Futures prop trading has become a popular path for new traders looking to grow their skills and access more buying power without risking large amounts of personal capital. But it’s not always what it seems. Behind the scenes, many of these accounts are simulated, come with strict rules, and don’t give you direct access to real firm capital.
This guide will break down how futures prop trading works, how much it costs, what rules you’ll face, and how it compares to trading with a live futures broker. If you’ve ever wondered whether a funded futures account is right for you, you’re in the right place.
Key Takeaways
- Futures prop trading uses simulated accounts, not real firm capital, with payouts based on rule‑compliant performance.
- Most traders fail prop challenges due to strict drawdown and risk rules rather than bad trading ideas.
- Prop trading can be useful for traders with limited capital who want structure and practice without risking real money.
- Live futures trading removes prop firm restrictions but puts full financial risk and reward on the trader.
What Is Futures Prop Trading?
Futures prop trading, short for proprietary trading, means trading with a firm’s capital instead of your own. In this model, traders go through a test or “challenge” to prove they can follow rules and stay profitable. If they pass, the firm gives them access to a funded account.
In most cases, this “funded” account is simulated. You are not trading with real money on a real exchange. Instead, you trade on a virtual platform with real market data. If you make profits without breaking any rules, the firm will pay you a portion of those profits.
Futures prop firms allow traders to speculate on futures contracts such as crude oil, stock index futures, gold, and more without needing real money to meet margin. But you don’t get a free ride. You must follow strict risk rules, hit profit targets, and often pay monthly fees to stay active.
How Futures Prop Trading Works
Here’s a breakdown of the typical flow:
- You pay a fee to enter a challenge
This could be a one-time fee or a monthly subscription, depending on the firm. - You trade in a simulated account
The firm gives you a demo account with a certain balance (like $50,000 or $100,000). Your goal is to hit the profit target without breaking any rules. - If you pass, you get a “funded” account
The firm gives you access to a new simulated account. This time, profits can be withdrawn if you follow their payout process. - You earn payouts based on simulated profits
Most firms pay out a percentage of profits (commonly 80% or 90%) after a holding period or after hitting a withdrawal threshold.
You’re not actually managing the firm’s real capital. The payouts are often funded from the fees collected from new traders. It’s a performance-based system.
Types of Prop Firm Challenges
Most futures prop firms use one of two evaluation types: 1-step or 2-step challenges.
1-Step Challenges
These are quicker and simpler. You get a simulated account and must hit a profit target (say $3,000) without violating rules like daily loss limits or trailing drawdowns.
Pros:
- Fast to complete
- Fewer steps and rules
Cons:
- Less room for error
- Can be more stressful
- Higher upfront cost
2-Step Challenges
These are more common with large firms. You must complete two phases:
- Step 1: Prove you can trade profitably while managing risk
- Step 2: Prove consistency, often with smaller lot sizes and more days traded
Pros:
- Shows stronger trading skills
- More realistic expectations
- Lower upfront cost
Cons:
- Takes longer to complete
- More chances to fail
Typical Evaluation Rules (Example)
| Account Size | Profit Target | Drawdown | Daily Loss Limit | Time Limit |
| $50,000 | $3,000 | $1,000 trailing | $1,100 | 30 trading days |
Key Rules in Futures Prop Trading
Prop firms are strict about their rules. Even one mistake can void your account.
Trailing Drawdown
Your max drawdown level moves up as your profits grow. If your account balance falls below this level, you fail.
Daily Loss Limit
You can only lose a set amount in one trading day. Hit that limit, and your account is terminated.
Scaling Rules
You may only be allowed to trade a limited number of contracts based on your profit or balance. For example, you can’t trade 10 contracts on day one.
Consistency Rules
Some firms require you to spread your profits across several days. Making all your gains in one day could lead to disqualification.
Other Common Rules
- No trading during major news events
- No copy trading or trade copying tools
- No holding trades past market close
These rules are in place to prevent risky behavior and protect the firm’s model.
Costs of Joining a Futures Prop Firm
Most prop firms charge an entry fee to take the evaluation. Here’s what you can expect:
One-Time Fees
You pay a fixed amount to take the challenge. If you pass, you move on. If you fail, you usually have to pay again.
- Small account (e.g., $25K): $100-$160
- Medium account (e.g., $50K): $250-$350
- Large account (e.g., $100K+): $400–$1,000+
Monthly Subscriptions
Some firms charge a monthly fee to maintain your funded account. Others bundle it into the upfront cost.
Reset Fees
If you break a rule or fail, you can often pay a reset fee to try again without starting from scratch.
Other Add-Ons
- Account extensions
- News trading access
- Faster payouts
These add up quickly. Know the full cost before joining.
Pros of Futures Prop Trading
Why do traders flock to prop firms? There are a few solid reasons.
- Relatively low upfront cost
You can trade a simulated $25K account for under $200. - Good practice environment
Prop firms teach you to follow rules, manage risk, and trade consistently. - No risk to real capital
You’re not risking your own money (except the entry fee). If you fail, you lose the fee instead of your trading capital. - Potential payout structure
If you’re consistent and follow all rules, you can withdraw simulated profits.
