What a "funded account" really is

If you only read one guide before paying for an evaluation, read this one. The single biggest misunderstanding in this industry is what the word “funded” means.

You are (almost always) trading a simulation

When a retail prop firm “funds” you, you are not handed a personal brokerage account full of the firm’s cash to trade on a live exchange. In the overwhelming majority of cases you trade a simulated (demo) account that mirrors live prices. Your fills, your P&L, and your drawdown are all tracked in that environment.

This is not inherently a scam — it’s a business model. But it changes how you should think about everything:

• The firm’s revenue comes substantially from evaluation fees, not from your trading profits.
• Your “profit split” is paid by the firm out of its own funds, as a reward for hitting targets under its rules — it is not a withdrawal of money you made on a live market.
• Because the firm is paying you from its own pocket, it has every incentive to write rules that decide who qualifies. The market is only half the test; the rule book is the other half.

Some firms route consistent traders to genuinely live capital, and a few are explicit about it. Treat “real/live funding” as a claim to verify on the firm’s own terms of service, not as a default.

Why this matters for you

1. Read the rules before the marketing. A 90% split is meaningless if a consistency rule or a trailing drawdown quietly disqualifies most traders before payout.
2. The firm is a counterparty, not a broker. Its solvency and its willingness to pay matter as much as the trading conditions. New firms with no payout history carry real counterparty risk — see how to vet a prop firm.
3. “Funded” ≠ “your money.” You generally can’t transfer the account, and the firm can change or revoke it under the contract you agreed to.

The honest framing

A prop-firm challenge is best understood as: pay a fee to take a skills test under a specific rule set; if you pass and keep following the rules, the firm pays you a share of simulated profits. Everything else — split %, drawdown model, payout speed — is the fine print of that deal.

That’s exactly what we score on the compare page: the objective terms of the deal, taken from each firm’s official site, with no pay-to-rank.

Bottom line: Know that you’re trading a simulation funded by fees, judged by a rule book. Pick the firm whose rules you can actually live with.