Prop Firm Rules: Explanation, Lists, Examples

Prop firm rules are the trading regulations, evaluation criteria, and risk limits that proprietary trading firms impose on traders using the firm’s capital. These rules define the boundaries of acceptable trading behavior and determine how traders qualify for, maintain, or lose access to a funded account.

Rules vary from one prop firm to another. Each prop trading firm sets its own parameters based on internal risk management, profit-sharing models, and the type of traders it wants to attract. What is permitted at one firm such as news trading or scalping may be prohibited at another. Understanding prop firm rules is one of the most important parts of selecting a prop firm as a funded trader. These rules directly affect strategy, risk tolerance, and payout eligibility. A trader who does not align with a firm’s rules may pass the challenge but still lose the account due to a compliance violation.

Prop firms implement rules to protect their capital and filter for traders who are not only profitable but also disciplined. Rules help firms identify traders who can manage risk consistently, follow structured processes, and maintain long-term performance. Without rules, firms would be exposed to erratic, high-risk behaviors that could lead to rapid losses.

Beginner traders must understand prop firm rules clearly before joining. Many rule violations are unintentional and happen because new traders overlook fine print or misinterpret risk thresholds. Not knowing the rules can result in failing the challenge, losing a funded account, or being banned from future evaluations, even if the trader was profitable.

There are two main types of prop firm rules: no consistency rules and consistency rules. No consistency rules allow traders to earn profits at any pace, without needing to show evenly distributed performance. Consistency rules require profits or lot sizes to be spread across multiple days or trades, preventing traders from relying on a single large win.

Most prop firm rules fall into six categories:

• Account Risk Rules (e.g., daily loss limits, drawdown)
• Profit Target & Payout Rules (e.g., profit goals, minimum trading days)
• Position Sizing & Leverage Rules (e.g., lot size limits, max open positions)
• Trading Style Rules (e.g., banning news trading or scalping)
• Behavioral & Compliance Rules (e.g., no gambling, no account sharing)
• Evaluation-Specific Rules (e.g., time limits, phase 1 & 2 structure)

Prop firm rules differ from prop firm challenge rules. Prop firm rules apply to live funded accounts and define long-term trading conduct. Challenge rules apply only during the evaluation phase, with stricter limits and time constraints designed to test the trader’s consistency and discipline before funding is granted. In this article, you will find real examples of rules from top proprietary trading firms. These examples will help you compare firms, understand how rules are structured, and choose the one that best fits your trading style.

What are prop firm rules?

Prop firm rules are the specific regulations, trading requirements, and risk parameters that proprietary trading firms use to control how traders operate with the firm’s capital. These rules define what is allowed within a funded account, what constitutes a violation, and under what conditions a trader can access payouts or continue trading.

Each prop firm sets its own rule set based on its business model, risk appetite, and trader profile. While some firms prioritize strict drawdown limits, others focus on consistency or prohibit certain styles like scalping or overnight holding. This variation means that prop firm rules are not universal and can differ significantly between firms.

The primary function of prop firm rules is to protect the firm’s capital while providing a structured environment for traders to perform. These rules serve as a contractual framework that outlines acceptable trading behavior, risk thresholds, and performance expectations. For example, traders may be required to maintain a maximum daily loss limit, meet a specific profit target, or avoid trading during high-impact news events.

Prop firm rules are categorized into several key areas:Account risk rules (e.g., maximum daily drawdown, total loss limits),  Trading style restrictions (e.g., no scalping, no holding trades over weekends), Position sizing and leverage limits (e.g., lot size caps, leverage ratios), Evaluation phase rules (e.g., minimum trading days, time limits), Behavioral compliance (e.g., no account sharing, no gambling strategies). 

Understanding prop firm rules is necessary for any trader seeking funding. Not following them can result in immediate disqualification, loss of access to the funded account, or forfeiture of earned profits. This is especially important for beginners, as unclear expectations can lead to early failure despite good trading performance. 

Why are funding traders’ rules necessary?

Funding traders rules are necessary to protect the prop firm’s capital, enforce disciplined trading behavior, and ensure that only consistent, skilled traders gain access to firm-funded accounts.

Prop trading firms provide traders with access to significant capital, which means any undisciplined or high-risk action could result in major financial losses. To prevent this, rules like maximum daily drawdown, profit targets, and position size limits are used to cap risk exposure and maintain financial stability within the firm.

These rules guide trader behavior by requiring risk management techniques such as setting stop-losses, using appropriate allocation, and avoiding overtrading. Traders must follow structured guidelines that promote stable, repeatable performance rather than impulsive or luck-based trades.

Consistency rules are especially important to verify that a trader’s strategy is sustainable. They prevent scenarios where a trader passes an evaluation with one large win but lacks the ability to perform reliably over time. This helps firms identify candidates who can manage capital responsibly across changing market conditions.

Rules on prop firms ensure fairness in the evaluation and payout process. Traders who follow the rules and demonstrate stable results are rewarded with live accounts or profit splits. This creates alignment between the firm’s goals and the trader’s incentives.

Regulations around trading behavior, such as bans on gambling strategies, account sharing, or martingale systems, defend against unethical practices and protect the firm’s reputation. They help maintain compliance with financial laws like KYC (Know Your Customer) and anti-money laundering regulations.

What are the types of prop firm rules?

