Prop trading
Stock Prop Firm
Stock prop firms, evaluations and what the payout is worth
Stock prop firms are not all the same business. Some fund you after an evaluation fee, some charge desk fees and require your own capital, and the difference matters a great deal.
The two kinds of stock prop firm
Evaluation firms sell you a test and fund the people who pass. Deposit firms take your capital, add leverage, and charge desk and platform fees. Your risk is completely different in each.
What buying power means at a prop firm
Buying power is not capital you own. It is a limit you may trade within, usually with a loss threshold that closes you out well before the notional figure means anything.
Reading the fee structure before the payout split
Platform fees, data fees, desk fees and per-share commissions come out first. A ninety percent split after four hundred dollars of monthly fees is not ninety percent.
Questions about stock prop firms
- What is a stock prop firm?
- A firm that lets traders trade equities with firm capital or firm-provided leverage, in return for a profit share, fees, or both.
- Do I need my own money for a stock prop firm?
- Depends on the model. Evaluation firms charge a test fee only. Deposit firms require your capital as a risk contribution before adding leverage.
- Are stock prop firms regulated?
- It varies by structure and jurisdiction. Firms trading their own capital sit under different rules than brokers, so check the specific entity rather than the marketing.
- What is a realistic payout?
- Work it from the loss threshold rather than the buying power. The threshold is the real size of the account you are trading.
- How do evaluation firms make money?
- Largely from evaluation fees paid by traders who do not pass. That is worth knowing when reading their pass-rate claims.
Work out the monthly fees first
Subtract them from a realistic month before you judge any profit split.