Everybody wants to run a prop firm these days. It looks like easy money—collect some fees, fund a few traders, take a slice of the profits. But let me tell you the truth after ten years in trading: it’s not that simple. If you really want to know how to start a prop firm, you need to understand the work behind it, not just the dream.
What’s a Prop Firm Anyway?
A prop firm is basically a company that gives traders money to trade with. Instead of risking their own savings, traders use the firm’s capital. In return, they split profits—often 70–90% goes to the trader, the rest to the firm.
Names like FTMO, The Funded Trader, and The 5%ers are the big players. They’ve shown that the model works, but they also prove how tough it is to keep traders happy while protecting the company’s capital.
Why Even Start a Prop Firm?
Simple: demand. There are thousands of retail traders out there who don’t have enough cash but want a shot at trading big accounts. They’re lining up for funded accounts.
For you, the business owner, that means two things: steady income from evaluation fees and long-term earnings from traders who actually perform. Just don’t go into it thinking it’s a quick win. The firms that last are the ones that build slowly and play fair.
Step 1: Choose Your Model
Most firms go with one of two setups:
- Challenge model – traders pay a fee, try to pass rules, and if they succeed, they get funded.
- Instant funding – traders pay more upfront but start live trading right away.
Neither option is “better.” The key is setting rules that make sense. Don’t be so strict no one passes, but don’t be so loose that your firm loses money overnight.
Step 2: Legal and Financial Setup
This part isn’t exciting, but it’s critical. Register the business properly, set up solid banking, and make sure you can process payments smoothly.
A question I hear often is, “how much does it cost to start a prop firm?” Well, there’s no single answer. If you’re bare-bones, maybe $50k gets you running. If you want serious tech, compliance, and proper support, you’ll need a lot more.
Step 3: Pick Your Tech
Traders expect MT4, MT5, or cTrader at a minimum. Some firms add TradingView. Behind the scenes, you’ll need risk management systems, account monitoring, and a way to automate payouts.
You can rent white-label platforms to save money, or go custom if you’ve got deep pockets. Just don’t cut corners here—bad tech kills trust faster than anything.
Step 4: Plan Funding and Payouts
Decide your account sizes, fees, and profit splits. A common setup is 80% to the trader, 20% to the firm. Offer scaling if they perform well. And for the love of trading, pay people fast. Delayed payouts are the #1 reason traders walk away.
Step 5: Build Trust
This industry has a bad reputation. Too many shady firms with sneaky rules. If you want to stand out, keep everything clear—rules, terms, payouts. Traders don’t expect perfection, but they do expect honesty.
Step 6: Find and Support Traders
SEO, social media, affiliates, YouTube traders—use them all. Build a community on Discord or Telegram. But here’s the key: answer questions fast. A trader waiting three days for a reply will never trust you with their money.
A Shortcut Many Traders Miss
Here’s something most beginners don’t realize: passing the test is only half the battle. Many traders finally get funded and then blow the account in two weeks. Not because they’re clueless, but because consistency is hard.
That’s why services like Prop Firm Passing Service (PFP) exist. They help traders with challenge passing and account management. As a prop firm owner, knowing these services are out there can help you build smarter partnerships and increase your traders’ chances of sticking around.
The Hard Parts Nobody Talks About
Running a prop firm isn’t glamorous. You’ll deal with traders abusing loopholes, people trying to scam the system, and the constant fear of market risk. And every month, a new firm will pop up trying to undercut your prices. You have to stay sharp.
Last but Not Least
If you came here looking for shortcuts on how to start a prop trading firm, here’s the truth: there aren’t any. It takes money, structure, transparency, and a thick skin.
But if you build it right—fair rules, solid tech, quick payouts—you can create something that lasts. Services like Prop Firm Passing Service already prove how strong the demand is. Traders want funded accounts. The question is: will they trust you to give them a fair shot?
If your answer is yes, then go ahead and learn how to start a prop firm properly. Just remember, the grind is real.