Prop firm rules are generally divided into two main types: no consistency rules and consistency rules. These two categories define how a trader’s performance is evaluated during the assessment phase of a funded trading program.

• A no consistency rule allows traders to reach their profit targets without needing to show stable or regular performance. Traders can pass the evaluation with a few large winning trades, even if their daily results vary significantly.
• A consistency rule, on the other hand, requires traders to demonstrate steady and controlled trading behavior. This typically means profit must be distributed across multiple days, with limits on how much of the total profit can be made in a single day.

These two types of rules reflect different philosophies in risk management and trader evaluation. Some firms prioritize outcome-based results, while others focus on the process and discipline behind the trades. Understanding which rule type a prop firm uses is necessary for traders to align their strategy with the firm’s expectations.

No consistency rule prop firm

A no consistency rule prop firm is a proprietary trading company that does not require traders to maintain consistent performance across their trading days. Traders are evaluated based on their ability to meet overall profit targets and follow risk limits, regardless of how their profits are distributed over time.

In the no-consistency rule prop firm model, traders are allowed to generate their profits in any pattern, whether through a single large trade or a series of irregular gains. There is no obligation to show steady daily returns, uniform lot sizes, or balanced trade frequency. For example, a trader can earn 90% of their profit target in one day and make minimal or no profits on the remaining days and still qualify, as long as they stay within the firm’s drawdown and risk parameters.

No consistency rule prop firms function by simplifying the evaluation criteria. They focus on key metrics such as:

• Total profit target achievement
• Maximum daily or overall drawdown limits
• Completion of minimum trading days (if applicable)

This structure is ideal for traders who use high-volatility strategies or aim to capitalize on specific market events. It benefits those who rely on swing trades, news-based setups, or momentum bursts rather than daily scalping or steady intraday gains.

To answer the question: Are there prop firms without consistency rules? Yes, many well-known prop firms operate without enforcing consistency rules. These firms allow traders to qualify for funding or request payouts even if their performance is uneven across days. As long as the trader meets the general objectives—profit target, risk limits, and any required trading days—they are not penalized for having concentrated or erratic profit patterns.

This rule type offers a more realistic and trader-friendly environment, especially for those whose strategies thrive on market timing rather than routine execution.

Prop firm consistency rule

A prop firm consistency rule is a trading regulation that requires a trader to generate profits in a steady and repeatable manner over time, rather than relying on one or two outsized winning trades. The rule is designed to evaluate whether a trader can maintain discipline, manage risk effectively, and produce sustainable returns across multiple trading days.

The core function of the consistency rule is to limit the percentage of total profits that can be made in a single day or trade. For example, a prop firm may state that no more than 30% of a trader’s total profit during an evaluation phase can come from one trading day. If a trader earns $10,000 in a challenge, no single day’s profit should exceed $3,000. If this threshold is breached, the trader may fail the challenge or become ineligible for payout, even if the overall profit target is reached.

Consistency rules are important because they help prop firms identify traders who are not just lucky or overly aggressive, but who follow a controlled strategy that can be scaled with firm capital. These rules filter out high-risk behavior, such as overleveraging or gambling-style trades, and instead reward traders who demonstrate patience, strategy, and repeatable execution.

The main purpose of the consistency rule is to protect the firm’s capital by ensuring that funded traders are capable of managing real accounts with long-term stability. It encourages risk management habits and discourages erratic profits that might not be replicable in live trading conditions. The implementation of consistency rules varies from one prop firm to another. Some firms apply a strict daily profit cap (e.g., 30% of total profits), while others set a minimum number of profitable trading days or use rolling averages to measure performance. Certain firms may not use consistency rules at all, while others enforce them during both the evaluation and funded stages, each with different thresholds.

Understanding the specific consistency rule of a prop firm is necessary before beginning a challenge, as violating it—even unintentionally—can lead to disqualification despite otherwise successful trading performance.

List of most common prop firm rules

The most common prop firm rules are standardized trading regulations that funded traders must follow to manage risk, maintain account eligibility, and qualify for payouts. These rules are applied across evaluation phases and live funded accounts, and are organized into six main categories: account risk limits, profit targets, position sizing, trading style restrictions, behavioral compliance, and evaluation-specific conditions.

Below is a complete list of the most frequently enforced prop firm rules:

• Maximum Daily Drawdown
• Daily Loss Limit
• Maximum Overall Drawdown
• Profit Target
• Minimum Trading Days
• Payout Rules
• Lot Size Restrictions
• Leverage
• Max Simultaneous Positions
• News Trading Restrictions
• Holding Trades Overnight/Over Weekend
• Scalping/HFT Restrictions
• Copy Trading/EAs
• No Gambling / Overleveraging
• No Martingale / Grid Systems (many firms explicitly ban)
• No Account Sharing
• Phase 1 Rules
• Phase 2 Rules
• Time Limit

Maximum Daily Drawdown

Maximum Daily Drawdown is a risk control rule that limits how much a trader can lose in a single trading day while using a prop firm’s capital. It is part of the broader category of Account Risk Rules, which are designed to protect both the trader and the firm from excessive losses.

This rule sets a fixed dollar amount or percentage that defines the maximum allowable loss across all trades within a 24-hour period. For example, if a prop firm sets a $1,000 daily drawdown on a $100,000 account, the trader must not exceed that loss in closed trades and floating losses combined.

