinRate × AvgR) − ((1 − WinRate) × 1R) − Costs. Include spreads/commissions, slippage, platform/data fees (especially futures), and evaluation fees amortized across attempts. Prefer firms where your strategy’s net expectancy remains positive under conservative assumptions.
Red flags
- Frequent silent rule changes or unclear ToS.
- Opaque payout communication or recurring delays.
- Extreme marketing claims, poor support responsiveness.
FAQ
Static vs. trailing drawdown — which is better?
Static DD is more forgiving for swing/hold; trailing DD suits tight, intraday risk control. Match to your style.
Do I need instant funding?
Usually not. It’s costlier and often stricter. Two-phase can be cheaper if you have patience and consistency.
How to verify payout reliability?
Check methods you can access, read recent user reports with specifics, and prefer firms with clear timelines.