If you are looking into proprietary trading firms, also called prop firms, you have probably noticed one thing straight away: they all have rules. These rules can look complicated at first, but they exist to protect both the trader and the firm.
The good news is that most prop firm rules follow the same pattern. Once you understand the basics, you will know what to expect across nearly any firm. In this guide, we break down the most common rules you will see, why they matter, and how to work with them.
Why prop firms have rules
Prop firms give traders access to larger accounts without risking personal savings. Because the firm is putting up the capital, it needs to manage risk carefully. The rules are designed to make sure traders:
Protect the firm’s capital
Prove they can trade with discipline
Show consistency before scaling up
Think of the rules as the framework that separates serious traders from those who rely on luck. If you can follow the rules, you are more likely to get funded and stay funded.
The most common prop firm rules
1. Profit targets
Almost every prop firm requires traders to hit a profit target. This is usually a percentage of the account balance, such as 6%, 8%, or 10%. The target proves that you can generate returns without breaking the other rules.
Tip: Focus on steady growth rather than rushing to hit the number. Most traders fail by overtrading to reach the target quickly.
2. Drawdown limits
Drawdown is the maximum loss you can take on the account. There are usually two kinds:
Daily drawdown – the most you can lose in one day
Overall drawdown – the most you can lose in total
These limits protect the firm’s capital and encourage good risk management. If you break them, the account is usually closed.
Tip: Use smaller position sizes until you are confident. Staying well inside the limits is more important than pushing for fast gains.
3. Minimum trading days
Some firms require a certain number of active trading days before you can pass a challenge or request a payout. This prevents traders from passing in a single lucky trade.
Tip: Even if there is no minimum, it is smart to spread trades out. This shows consistency and lowers pressure.
4. Maximum trading days
Other firms give a time limit to reach the profit target, such as 30 or 60 days. This adds urgency but also pressure.
Tip: If the firm offers unlimited days, use that to your advantage. If not, create a clear plan so you are not rushing near the deadline.
5. Leverage
Prop firms set leverage limits to control risk. Forex prop firms often allow high leverage, while futures and equities firms may be stricter.
Tip: Higher leverage gives you flexibility, but you do not need to use it all. Many successful traders use less than the maximum allowed.
6. News trading
Some prop firms do not allow trading around major economic news releases, because price swings can be unpredictable. Others allow it freely.
Tip: Always check the rules before trading events like Non-Farm Payrolls or central bank announcements.
7. Weekend holding
Rules vary on whether you can hold trades over the weekend. Some firms close all positions on Friday to avoid gaps. Others allow you to keep trades open.
Tip: If weekend holding is allowed, make sure you are comfortable with the extra risk of Monday gaps.
8. Consistency rules
Some firms want to see consistent results rather than one or two big trades. They may limit the percentage of profits that can come from a single day or position.
Tip: Trade in a way that spreads profits out. This shows skill rather than luck.
9. Scaling plans
Many prop firms offer scaling, meaning if you perform well, your account size grows. Scaling rules usually require a steady profit track record without breaking drawdown limits.
Tip: Do not focus only on the first account size. If you follow the rules and trade consistently, you can scale much higher.
10. Payouts
The rules around payouts are often the most important to traders. Firms set schedules such as bi-weekly or monthly. They may also have minimum withdrawal amounts or consistency requirements before you can take money out.
Tip: Plan your strategy with the payout cycle in mind. Trading changes when you know you can access profits quickly.
How rules vary by firm
While the rules above are the most common, each firm has its own variations. Some are stricter, others are more flexible. For example:
One firm may set an 8% profit target with a 30-day limit.
Another may set a 6% profit target with unlimited days.
Some firms allow weekend holding, others ban it.
This is why reading the rulebook carefully before signing up is essential. The right firm for you depends on your trading style and risk tolerance.
Why breaking rules ends accounts
Prop firms do not bend rules. If you break a rule, the account is usually closed immediately, even if you were close to passing. This strictness keeps the system fair and protects the firm’s capital.
Tip: Think of rules as the cost of entry. They are not there to block you, but to make sure only disciplined traders succeed.
How to work with prop firm rules
Here are a few practical steps to help you trade within the rules:
Study the rulebook before trading – every firm has a PDF or page that explains the details.
Build a risk plan – decide how much to risk per trade and per day, and stick to it.
Track your progress – keep a simple journal to make sure you are on track to hit targets without rushing.
Stay patient – the rules reward steady trading, not fast gambling.
The rules of prop firms may feel restrictive, but they are there to create a level playing field. They test your discipline, protect capital, and reward consistency.
If you understand the common rules — profit targets, drawdowns, trading days, leverage, news restrictions, weekend holding, consistency, scaling, and payouts — you will be prepared for almost any prop firm evaluation.
Success in prop trading is not just about finding trades. It is about showing you can follow the rules with patience and control. Once you do, you unlock the real benefits: access to larger accounts, reduced personal risk, and the chance to grow as a trader.