Some firms calculate the drawdown from the day’s starting balance (static method), while others use the highest point reached during the day (trailing method). A violation of this limit, whether by a single trade or a series of losses, results in immediate disqualification or account suspension.

The purpose of the Maximum Daily Drawdown rule is to enforce trading discipline and ensure capital preservation. It forces traders to manage risk per session and discourages emotional or revenge trading after losses. It also helps prop firms maintain operational stability by capping potential damage from a single trader’s bad day. This rule is one of the most frequently breached in prop firm evaluations, making it necessary for traders to understand how their specific firm measures and enforces the daily drawdown limit.

Daily Loss Limit

The Daily Loss Limit is a core risk control rule in prop firm trading that sets the maximum amount a trader is allowed to lose in a single trading day. It is part of the broader category of Account Risk Rules designed to prevent excessive losses and protect both the firm’s capital and the trader’s performance record.

This rule is enforced by most proprietary trading firms through automatic systems that monitor daily losses in real time. When the trader’s losses, realized or unrealized, reach the daily threshold, the system may immediately close all open positions and disable further trading until the next session. The limit resets daily, usually at midnight or at a firm-specified session reset time.

Daily loss limits are defined either as a fixed dollar amount or as a percentage of the starting or current account balance. For example, a trader with a $100,000 funded account might have a daily loss limit of $1,000 (1%) or $2,500 (2.5%), depending on the firm’s risk model. Some firms apply a static threshold based on the initial balance, while others use a floating model tied to equity changes. The primary function of this rule is to enforce discipline and reduce emotional trading after a losing streak. It also prevents rapid account depletion from high-risk strategies, especially during volatile market conditions or news events.

Violating the daily loss limit frequently results in immediate consequences such as evaluation failure, account suspension, or disqualification from payout eligibility. Even profitable traders can be disqualified for breaching this rule, making it one of the most critical limits to understand and follow. For beginner traders, respecting the daily loss limit is necessary to building consistency and avoiding early disqualification. It encourages proper use of stop-losses, realistic position sizing, and emotional control—key traits for long-term success in funded trading programs.

Maximum Overall Drawdown

Maximum overall drawdown is a rule that limits the total amount a trader can lose from the highest point their account has reached. It is one of the most important account risk rules enforced by proprietary trading firms to protect their capital and ensure traders follow disciplined risk management.

This rule measures the largest permissible decline in account equity from the peak balance achieved after closed profits. If the trader’s equity drops below the allowed threshold, whether from one large trade or a series of smaller losses, the account is disqualified or terminated, even if the trader was previously in profit.

For example, if a funded account grows from $100,000 to $105,000 and the firm sets a 10% maximum total drawdown, the new risk floor becomes $94,500. The trader must not let their equity fall below this adjusted level at any point during the evaluation or funded phase.

Unlike daily loss limits that reset every day, maximum total drawdown is calculated over the lifetime of the trading account. Some firms apply a trailing drawdown that moves upward with profits, while others use a static drawdown based on the starting balance.

The main purpose of this rule is to prevent sustained or catastrophic losses and to encourage long-term risk control. Violating it typically results in immediate account closure, regardless of the trader’s performance up to that point. Maximum total drawdown is always part of the account risk rules category and is published clearly by most prop firms to ensure traders understand the total loss boundaries before they start trading.

Profit Target

The profit target is a rule in prop trading that requires a trader to reach a specific financial gain, either as a percentage or fixed amount, before qualifying for progression or payout. It is part of the Profit Target & Payout rule category.

Most prop firms set the profit target between 5% and 10% of the starting account balance. For example, on a $50,000 evaluation account with a 5% target, a trader must generate $2,500 in profit to pass the challenge.

The profit target acts as a performance benchmark to prove a trader’s ability to generate returns while managing risk. Hitting the target is necessary but not sufficient on its own—traders must also follow other rules like minimum trading days or drawdown limits. Profit targets vary by phase. In Phase 1, the target is typically higher (6%–10%) to test profitability under pressure. In Phase 2, it is usually lower (4%–6%) to assess consistency and discipline. Some firms may keep profit targets in place even after funding to maintain performance standards.

Failing to meet the profit target within the allowed time or breaking other rules typically results in restarting the challenge or losing the account. Understanding the specific profit target requirement of a prop firm is necessary when planning trades and choosing which firm to apply to.

Minimum Trading Days

Minimum Trading Days is a prop firm rule that requires traders to execute trades on a set number of active days before qualifying for payout or account funding. This rule is part of the Profit Target & Payout category because it directly affects when a trader can move forward in the evaluation process or withdraw profits.

The purpose of the Minimum Trading Days rule is to verify that a trader’s performance is consistent over time rather than based on a few high-risk or lucky trades. For example, if a trader reaches the profit target in 6 days but the minimum requirement is 10, they must continue trading for 4 more active days to meet the rule.

Prop firms use this rule to filter for disciplined traders who can trade with control across different market conditions. It helps firms assess whether a trader can maintain profitability while managing risk over several sessions, not just in a single spike.

Some firms define a trading day as any day with at least one executed trade, while others specify conditions such as a minimum profit per day or require that trades be placed during specific market hours.

