Definition
Prop firm (proprietary trading firm)
A company that gives traders access to its own capital in exchange for a share of the profits, usually after a paid evaluation.
In the retail 'funded trader' industry, a prop firm sells an evaluation (a challenge): hit a profit target inside the firm's risk rules and you receive a funded account, keeping a large share of future profit (commonly 80–90%).
Unlike a classic institutional prop desk, most retail prop firms operate on simulated or brokered environments and make revenue from evaluation fees plus their share of successful traders' profit. The rules — drawdown, consistency, news windows — are the product, which is why reading them matters more than any strategy tweak.
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General industry definitions — individual firms define terms differently in their own ToS; the decoded rulebook for each firm is the source of truth. Educational, not financial advice.