how do prop firms make money ?

As you know, prop companies are very popular among traders because these companies provide traders with very good starting capital so that traders can trade and profit from these accounts using their knowledge and skills. Prop trading companies have a lot of capital and traders who can pass the challenges and tests related to each account are given accounts with specific capital, each prop company has special plans and challenges. They offer different types of accounts with different balances to their users, and each account model has its own challenges.

But you may have a question about how prop trading companies make money and in what ways they make money, in this article we would like to introduce you to the way prop trading companies make money.

How do trading prop firms make money?

Taking a percentage of the profits from each account

One of the main ways in which prop trading companies make money is by taking a percentage of the profits from each trade from the accounts available to their traders. The amount of profit taken by each prop company is different, but usually between 5% and 30% of each account’s profit belongs to the prop company.

Challenge entry fees

Another way for Prop Companies to make money is to charge traders to enter the Challenges. Prop companies have different accounts with different balances, and to get one of these accounts you have to pass challenges. To enter these challenges, you will also pay an entry fee, which will be refunded if you pass the challenge. However, in some prop firms, if the challenge is not passed, a percentage of the fee paid or the total amount paid is awarded to the prop firm.

We hope you enjoyed this article.