Failing to meet the Minimum Trading Days requirement—even after hitting the profit target—can result in a failed evaluation or delay in funding. This makes the rule especially important for new traders who may focus only on reaching the profit goal without understanding the full evaluation criteria. Minimum Trading Days is a standard rule across most reputable prop firms and is implemented alongside other payout-related rules to ensure that traders demonstrate repeatable, controlled performance before accessing real capital.

Payout Rules

Payout rules in prop trading define how and when a funded trader can withdraw profits from their funded account. These rules are part of the broader Profit Target & Payout category and directly affect a trader’s earning timeline.

Most prop firms operate on a profit-sharing model, where traders keep a percentage of the profits they generate. Common profit splits range from 70% to 90% in favor of the trader, and in some cases 100%. 

To qualify for a payout, traders must usually meet a minimum profit threshold. For example, some firms require at least $1,000 in profit before allowing a withdrawal. This ensures that payouts are meaningful and that the trader has demonstrated consistent profitability.

Payouts are processed according to a fixed schedule, with most firms offering monthly or bi-weekly withdrawal windows. Some firms allow more flexible withdrawal timing, but all require traders to remain in full compliance with other trading rules, such as drawdown limits and minimum trading days. Before processing any payout, firms may request identity verification or compliance documentation. This step helps prevent fraud and ensures the firm meets anti-money laundering (AML) regulations.

Certain firms retain a buffer in the trader’s account, meaning only a portion of the total profit can be withdrawn. Others may restrict back-to-back withdrawals or introduce scaling plans where payout percentages increase with performance milestones. Payout rules are designed to reward disciplined trading while protecting the firm’s capital structure. Understanding these rules is necessary for managing expectations and planning a sustainable trading strategy.

Lot Size Restrictions

Lot size restrictions are trading limits set by prop firms to cap the maximum position size a trader can open or hold at any time. This rule is part of the broader category called Position Sizing & Leverage rules, which are designed to manage risk and protect firm capital.

A lot refers to a standardized trading unit, such as 100,000 units in forex (standard lot), or a single futures contract. Lot size restrictions define how many of these units a trader is allowed to use per trade or across all open trades. For example, a trader with a $50,000 funded account might be limited to 5 standard lots in forex or 3 contracts in futures.

The primary purpose of lot size limits is to prevent overexposure. By capping position sizes, prop firms reduce the chance of large, single-trade losses that could violate risk thresholds or lead to account termination. This rule also encourages traders to adopt consistent position sizing strategies aligned with their account size and risk profile.

Lot size restrictions may be enforced in different ways:

• Fixed cap per trade or per account (e.g., no more than 2 lots per trade)
• Risk-based sizing (e.g., position must not risk more than 1% of equity)
• Scaling tiers based on account size (e.g., 1 lot for $10k, 5 lots for $50k)

Violating lot size rules frequently leads to strict penalties, such as disqualification from the evaluation phase, forfeiture of profits, or account suspension. Some prop firms use automated systems to close trades that breach the maximum lot rule instantly. Lot size restrictions are especially important for beginner traders, as they instill disciplined risk management habits and prevent emotional overtrading. They also ensure that all funded traders operate within the firm’s predefined risk tolerance, regardless of experience level.

Leverage

Financial amplification in prop trading defines the ratio between the capital a trader controls and the actual funds in their account. It allows funded traders to open positions significantly larger than their account balance by using borrowed capital from the prop firm.

Prop firms assign specific amplification limits based on asset class, account type, and risk model. For example, forex accounts may offer amplification from 1:30 to 1:500, while stock or futures accounts are commonly limited to 1:10 or 1:20 due to higher volatility and margin requirements.

Financial amplification rules are part of the Position Sizing & Amplification category and work alongside lot size restrictions and maximum exposure limits. These rules ensure that traders do not exceed the firm’s risk tolerance by opening oversized or highly amplified positions.

The main purpose of amplification restrictions is risk control. High amplification increases both profit potential and loss exposure. By capping amplification, firms protect their capital and keep traders within acceptable risk boundaries. Violating amplification rules—such as exceeding the permitted ratio or ignoring margin thresholds—can lead to account termination or loss of payout eligibility. Understanding and respecting amplification limits is fundamental for any funded trader aiming for long-term success with a prop firm.

Max Simultaneous Positions

Max Simultaneous Positions is a trading rule that limits how many open trades a funded trader can hold at the same time in a prop firm account. This rule is part of the broader category of Position Sizing & Leverage rules.

The purpose of this restriction is to control risk exposure by capping the number of simultaneous positions across all instruments. For example, if a prop firm sets a limit of five, a trader may only have five active trades open at once, regardless of the asset class or position size. Opening a sixth position would violate the rule and may result in a warning, penalty, or account termination depending on the firm’s enforcement policy.

This rule is designed to prevent overexposure and over-diversification, which can reduce a trader’s ability to manage trades effectively. Fewer open positions encourage more selective trade entries, better focus, and improved risk-reward ratios. Different prop firms apply this rule with varying limits. Some allow only 3 open positions, while others permit up to 10 or more depending on the account size and trading strategy. The higher the account balance, the more flexibility a trader may be given to manage multiple positions.

Max Simultaneous Positions works together with other position control rules such as lot size restrictions and maximum ratio caps. Together, these rules help maintain trading discipline, reduce correlated risk across similar instruments, and protect both the firm’s capital and the trader’s account from large-scale drawdowns.

