How Do You Join a Prop Trading Firm as a Beginner in 2025?

Are you looking forward to aligning your skills and goals to make a difference in your trading journey? Then, joining a prop trading firm as a beginner in 2025 is an exciting way to access larger trading capital and professional resources. Prop firms allow you to trade the firm’s own money and share in the profits, accelerating your growth as a trader.

However, succeeding in a prop firm environment requires preparation and discipline. This guide will explain what prop firm trading is, how to join one as a beginner, key legal considerations (including is prop firm trading legal in India), and practical steps to get started – while emphasizing accuracy, safety, and realistic expectations.

Overview: How Do You Join a Prop Trading Firm as a Beginner?

Step	Action Required	Key Points & Tips
1Build Trading Skills	Practice on demo or small live account for months Develop consistent strategy & trading plan Master basic risk management skills	Focus on consistency over profits Learn stop-losses and emotional control Treat like training for sports tryout Must be profitable before attempting
2Research Firms	Look for positive reviews & transparent rules Check profit splits and evaluation costs Verify reliable payout history	Start with well-known firms (FTMO, Topstep) Check online forums for real experiences Avoid unrealistic promises Better to start smaller than get overwhelmed
3Understand Rules	Study evaluation criteria carefully Max daily loss: 5%Max drawdown: 10% Profit target: 8-10%Min trading days: 5-10	Risk management is everything Plan risk per trade (2-3% max) Rule violations = instant failure Tailor trading to these parameters
4Execute Evaluation	Start slow, don't rush profit targets Always use stop-losses Control emotions during wins/losses Use full time allowance wisely	Focus on good trades, not daily quotas Aim for 0.5-1% daily growth Step away if panicking or euphoric If you risk $1, make sure you can earn $3 or more - Paul Tudor Jones
5Get Funded	Sign contract after passing evaluation Trade with same discipline as test Follow withdrawal procedures Withdraw profits regularly	Same rules apply to live account Lock in earnings through withdrawals Treat as professional partnership Potential for account scaling over time
Overall Success Mindset	Think like a risk manager first Prepare for multiple attempts Stay coachable and keep learning View as long-term partnership	Protection first, profits second Failed attempts are valuable feedback Never violate rules to hit targets Losses are a very important part of trading - Gil Blake

Understanding Prop Trading Firms (What is Prop Firm Trading?)

A proprietary trading firm uses its own capital to trade financial markets for profit. Instead of managing client funds, the firm allocates company money to skilled traders, who then trade assets like stocks, forex, or futures. Profits are split between the trader and the firm (often the trader keeps 50–90%). This lets beginners leverage “other people’s money” without risking large personal losses.

Prop firm trading (also called funded trading) has boomed in recent years: many firms now operate online and offer remote “funded account” programs. You typically must pass an evaluation or trading challenge to prove your skills. Once you meet the profit targets and risk rules in a demo account, the firm provides you a funded account to trade real capital. In essence, these firms act as talent incubators – you pay a fee to attempt the evaluation, and if successful, you trade the firm’s money. Notably, most retail prop firms rely on simulated accounts during the evaluation (no real money is at risk until you’re funded). Their business model combines trader development with strict risk control. Prop firms earn revenue from profit splits with successful traders and from the evaluation fees of those who try out.

Legal and Regulatory Considerations

Global: In most countries, joining a prop trading firm is legal because you’re trading the firm’s capital (not taking client investments). That said, prop firms are usually unregulated – they aren’t traditional brokers or advisors. This means you don’t have the same legal protections when dealing with them. Choosing a reputable firm with a good track record is crucial for safety. Make sure the firm has clear contracts and publicly verified payouts, since authorities generally don’t oversee these arrangements closely.

India: In India, prop firm trading falls into a grey area. It’s not explicitly illegal for Indian residents to join a prop firm, but regulators have expressed concerns. In late 2024, SEBI warned that some “funded trading” platforms are not authorized and that investors use them at their own risk. The Reserve Bank of India also listed certain prop firms as unapproved entities. In practice, many Indian traders do work with overseas prop firms and get funded, but they do so without regulatory protection. If you’re in India and considering it, ensure any fee payments abroad comply with RBI rules (e.g. under the Liberalized Remittance Scheme) and understand that you may have limited recourse if something goes wrong. In summary, prop trading isn’t banned in India, but it’s not regulated – proceed with caution and stick to well-known firms.

Ivan Scherman’s Approach

Ivan Scherman’s approach underscores the same analytics‑driven mindset prized by top prop firms: strategies backed by historical performance, sensible position sizing, and tight stop-losses. These principles form the backbone of any compliant and successful prop firm evaluation.

