Prop Firm Models — Challenge, Instant, Forex vs Futures

"Prop firm" is not one single thing · there are several models, and picking the wrong type at the start = losing both money and time · this chapter sorts the types for you.

Axis 1 — the evaluation format (how you get the capital)

Model A — Evaluation / Challenge (the most popular) You must pass the criteria before getting capital · sub-divided: - 2-Step — a 2-phase test (Phase 1 a big target → Phase 2 a smaller target) · the fee is usually the cheapest · it takes longer - 1-Step — a single-phase test → pass → get capital · faster · the single-phase target is usually higher

Model B — Instant Funding Pay and you get a funded account immediately, no exam · the entry cost is usually the highest · the payout/drawdown rules are usually stricter (because the firm takes on more risk, not having screened you with an exam)

For beginners: start with Evaluation/Challenge — it forces you to prove your skill first, which is a good thing, and the fee is cheaper.

Axis 2 — the market traded

Forex / CFD prop firms — trade forex, gold, indices, crypto CFDs · the largest group, suited to general traders

Futures prop firms — trade futures contracts (ES, NQ, oil, etc.) through a dedicated platform · the rules and payouts differ from forex props

A simple rule: choose a firm whose market matches what you already trade — do not change your market for a firm.

Axis 3 — the rules to know by name first

Every prop firm has "rules" you must not breach · for now just know the names (the details are in the "Passing the Prop Firm Challenge" ebook): - Profit Target — what % profit you must reach to pass - Max Drawdown — how far the account may be down in total, no more than X% - Daily Loss Limit — how much you may lose in a single day, no more than X% - Minimum Trading Days — at least how many days you must trade - Profit Split — what % of the profit you get (80-90%)

An important truth: most people who fail do not fail because they could not reach the profit — they fail because they breached a Drawdown rule.

"The cheapest" is not the only criterion

A fee that is $20 cheaper means nothing if the firm does not pay out when you pass · the correct criterion is "good value + trustworthy (genuinely pays)."

> Prop firms have Challenges (2-step/1-step) and Instant Funding · there are both Forex and Futures firms · beginner: start with a Challenge at a firm that genuinely pays, in the market you know best

Next chapter — the realistic path from $0 to a funded account