News Trading Restrictions

News trading restrictions are rules that limit or prohibit trading activity around scheduled economic news events. These restrictions are part of a prop firm’s Trading Style Rules, which define how traders are allowed to interact with the market based on timing, strategy, and volatility exposure.

Most proprietary trading firms enforce news trading restrictions to reduce risk during high-impact announcements such as Non-Farm Payrolls (NFP), central bank interest rate decisions, CPI inflation releases, and GDP data. These events frequently trigger sudden price spikes, widened spreads, and extreme slippage, making trade execution and risk control unreliable.

A typical news restriction rule requires traders to avoid opening or closing trades within a specific time window before and after a news release. Common restriction periods range between 2 to 15 minutes before the event and 2 to 10 minutes after. Some firms may also require all positions to be closed prior to the event, regardless of direction or size.

The main purpose of these rules is to protect both the trader and the firm from unpredictable losses caused by volatile price reactions. During news events, liquidity can drop sharply, spreads can widen by several pips, and technical setups frequently fail, leading to unexpected drawdowns or violations of other firm rules like daily loss limits.News trading restrictions also help ensure fairness across all traders. Market conditions during major announcements are not representative of normal trading environments, and some traders may attempt to exploit the volatility using high-risk strategies. By enforcing uniform restrictions, prop firms maintain consistency in their evaluation metrics and funded account performance.

Each prop firm defines its own list of restricted news events based on economic calendars and impact ratings. Traders must review the firm’s specific guidelines to avoid rule violations, which can result in disqualification or forfeiture of funding.

Holding Trades Overnight/Over Weekend

Holding trades overnight or over the weekend is a trading style rule that determines whether a trader is allowed to keep positions open beyond the daily or weekly market close. This rule is enforced by many proprietary trading firms to reduce exposure to market volatility and gap risk during non-trading hours.

Most prop firms restrict overnight and weekend holding because markets can open with significant price gaps after being closed, especially following major news events or geopolitical developments. These gaps can lead to losses that exceed the firm’s predefined risk limits, making this rule a key part of institutional capital protection. When the rule is active, traders must close all open positions before a set cutoff time—commonly 4:55 PM EST for forex or 3:55 PM CST for futures—depending on the asset class and firm policy. Failure to comply can result in penalties such as disqualification, account suspension, or forfeiture of profits.

Some firms make exceptions for funded accounts or specific instruments, but usually under strict conditions like reduced lot sizes or pre-approved risk parameters. Evaluation accounts almost always enforce this rule with no exceptions.

This rule directly impacts strategy selection. Day traders and scalpers are generally unaffected, while swing traders or overnight momentum traders must adjust their plans to avoid automatic closures or rule violations. Understanding this rule helps traders align their trading timeframes with the firm’s risk model and avoid disqualification due to technical non-compliance.

Scalping/HFT Restrictions

Scalping/HFT restrictions are trading style rules that prohibit or limit ultra-short-term strategies such as scalping and high-frequency trading on funded prop firm accounts. These rules are designed to control how trades are executed, not just what is traded.

Scalping is a trading method where positions are opened and closed within seconds or minutes to capture small price fluctuations. High-Frequency Trading (HFT) uses automated algorithms to execute hundreds or thousands of trades in microseconds, frequently exploiting minor inefficiencies in the market.

Most prop firms restrict or ban these strategies to protect their infrastructure, broker relationships, and risk models. High volumes of rapid trades can overload trading servers, trigger broker penalties, and expose firms to regulatory scrutiny. For example, latency arbitrage and quote stuffing are frequently flagged as manipulative behaviors that violate fair use policies.

Firms implement these restrictions by setting minimum holding times—such as requiring trades to remain open for at least one or two minutes—or by banning automated systems entirely. Some firms allow manual scalping but prohibit the use of bots or tick-based execution strategies. Others may restrict scalping during high-impact news events or volatile market conditions.

Violating scalping or HFT rules can lead to immediate account termination or disqualification from payout eligibility. Traders who prefer fast-paced strategies should carefully review each firm’s policy, as enforcement is frequently monitored through algorithmic trade analysis and flagged activity patterns.

Scalping/HFT restrictions fall under the category of Trading Style Rules because they define the acceptable method of executing trades within the prop firm’s funded environment. Understanding and following these rules is necessary for maintaining account compliance and avoiding penalties.

Copy Trading/EAs

Copy Trading/EAs is a trading style rule that restricts the use of automated systems or third-party signals on a prop firm account. This rule defines whether traders are allowed to use Expert Advisors (EAs), algorithmic bots, or copy trading platforms to execute trades.

Most prop firms prohibit or limit automation because they want to evaluate a trader’s personal decision-making and risk management. By requiring manual trading, firms can verify that profits result from individual skill rather than external software or signal duplication.

This rule is part of Trading Style Rules because it governs how trades are executed. It separates discretionary traders, who make decisions themselves, from system-based traders who rely on automation. Many firms disallow commercial EAs, social trading tools, or trade mirroring during evaluation phases. Some firms allow partial automation but only after pre-approval of the algorithm. Others monitor accounts for patterns that resemble bot-driven behavior, such as identical entries, fixed intervals, or abnormal frequency.

Violating the Copy Trading/EAs rule can lead to immediate account termination, disqualification from funding, or loss of profits. This rule protects the integrity of the evaluation process and ensures all traders compete under the same conditions.