Ivan Scherman … emphasizes evidence‑based strategies tested under varied market conditions to minimize risks. He highlights key risk management tips: diversify trades, aim for small gains, use historical data for stop‑loss settings, and keep positions small (2–3% of the portfolio).

Steps to Join a Prop Trading Firm as a Beginner

Entering a prop firm in 2025 as a newcomer involves more than just signing up. Follow these steps to improve your chances of success:

Build Your Trading Skills First: Before attempting a prop firm evaluation, practice trading on a demo or small live account. Prop firms look for consistent profitability and good risk management. Spend a few months developing a strategy and trading plan. Treat this like training for a sports tryout – you want to be in peak form. Master basic skills like setting stop-losses, managing risk per trade, and controlling your emotions during wins and losses. This preparation will make the evaluation feel much easier.
Research and Choose a Reputable Firm: Not all prop firms are equal. Look for firms with positive reviews, transparent rules, and reliable payouts. Key factors include the profit split (what percentage of profits you keep), the evaluation fee cost, allowed trading products (forex, stocks, etc.), and any restrictions (such as no overnight holding or news trading). Avoid any firm that makes unrealistic promises or lacks a proven track record. It’s often safer to start with a well-known firm (for example, FTMO or Topstep) which has a large community and many testimonials. Check online forums or social media to see real trader experiences. Choosing a reputable firm ensures that if you do well, you’ll actually get paid and won’t face unexpected “gotchas” in the rules.
Understand the Evaluation Rules: Every prop firm has specific evaluation criteria. Typically, you must trade on a demo account for a set period (e.g. 30 days) and achieve a target profit (say +8% or +10%) without exceeding a max loss limit. Read the rules carefully before starting. Common rules include: Max daily loss, Max total drawdown, Profit target, Minimum trading days, and other restrictions. You must tailor your trading to these parameters. Plan your risk per trade so that even a string of losses won’t hit the limits. Risk management is everything here – even good traders get disqualified by ignoring a rule.
Execute the Evaluation with Discipline: When you begin the challenge, stick to your trading plan. It’s crucial not to let nerves or excitement derail you. Start slow, manage risk on every trade, control your emotions, and use the allowed time. Consistency is more valuable than quick profits.
Get Funded and Trade the Firm’s Capital: If you pass the evaluation – congratulations! You’ll sign a contract and receive a funded account. Now you are a funded trader. Continue to follow the rules diligently, because the same drawdown limits usually apply to the live account. Start trading with the same discipline you used in the test. Withdraw a portion of profits regularly to lock in your earnings. Treat this opportunity like a professional job. Over time, if you perform well, some firms will even scale up your account or offer you better profit splits. The goal is to grow steadily and make this a win-win partnership – the firm wants you to profit, because they profit too.

Throughout this journey, stay coachable and keep learning. Many traders don’t pass on the first try – and that’s okay. Use any failed attempt as feedback to improve your strategy or discipline. The prop firm route can be very rewarding, but it requires patience and a constant focus on managing risk.

“Whenever I take a position, I like to imagine what it would be like under the worst‑case scenario… Losses are a very important part of trading.”
— Gil Blake, world‑renowned trend‑follower and Market Wizards expert

Gil Blake highlights the paramount importance of pre‑defining risk parameters before entering any trade—a mindset that aligns directly with how prop trading firms expect beginners to operate. Evaluations typically enforce strict loss limits, making such pre‑emptive loss planning not just smart, but essential to stay compliant and funded.

For instance, when practicing your trading strategy or during a prop firm evaluation, monitoring live XAU/USD charts can help you fine-tune your timing and risk management, especially if your focus includes precious metals trading.

Conclusion: Practical Insights

Joining a prop trading firm can be a fantastic opportunity for a new trader, but it requires a realistic and disciplined approach. Prepare thoroughly before you take on an evaluation. During the challenge, think like a risk manager as much as a trader – your number one job is to follow the rules and survive, so that you have the chance to hit the profit target. If you find yourself asking “should I risk this trade violating a rule to maybe hit the goal,” the answer is always no. Protecting the account comes first.

Also, choose the right firm and account size for your comfort. It’s better to start with a smaller challenge that you can manage than to get in over your head with a big account that amplifies your anxiety. You can always scale up later once you prove yourself.

Finally, view prop trading as a long-term partnership. The firm only succeeds if you do, so the setup is win-win. Don’t be discouraged by a setback; even top traders face losing streaks or failed attempts. The key is to learn and come back stronger. By focusing on sound strategy, risk control, and emotional discipline, you can greatly increase your odds of not only joining a prop trading firm but also growing with one. Good trading!