Cons and Risks of Futures Prop Trading
Now for the flip side.
- Strict rules lead to failure
Many traders fail evaluations due to one mistake. - Simulated accounts aren’t real
You are not managing live capital. Execution may differ from live trading. - Payouts depend on your performance
No guaranteed income. If you’re not profitable, you get nothing. - Resets and re-entry fees
Some traders fall into a cycle of paying over and over again. - Bad habits can form
Traders may take risks they wouldn’t in live markets.
Futures Prop Trading vs Live Trading with a Broker
At some point, many traders consider switching to a live brokerage account. Here’s how it differs.
Capital Source
In a prop account, you’re trading in a simulated environment with firm-controlled parameters. In a live account, you’re trading your own real money in the open market.
Trading Rules
Prop firms impose strict rules around drawdowns, daily losses, and lot sizing. With a live broker, you set your own risk management rules.
Payout Structure
Prop payouts are based on simulated performance and follow specific schedules or thresholds. Live trading payouts are real profits you can access at any time.
Trader Freedom
Prop trading limits how and when you can trade, often restricting news events or holding overnight. Live trading gives you full control over your strategy and timing.
Platform Access
Most prop firms use web-based or white-labeled platforms with restricted features. A live futures broker typically gives you access to professional-grade tools and direct market execution.
Going live gives you:
- True financial ownership
- Real market execution
- More control over trade timing, size, and strategy
But it also comes with real risk. Profits and losses are yours to keep.
When Prop Trading May Make Sense
Futures prop trading works best in a few key cases:
It makes sense if you:
- Are skilled but lack the capital
- Want to build discipline through structure
- Are testing a strategy in a risk-controlled setting
- Are learning to manage risk and avoid revenge trading
It doesn’t make sense if you:
- Can’t follow strict rules
- Want a guaranteed income
- Rely on shortcuts instead of real strategy
- Get discouraged easily by losing a fee
How to Transition from Prop to Live Trading
Passing a challenge is a milestone, not the end of the road. Here’s when you might consider switching to a live account:
- You’re consistent over weeks or months
- You’re following your own trading plan and not relying on firm rules
- You’re ready to take full ownership of wins and losses
- You’ve saved enough to meet margin requirements
Why Live Futures Trading Can Be the Next Step
With a live futures broker like MetroTrade:
- You don’t need to pass a challenge
- You can fund your account and start trading right away
- You get real-time execution and direct market access
- You control your strategies without rule-based restrictions
And with MetroTrade’s low fees ($0.29 for micros and $1.09 for e-minis) and no minimum deposit, it’s more affordable than many traders think.
Read our guide on Switching from Prop Trading to Live Trading
Conclusion
Futures prop trading can be a useful stepping stone, especially for traders with limited capital or those looking to sharpen their discipline. But in most cases, you’re trading in a controlled, simulated environment with strict rules and no real ownership of your performance.
If you’re serious about trading futures, consider skipping the endless cycle of evaluations and resets. MetroTrade offers a 30-day free demo account where you can practice in real market conditions, without risking real money or paying challenge fees. Once you’re ready, open a live account and trade with full control, real execution, and low commissions on micros and e-minis.
Stop renting your trading journey. Start owning it.
Create a MetroTrade account and take the next step toward real futures trading.
FAQs
What is futures prop trading?
Futures prop trading is when a trader uses a firm’s simulated capital to trade futures contracts under strict rules. If the trader meets profit targets without breaking risk limits, they receive a share of the simulated profits as a payout.
Are futures prop firms legitimate?
Yes, many futures prop firms are legitimate and operate as performance-based funding platforms. However, traders should carefully review each firm’s rules, fees, and payout terms before signing up.
Can you make real money with a futures prop firm?
Yes, traders can earn real payouts from futures prop firms if they follow all rules and trade profitably. Payouts are typically based on simulated profits and may follow a set schedule or require a withdrawal threshold.
What’s the difference between a 1-step and 2-step prop challenge?
A 1-step challenge requires traders to hit a profit target while following risk rules in a single phase. A 2-step challenge includes an additional phase focused on consistency and often has stricter conditions.
How much does it cost to join a futures prop firm?
The cost to join a futures prop firm ranges from $50 to over $500, depending on the account size and evaluation type. Some firms also charge monthly fees or offer paid reset options.
Is futures prop trading good for beginners?
Futures prop trading can be helpful for beginners who want to learn discipline and manage risk without risking personal capital. However, strict rules and high failure rates make it better suited for traders who already have a basic strategy.
The content provided is for informational and educational purposes only and should not be considered trading, investment, tax, or legal advice. Futures trading involves substantial risk and is not suitable for every investor. Past performance is not indicative of future results. You should carefully consider whether trading is appropriate for your financial situation. Always consult with a licensed financial professional before making any trading decisions. MetroTrade is not liable for any losses or damages arising from the use of this content.