No Gambling / Overleveraging

No Gambling / Overleveraging is a behavioral compliance rule that prohibits traders from taking reckless positions or using excessive leverage without a defined risk strategy. This rule is designed to prevent emotional trading, speculative bets, or high-risk tactics that could jeopardize the firm’s capital and the trader’s account.

Gambling in trading refers to entering positions without analysis, planning, or risk control such as placing trades purely on gut feeling, news hype, or revenge trading after a loss. Overleveraging happens when a trader opens positions that are too large relative to their account size, which amplifies losses from even small market movements.

Prop firms enforce this rule by monitoring for behaviors like:

• Opening trades without stop-losses or risk parameters
• Using lot sizes that exceed the firm’s maximum risk-per-trade policies
• Applying leverage beyond the firm’s set limits or margin thresholds

This rule helps protect both the trader and the firm. It ensures traders follow a consistent, professional approach that prioritizes risk management over impulsive execution. It also maintains fair competition by discouraging luck-based strategies that could temporarily outperform disciplined traders.

Violations of the no gambling or overleveraging rule can result in immediate account termination, disqualification from evaluations, or permanent bans from the platform. Most firms use automated systems to detect these violations based on trade frequency, position sizing, and risk-to-reward ratios.

This regulation falls under Behavioral & Compliance Rules and is necessary for long-term success in funded trading environments. It reinforces the expectation that traders act like risk-conscious professionals, not speculators.

No Martingale / Grid Systems (many firms explicitly ban)

The “No Martingale / Grid Systems” rule in prop trading prohibits the use of high-risk strategies that rely on increasing position sizes after losses or layering orders without directional bias. This rule is part of the Behavioral & Compliance Rules, which enforce responsible trading conduct and capital protection.

A Martingale strategy involves doubling the trade size after each loss to attempt recovery with one winning trade. It assumes unlimited capital and no risk limits, which makes it unsustainable in real market conditions. A single prolonged losing streak can lead to exponential drawdowns and complete account loss.

Grid trading systems place buy and sell orders at fixed intervals above and below a central price. These systems frequently avoid stop losses and instead rely on price oscillation, which exposes the account to compounding losses during strong trends or breakouts.

Prop firms ban these strategies because they violate core risk management principles. Both methods increase exposure during adverse conditions, encourage reckless trade sizing, and treat trading like a probabilistic game rather than a skill-based discipline.

Many top prop firms use automated monitoring tools to detect Martingale or grid-like behavior. Signs such as increasing lot sizes after losses or stacking trades without directional logic can trigger immediate account termination. The ban on Martingale and grid systems protects the firm’s capital and promotes long-term trader development. It ensures that funded traders use scalable, sustainable strategies instead of gambling on recovery through position escalation.

No Account Sharing

The “No Account Sharing” rule is a strict behavioral and compliance regulation used by proprietary trading firms to ensure that only the approved trader, who passed the evaluation, is the one executing trades on a funded account.

Account sharing refers to any situation where a trader allows another person to access, manage, or trade on their funded account. This includes giving out login credentials, letting someone else place trades, or collaborating with another trader in real time using the same account.

Proprietary firms implement this rule to maintain individual accountability and protect their capital. When a firm funds a trader, it does so based on that trader’s specific risk profile, strategy, and performance during the evaluation phase. If someone else trades the account, the firm can no longer verify who is responsible for the decisions or whether the trading behavior aligns with the agreed terms.

The no account sharing rule also supports regulatory compliance. Many jurisdictions require trading firms to track account access and trading behavior for audit and legal purposes. Shared accounts create data inconsistencies and increase exposure to fraud or unauthorized activity.

Violating this rule usually results in immediate termination of the funded account and forfeiture of any profits. Most firms also issue a permanent ban, meaning the trader cannot reapply or open new accounts in the future. Some firms use IP tracking, behavioral analytics, and device fingerprinting to detect violations.

This rule is part of the broader category of behavioral and compliance rules, which are designed to uphold the integrity of the trading environment and ensure that each trader remains individually responsible for their actions. Understanding and respecting this rule is necessary for any trader who wants to maintain a long-term relationship with a prop firm.

Phase 1 Rules

Phase 1 rules are evaluation-specific regulations that define the first step of a prop firm’s trader assessment process. These rules are designed to test a trader’s ability to generate profits while managing risk under controlled conditions. The main objective of Phase 1 is to verify that a trader can meet a predefined profit target without violating any risk parameters. Most prop firms set this target between 8% and 10% of the starting account balance, and traders must reach it within a fixed time window—typically 30 calendar days.

To ensure risk control, Phase 1 includes strict drawdown limitations. These typically involve a maximum daily loss (such as 5%) and an overall drawdown cap (frequently 10%). If a trader exceeds either limit, the evaluation is failed regardless of profitability.

Another common rule is the minimum trading days requirement. Even if the profit target is hit early, traders must remain active for a set number of days—usually 5 to 10—to prove consistency over time rather than relying on one or two lucky trades.

Traders are also expected to follow behavioral and strategy restrictions. This includes avoiding overleveraging, martingale systems, account sharing, and gambling-like behavior. Some firms also limit position sizing or prohibit trading during high-impact news events.