Frequently Asked Questions (FAQs)

What is prop firm trading?

Prop firm trading refers to trading financial instruments using capital provided by a proprietary trading firm rather than your own money. A prop trading firm (short for proprietary firm) evaluates traders and funds those who meet its criteria. The trader then operates a funded account – for example, $50,000 or $100,000 – supplied by the firm. Any profits generated are split between the trader and the firm. This setup allows traders to leverage much larger capital than they might personally have. The firm handles losses (up to predefined limits) and provides the capital, while the trader contributes skill and strategy. In essence, with prop firm trading you trade for the firm’s profit as well as your own, functioning almost like a contractor: you’re using their money to make trades and sharing the rewards. It’s a popular path for talented traders who lack big personal funds, as it can dramatically accelerate a trading career.

Is prop firm trading legal in India?

It’s not illegal, but it isn’t regulated either. India’s regulators have not banned individuals from participating in prop funding programs, but they have raised red flags. In 2024, SEBI warned that certain online prop trading platforms (which offer funded accounts or “trading games”) are unauthorized and possibly violating securities laws. Essentially, these firms aren’t registered in India, so SEBI can’t protect traders who use them. The Reserve Bank of India has also cautioned against sending money to unregulated foreign platforms. Despite these warnings, many Indian traders do join prop firms based abroad and receive payouts. The activity exists in a regulatory grey zone – it’s not expressly forbidden by law, but if something goes wrong (like a firm not paying you), Indian authorities might not be able to help. If you decide to pursue a funded account from India, do so with eyes open: stick to well-known firms, follow RBI’s rules for overseas remittances (categorize your fee correctly), and be aware that you’re dealing with an offshore entity. In summary, prop firm trading is legal for Indian traders in practice, but it’s officially not endorsed, and you should approach it cautiously.

How do prop trading firms make money?

Proprietary trading firms make money in a few ways. The primary way is by sharing in traders’ profits. When you trade a funded account, the firm might take 20% of your profits (just as an example) and give you 80%. If you and other funded traders do well, the firm earns a portion of all those trading gains without having to trade themselves. The other major revenue source is evaluation fees. Most people who attempt a prop firm challenge pay a fee (perhaps $100–$300 or more, depending on account size). Industry statistics show that a large percentage of traders do not pass these evaluations on the first try – or at all. Those failed challenge fees go straight to the firm’s coffers. In effect, it’s like an entrance exam fee. For the firm, this often covers the losses and risk of the relatively smaller number of traders who do get funded. Some firms also have monthly “seat” fees or subscriptions for using their platform (though many have moved away from this model). Additionally, a prop firm could deploy its own capital in the markets alongside or in hedging of its traders’ positions, aiming for direct trading profits as a company (this is more common in traditional prop firms). But in the popular funded account model, profit splits and challenge fees are the bread and butter. The firm’s goal is to recruit a lot of promising traders, filter out the best (keeping the fees from those who don’t make it), and then scale up those successful traders so everyone profits.

What are the main risks for a beginner with prop firms?

For new traders, prop trading firms present several unique risks:

Challenge failure: The first hurdle is passing the evaluation. Many beginners end up failing their first challenge (or several) and losing the fees they paid. This can add up financially and psychologically. It’s important to only attempt a challenge when you’re truly ready and can afford the fee as a learning experience if things go wrong.
Strict rules: Prop firms have zero tolerance for breaking rules. A single mistake – like one oversized trade or a lapse in discipline – can violate a rule and disqualify you instantly. This is different from trading your own account, where you might be able to withstand a big hit. The pressure to avoid instant disqualification can itself be stressful for beginners.
Psychological pressure: Trading a prop firm evaluation or funded account can induce anxiety. Knowing that any loss counts against a limit or that you’re being monitored may cause you to deviate from your normal trading style. Emotions like fear of losing the opportunity or greed to hit the profit target quickly can lead to bad decisions. Beginners need to be prepared for this mental aspect.
No guaranteed income: Unlike a salary, prop trading income is uncertain. You might go through a month of trading and end up with little to no profit (especially after the split) or even lose the account. If you were counting on that to pay bills, it could put you in a tough spot. It’s wise for beginners to treat prop trading profits as supplemental until they have a long, stable track record.
Firm reliability: While rare among top-tier firms, there’s the risk that a prop firm could delay or deny payouts, or even shut down (there have been scams in the industry). If you choose an obscure or new firm because they offer slightly better profit splits or easier rules, you might expose yourself to this risk. Sticking to reputable firms greatly mitigates it.