What Is a Prop Firm? The Challenge Model vs. Funded Trading
Last Updated: September 21, 2026
What is a prop firm? A prop firm is a company that lets a trader operate a larger simulated or funded account after passing a paid evaluation, then splits the profit — commonly 80-90% to the trader. As of September 2026, FTMO, FundedNext, Topstep and Apex Trader Funding run this challenge model; EVEDEX Funded Trading replaces the challenge with the trader's own posted margin instead.
The two models put different money at risk. A classic prop firm charges a fee to trade its simulated capital and keeps a share of the profit; on futures prop firms such as Topstep and Apex, that capital sits inside a CME futures account with daily loss rules. This guide breaks down how prop firms make money from those fees, works out how much prop traders make once costs and drawdown rules are counted, and a companion piece, prop trading vs hedge fund, lines up who actually owns the capital in each structure.
What Is a Prop Firm? Compared by Entry Cost, Profit Split and Drawbacks
| Platform | Model | Entry cost | Profit split | Drawbacks |
|---|---|---|---|---|
| EVEDEX Funded Trading | Trader posts own margin for a larger notional across six tiers (50 USDT margin for 1,500 USDT notional, 165 for 5,000, 335 for 10,000, 835 for 25,000, 1,665 for 50,000, 3,335 for 100,000 USDT), no evaluation stage | No challenge fee; the margin is the trader's own money, not a purchased attempt | 100% of profit stays with the trader | Only 52 perpetual pairs and web-only access with no API; the posted margin can be lost in full if the position moves against it |
| FTMO | 1-Step or 2-Step Challenge on simulated CFD/forex capital | $99 for the smallest, $10,000, 1-Step Challenge, refunded with the first reward withdrawal | Up to 90% | Capital is simulated, not real funds behind the position, and breaching the daily or overall loss limit resets the account to zero |
| FundedNext | Stellar 1-Step or 2-Step CFD evaluation | One-time challenge fee, size depends on the account bought | Starts at 80% on the standard path, up to 90% with Scale-Up, up to 95% with a paid Lifetime Reward add-on | Base reward share is 80%, not the advertised 95% headline, and the fee-free Instant and Evaluation legacy models were discontinued for new clients on March 18, 2025 |
| Topstep | Futures-only Trading Combine evaluation | $49-$85 per month per account size until the Combine is passed | 90% to the trader | Fee keeps recurring monthly until passed, and the first payout is capped at $2,000-$5,000 in dollars even though the rule reads "up to 50% of balance" |
| Apex Trader Funding | Futures-only evaluation, moved to a one-time fee structure in March 2026 | One-time evaluation fee plus a separate activation fee to open the funded (Performance) account | Up to 100% of the approved payout amount | A second activation fee applies on top of the evaluation fee, and intraday accounts use a real-time trailing drawdown that moves with open profit |
Data as of September 21, 2026. FTMO: FTMO Challenge and Trading Objectives. FundedNext: Reward Share FAQ. Topstep: Payout Policy and Trading Combine Parameters. Apex Trader Funding: Help Center on trailing drawdown payouts. EVEDEX Funded Trading: EVEDEX Help Center, 13.07.2026.
How the Classic Challenge Model Works
The challenge model exists to filter traders before any real payout is on the line. It runs in stages:
- Buy an evaluation. The trader pays a one-time fee (FTMO, FundedNext) or a recurring monthly fee (Topstep, most Apex legacy plans) for an account of a chosen size, usually $10,000 to $300,000.
- Hit a profit target inside loss limits. A typical CFD evaluation asks for 8-10% profit while staying under a 5% daily loss and a 10% overall loss; futures evaluations use a fixed or trailing drawdown in dollars instead of percentages.
- Clear a minimum number of trading days. FTMO's 2-Step Challenge requires at least 4 trading days in its Verification phase; Topstep's Consistency payout path asks for at least 3.
- Move to a funded or "Account" stage. Passing does not hand over real capital at most firms — it unlocks a live-monitored account (FTMO calls it the FTMO Account) that pays out a share of simulated or firm profit under the same style of rules.
- Get paid, or get reset. A loss-limit breach at any stage, including after funding, typically resets the account to zero and requires buying a new evaluation to try again.
The profit split is the headline number, but it is set on top of that reset risk. Topstep and FTMO both advertise splits near 90%, FundedNext ranges from 80% to 95% depending on add-ons, and Apex advertises up to 100% of the approved payout — but each firm still caps how much of the account balance can be requested per payout, and each still requires paying to re-enter after a failed run.
None of these firms let a trader skip straight to the funded stage for free. Even Apex's move to a one-time evaluation fee in March 2026 kept the same underlying structure: pay once, hit the target inside the drawdown, then pay again to activate the funded account. The fee is the firm's real, guaranteed revenue; the profit split only applies to traders who both pass and then trade profitably, which is a minority of entrants at every major prop firm that has published pass-rate data.
Own Margin, No Challenge: How Funded Trading Is Different
EVEDEX Funded Trading is not a version of the challenge model with a bigger discount. There is no evaluation stage, no profit target to hit before a deadline, and no simulated capital changing hands. A trader deposits their own margin — EVEDEX's published examples are 50 USDT of margin for a 1,500 USDT trading notional, and 165 USDT for a 5,000 USDT notional — and trades that notional on EVEDEX's 52 perpetual pairs. Those two are the lowest of six published tiers: 50 → 1,500; 165 → 5,000; 335 → 10,000; 835 → 25,000; 1,665 → 50,000; 3,335 → 100,000 USDT, so the margin posted, not a plan bought from a firm, sets the size.
Two details matter for an honest comparison. First, because there is no evaluation and no firm capital involved, there is also no profit split in the traditional sense: the trader keeps 100% of any profit, but that profit comes entirely from their own posted margin working with leverage, not from a firm's balance sheet. Second, the notional figure is a leverage ceiling, not funds EVEDEX owns, lends or allocates to the trader — EVEDEX's terms describe the notional balance shown in the interface as the maximum position value available at the pre-set leverage ratio, not funds held on the trader's behalf. If losses, funding or fees exhaust the posted margin, the balance goes to zero with no separate account reset fee, but also with no reward to fall back on: the maximum loss is the margin itself. Funded Trading runs only through the EVEDEX web app, with no API access and no partner rewards attached to it.
EVEDEX Funded Trading
EVEDEX is a hybrid exchange for perpetual futures: order matching happens off-chain, and settlement happens on-chain on Arbitrum. Funded Trading sits on top of the same 52 pairs available to every trader — 39 crypto perpetuals, five US stock perpetuals, gold, silver, oil, two forex pairs and an index — all margined in USDT with maker/taker fees no higher than 0.015%/0.045% before cashback of up to 35%. There is no traditional KYC; deposits go through automated AML screening. Funding on every pair is calculated every eight hours and settled hourly in one-eighth increments, and an ADL Protection Reserve of $500,000, running since July 18, 2026, exists specifically to reduce cases where a profitable position gets force-closed through auto-deleveraging. The trade-off against a classic prop firm is real: only 52 pairs instead of hundreds of CFD or futures instruments, web-only access with no API, and a maximum loss equal to whatever margin was posted. Perpetual futures carry a high risk of loss, and the margin behind a Funded Trading position can be lost in full.
