If you’re venturing into the world of prop trading, understanding the different prop trading account types available is essential.
Choosing the right account can dramatically affect your trading experience, your earning potential, and your long-term success.
Let’s break down the various account types clearly to help you make an informed decision.
Prop Trading Account Types
Here are the different types of prop trading accounts.
Evaluation (Challenge) Accounts
Evaluation accounts require traders to pass specific tests before accessing funded accounts.
Typically, you’ll need to achieve profit targets (like 8-10%) within a set timeframe (usually 30-60 days) while adhering to strict risk rules.
For example, a firm might require you to avoid exceeding a daily loss limit of around 2-5% or an overall drawdown of about 10-12%.
Successful evaluation traders prove discipline and skill, making this type perfect for traders who want to demonstrate their capabilities before accessing substantial capital.
Funded (Live) Accounts
Once you’ve successfully passed an evaluation, you’ll trade real capital provided by the prop firm.
Your profits, often split favorably (commonly 80% to the trader), can be substantial.
For instance, earning a monthly profit of $5,000 at an 80% split nets you $4,000.
It’s essential to understand clearly when and how you can withdraw your earnings, as payout schedules vary between firms—some offer weekly withdrawals, while others provide payouts monthly.
Instant Funding Accounts
Instant funding accounts grant immediate access to trading capital, skipping evaluation entirely.
However, the convenience typically comes at a higher initial cost and potentially lower profit splits.
Traders usually pay an upfront fee (ranging from a few hundred to over a thousand dollars) for direct access to capital ranging from $10,000 to $100,000.
These accounts suit traders who’ve already built a solid track record and can comfortably handle stricter risk management guidelines.
Scaling (Growth) Accounts
Scaling accounts allow traders to progressively manage larger amounts of capital based on consistent performance.
For example, starting with a $20,000 account, you might increase your capital to $100,000 after consistently achieving cumulative profit milestones (often around 10-20% growth increments).
It’s great because you get disciplined, long-term profitability rather than risky short-term gains, ideal for traders committed to steady account growth.
Swing Trading Accounts
Swing trading accounts cater specifically to traders holding positions overnight or for several days.
Typically, swing traders have fewer restrictions on overnight positions, though holding positions over weekends might incur small fees or carry higher margin requirements.
These accounts fit traders who capitalize on multi-day market movements, like trading Forex pairs over longer economic cycles or holding stock index futures for extended market swings.
Day Trading Accounts
Designed for traders who prefer rapid, short-term trading, day trading accounts require all positions closed by market close each day.
Traders benefit from tight intraday spreads, lower margins, and clear daily risk limits.
A day trader might, for example, focus on high-volatility sessions, using structured risk management to capture smaller but consistent profits, effectively avoiding overnight market risk.
Forex Accounts
Forex accounts focus exclusively on currency trading, offering features like low spreads (around 0.0 to 1.5 pips on popular pairs) and leverage up to 1:100.
Traders benefit from specialized tools tailored specifically for Forex trading, such as advanced currency analysis platforms, real-time economic calendars, and specialized educational resources.
Currency-focused traders find these accounts highly efficient for executing short-term currency trades or capitalizing on global economic news.
Futures Accounts
Futures accounts provide traders with access to commodities, stock indices, or other futures contracts.
Margin requirements can vary significantly—for instance, trading one E-mini S&P 500 contract may require margins between $500 to $1,500 depending on the firm’s policies.
For this type, you must understand the unique dynamics of futures trading, like rollover costs and contract expiration dates.
They are ideal for experienced traders comfortable navigating leveraged markets.
Direct Funding Accounts
Direct funding accounts immediately provide traders capital without evaluation.
Suitable for seasoned traders with verified track records.
These accounts often have higher initial costs, stricter risk parameters, and slightly reduced profit splits.
For instance, a trader paying a higher upfront fee may receive instant access to substantial capital but with more stringent daily drawdown limits to protect firm capital.
Choosing the Right Account Type for Your Trading Style
Selecting the correct prop trading account types involves carefully assessing your trading strategy, experience, risk tolerance, and personal goals.
Beginners may benefit from evaluation accounts, while experienced traders might prefer instant funding or scaling accounts.
Consider these questions when choosing:
- What’s your risk tolerance?
- What’s your preferred trading strategy?
- How quickly do you want to access capital?
Best Prop Firms Based on Account Types
Choosing the right firm is equally crucial as choosing your account type. Here are two leading prop firms known for providing diverse and competitive account types:
1. FunderPro (Top Pick)
FunderPro stands out due to its excellent range of account types suitable for all levels.
They offer evaluation accounts with achievable goals, generous profit splits for funded accounts, and clear scaling options.
Pros:
- Flexible and clearly defined account structures
- Excellent educational resources
- High profit splits (up to 90%)
- Strong trader community and support
Cons:
- Slightly higher initial fees for some account types
2. Apex Trader Funding
Apex Trader Funding offers transparent, structured accounts ideal for beginners and intermediate traders.
They have clear evaluation rules, instant funding options, and fair profit splits.
Pros:
- Transparent terms and conditions
- Reliable and well-structured account types
- Consistent scaling opportunities
Cons:
- Lower profit splits compared to FunderPro
Common Mistakes to Avoid When Selecting a Prop Trading Account
Avoid these common pitfalls when choosing your account type:
- Rushing into a funded account without sufficient preparation
- Choosing account types not aligned with your trading strategy
- Overlooking detailed terms and conditions
- Ignoring risk management rules of specific account types
Frequently Asked Questions
What Is the Easiest Prop Trading Account Type for Beginners?
Evaluation accounts are generally the easiest and safest for beginners, allowing traders to test their skills without significant upfront costs.
Can You Switch Account Types Later On?
Yes, many prop firms allow traders to upgrade or change account types based on performance and preferences.
How Do Profit Splits Usually Differ Among Account Types?
Funded accounts typically offer higher profit splits, whereas instant funding accounts may have lower splits due to higher firm risk.
Are There Fees Associated with Certain Prop Trading Account Types?
Yes, evaluation and instant funding accounts often have upfront fees or maintenance costs clearly outlined by the firms.
Conclusion
Understanding and selecting the right prop trading account types is crucial for your long-term trading success.
Carefully evaluating each account’s features, risks, and benefits helps align your choices with your trading goals and style.
With reputable firms like FunderPro and Apex Trader Funding offering clear and structured account types, you have excellent options to confidently begin or continue your prop trading journey.