Phase 1 rules are important because they filter for disciplined traders who can follow structure and manage risk. Passing Phase 1 shows that a trader is capable of operating under pressure using real-world trading habits, not just chasing short-term gains.

These rules are part of the broader category of evaluation-specific rules and serve as the first gate before advancing to Phase 2 or receiving a funded account.

Phase 2 Rules

Phase 2 rules are evaluation-specific regulations that apply after a trader successfully completes Phase 1 of a prop firm challenge. These rules are designed to confirm that the trader can maintain consistent performance while respecting strict risk parameters before receiving a funded account.

The profit target in Phase 2 is usually lower than in Phase 1. While Phase 1 may require a 8–10% profit, Phase 2 typically reduces that to 4–5%, placing more emphasis on stable results over time rather than aggressive gains. This shift helps the firm assess whether the trader can generate profits under realistic conditions.

Risk limits from Phase 1 typically remain unchanged. Traders must still respect the maximum daily loss and overall drawdown limits, which are closely monitored during Phase 2 to ensure disciplined risk control is maintained across trades.

Minimum trading days are required regardless of how quickly the profit target is reached. Most firms ask for 5 to 10 minimum trading days in Phase 2 to verify that the trader’s strategy works consistently and is not based on a few lucky trades.

Some firms add or enforce consistency rules at this stage. These may include limits on how much of the total profit can be made in a single day or restrictions on large fluctuations in position size. The goal is to identify traders who apply steady risk practices, not those relying on oversized one-off trades.

All behavioral and compliance rules continue to apply. Traders must avoid overleveraging, account sharing, martingale strategies, and unauthorized trading methods. Any violation—no matter how small—can lead to disqualification and a restart of the evaluation process.

Phase 2 rules are part of the Evaluation-Specific Rules category and serve as the final checkpoint before funding. Passing Phase 2 shows that the trader can manage capital responsibly under live-like conditions without breaking any firm regulations.

Time Limit

The time limit is an evaluation-specific rule that defines the maximum number of days a trader has to complete each phase of a prop firm’s challenge or assessment.

Most prop firms assign a fixed time limit during the evaluation phase, typically ranging from 10 to 60 calendar days depending on the firm and the account type. During this period, traders must reach the designated profit target while staying within all risk management constraints, such as daily loss limits and maximum drawdown.

The purpose of the time limit is to assess not just profitability but a trader’s ability to perform within realistic market timelines. It introduces pressure similar to managing capital in live trading environments, where timing and discipline are required.

If a trader does not complete all evaluation objectives within the time limit, the account is usually disqualified, and the trader must restart the challenge—frequently by paying a new fee. Some firms may provide extensions or resets, but this depends on the firm’s policies and trader performance.

The time limit only applies during the evaluation or challenge phase. Once a trader becomes funded, most firms remove the time constraint, allowing more flexibility in trade execution.

This rule belongs to the category of Evaluation-Specific Rules, which govern the structure and expectations of the initial qualification process, separate from rules applied to live funded accounts.

What are prop firm challenge rules?

Prop firm challenge rules are the specific trading requirements a trader must follow during the evaluation phase of a proprietary trading firm. These rules are designed to test a trader’s ability to manage risk, hit profit targets, and follow disciplined strategies before being granted access to a funded account.

A prop firm challenge is a structured assessment where traders use simulated funds to prove their trading consistency and risk control. The challenge includes two phases, each with defined objectives such as reaching a profit target, staying within drawdown limits, and trading for a minimum number of days within a set time limit.

The key difference between prop firm challenge rules and general prop firm rules lies in their purpose and timing. Challenge rules apply only during the evaluation stage and are temporary. 

They focus on performance metrics like:

• Hitting a specific profit target (e.g. 8–10% in Phase 1)
• Staying within a maximum daily or overall drawdown
• Trading a minimum number of days (e.g. 5–10 days)
• Completing the challenge within a fixed period (usually 30–60 days)

Once a trader passes the challenge and becomes funded, general prop firm rules take over. These are ongoing regulations that govern how the trader manages the firm’s capital. General rules include payout structures, trading behavior restrictions, leverage limits, and compliance policies.Breaking a challenge rule usually means failing the evaluation and losing the chance to get funded. Violating general prop firm rules after funding can lead to account suspension or termination.Understanding the difference between these two sets of rules is necessary for any trader aiming to pass a prop firm challenge and maintain a funded account.

What are the best prop firms for beginners?

The best prop firms for beginners are those that offer clear rules, low-risk evaluation models, and strong educational support. Prop number one is widely considered the top choice for new traders due to its accessible entry conditions and transparent rule structure.

Choosing the right prop firm as a beginner is about finding a platform that balances opportunity with structure. A good beginner-friendly prop firm clearly outlines its trading regulations, including drawdown limits, profit targets, and minimum trading days. This transparency helps new traders avoid disqualification from misunderstood rules.

The most suitable firms for beginners also provide moderate risk parameters. For example, a daily loss limit of 3–5% and an overall drawdown cap of 6–10% allows traders to learn proper risk management without being penalized for small mistakes.

Beginner prop firms frequently set realistic profit targets between 5% and 10%. These targets encourage consistency rather than relying on high-risk trades. They also require a minimum number of trading days, typically between 5 and 10, to ensure traders develop sustainable habits over time.

Prop number one stands out because it combines all of these beginner-friendly features with high ratings and a strong reputation in the industry. It is structured to help new traders grow steadily without overwhelming them with complexity or unrealistic expectations.

How does a prop firm work?

A prop firm works by giving traders access to the firm’s capital in exchange for a share of the profits they generate. The process of getting access to a prop trading firm begins with an evaluation phase where traders must prove their skills by trading on a simulated or demo account under strict rules. These rules include a profit target, a maximum drawdown limit, and a time restriction. If the trader meets the criteria, they are offered a funded account where they can trade using the firm’s real or simulated capital. The firm retains a percentage of the profits, usually between 10% and 20%, while the trader keeps the majority. This structure allows skilled traders to earn from larger capital pools without risking their own money, while the firm protects itself with predefined trading regulations and risk controls.

What are the tips to choose a good prop firm?

Choosing a good prop firm is about matching the firm’s rules, trading conditions, and payout structure with your personal trading style and experience level. The best prop firms are transparent with their rules, fair in their evaluations, and supportive of your growth as a trader.

Here is a short list of tips to help you choose the right prop firm:

• Check the firm’s reputation and trader feedback: Look for reviews that highlight consistent payouts, responsive support, and honest evaluations.
• Understand the firm’s rule structure: Make sure you’re comfortable with rules around drawdown limits, minimum trading days, and profit targets.
• Evaluate the payout model and profit split: Choose firms that offer favorable profit-sharing terms and allow frequent, reliable withdrawals.
• Match the rules with your trading style: If you’re a scalper, news trader, or swing trader, verify the firm allows your preferred strategy.
• Assess the challenge difficulty: Look at pass rates, time limits, and whether consistency rules are enforced.
• Compare fees and hidden costs: Check evaluation costs, monthly subscriptions, and whether resets or add-ons are required.
• Verify capital ratios and instrument access: Choose a firm that offers suitable capital ratios and access to the markets you trade.
• Review customer support and education: Good prop firms offer fast support and helpful resources, especially useful for beginner traders.
• Check for transparency in all phases: Firms should clearly explain their Phase 1 and Phase 2 rules, with no hidden conditions.
• Choose based on your experience level: Some firms cater to advanced traders with strict rules, while others are beginner-friendly with flexible evaluations.

Prop firm rules Examples of the best prop firms

Understanding the rules of the best prop firms is necessary for funded traders who want to compare real-world trading requirements and choose the right firm for their style.

Each proprietary trading firm enforces its own set of rules to manage risk, evaluate trader consistency, and ensure capital protection. By reviewing actual rules from top firms, traders can see how different companies enforce limits around drawdowns, profit targets, minimum trading days, news trading restrictions, and payout structures.

Some firms apply a no consistency rule, allowing traders to reach profit targets in any way they choose. Others require consistency, meaning a single high-profit day cannot account for most of the total profit. These two approaches reflect different philosophies on trader evaluation, one focused on flexibility, the other on discipline.

Risk management rules, such as maximum daily drawdown and overall drawdown limits, are designed to prevent catastrophic losses. Trading style restrictions, like banning high-frequency trading or news scalping, are used to maintain platform stability and reduce exposure to volatility. Behavioral rules, such as no gambling or account sharing, help ensure that traders follow responsible practices. Evaluation-specific rules, including Phase 1 and Phase 2 targets and time limits, define how traders must prove their skills before qualifying for a funded account.

By comparing the rules of leading firms side by side, traders can find the structure that best fits their strategy and risk tolerance. Below, we provide complete rule breakdowns for three of the most prominent prop firms in the market.

Prop number one prop firm rules

Prop number one is a no-consistency-rule proprietary trading firm that provides flexible trading conditions while enforcing strict risk management standards. 

The table below outlines all key rules that apply to traders during both evaluation and funded phases.

Alpha futures prop firm rules

Alpha Futures is a funded trading firm offering flexible evaluation programs with structured risk controls. The table below outlines the key rules and trading conditions used across their programs. These rules are designed to promote disciplined trading, limit exposure, and ensure consistency in performance.

Apex prop firm rules

Apex Trader Funding applies a structured set of rules designed to evaluate futures traders based on risk control, consistency of engagement, and trading discipline. The table below summarizes the main Apex prop firm rules across all core regulation categories.

Why Choose Prop number one as a prop firm?

Choosing Prop number one as your prop trading firm is a smart decision for both new and experienced traders because it combines flexible rules, fast payouts, and a supportive trading environment designed to help traders grow consistently. Prop number one allows traders to  operate without strict consistency rules, giving them the freedom to scale profits without being penalized for uneven performance. This flexibility is ideal for traders who use adaptive strategies or who perform better in trending markets than in flat ones.

The firm enforces clear and protective risk management rules, including daily and maximum drawdown limits, which help traders build discipline while preserving capital. These rules are easy to understand and are supported by built-in tools like real-time drawdown tracking and profit calculators. Prop number one is beginner-friendly, with accessible evaluation phases and a minimum trading day requirement that encourages steady, long-term performance instead of rushed, high-risk trading. This makes it easier for new traders to develop habits that lead to consistent profitability. With a reputation for fairness, transparency, and fast support, Prop number one stands out as a reliable partner for anyone looking to succeed in funded trading. It offers the right balance of freedom, structure, and opportunity to help traders build a lasting edge in the market.