Frequently Asked Questions
Frequently asked questions about prop firms and prop trading
General Questions
What is a prop firm in simple terms?
A prop firm is a company that gives traders money to trade with. If you make profits, you keep most of it (70%-95%). If you lose money, the company absorbs the loss. You don't risk your own savings, only a small evaluation fee.
How much money can I make with a prop firm?
It varies based on capital allocation and performance. With larger capital allocations and consistent returns, monthly income can range from hundreds of thousands to millions of yen depending on your profit share percentage and trading results.
Is prop trading a scam?
Legitimate prop firms are not scams. However, some fraudulent operations exist. Always verify years in operation (2+ minimum), user reviews and testimonials, regulatory partnerships, payout track record, and transparent terms and conditions.
Do I need prior trading experience?
While not always required, 6-12 months of consistent trading experience significantly increases success probability. The 21%-30% pass rate indicates evaluation difficulty.
Evaluation Questions
How long does the evaluation take?
Varies by firm. Most firms allow unlimited time per stage. Some firms impose 30-60 day limits. Average completion is 2-8 weeks for two-stage evaluation.
What happens if I fail the evaluation?
You lose the evaluation fee (typically non-refundable). You can purchase a new evaluation and retry. Some firms offer discounted retry attempts. No limit on retry attempts if willing to pay fees.
Can I use Expert Advisors (EAs) or trading bots?
Depends on the firm. Many firms ban automated trading. Some permit EAs with approval. Few firms permit unrestricted EA use. Always confirm with specific firm.
What are the most common reasons for failing evaluations?
In order of frequency: violating daily loss limits (35-40%), exceeding maximum drawdown (25-30%), insufficient consistency (15-20%), not meeting minimum trading days (10-15%), and rule violations such as news trading or prohibited strategies (5-10%).
Financial Questions
How much does it cost to start prop trading?
Initial costs include evaluation fee (one-time, varies by capital tier), recommended 6-12 months of living expenses saved, and no trading capital required as the firm provides all trading capital.
When can I withdraw my profits?
Withdrawal terms vary. First withdrawal is typically after first profitable period (2 weeks to 1 month). Minimum amounts and frequency (daily, bi-weekly, monthly, or on-demand) vary by firm. Processing time ranges from same-day to 14 business days.
Are there any hidden fees?
Potential additional fees include monthly platform fees, inactivity fees, withdrawal fees, and data feed fees. Always read complete terms before purchasing.
Is the evaluation fee refundable?
Depends on firm. Best practice is fee refunded on first payout. Some credit fee to account balance. Most firms have non-refundable fees. Verify before purchase.
Trading Rules Questions
Can I hold positions overnight?
Varies by firm. Most firms permit overnight holding. Some require all positions closed daily. Many firms prohibit holding over weekends. Check specific firm rules.
Can I trade during news events?
Typically restricted. Standard restriction is plus or minus 2 minutes around high-impact news like NFP, FOMC, GDP, and inflation reports. Violation consequence is account termination. Some firms allow news trading (rare).
What happens if I violate a rule?
Minor violations result in warning and rule clarification. Major violations result in immediate account termination. Evaluation fees typically not refunded. Must purchase new evaluation to reapply.
Are there limits on how much I can profit in one day?
Some firms impose daily profit caps (5%-10% maximum daily gain) to prevent excessive risk. Many firms have no profit ceiling. Consistency rules may restrict single-trade profit concentration. Confirm with specific firm.
Career Questions
Can prop trading be a full-time career?
Yes, but requires sufficient capital allocation (10M+ for sustainable income), consistent profitability (5%-10% monthly returns), financial cushion (12+ months expenses saved), strict risk management discipline, and realistic expectations about income volatility.
How long until I can make a living from prop trading?
Realistic timeline: Months 1-2 for evaluation completion, Months 3-6 for initial funded trading with small capital, Months 6-12 for first scaling opportunity and building track record, Months 12-18 for sufficient capital for full-time income, and 18+ months for established career with scaling to larger amounts.
What happens if I have a losing month?
If no rule violations, continue trading with no penalties. No profits means no payout that month. Firm typically allows recovery period. Extended losses (3-6+ months) may trigger review or termination. As long as rules followed, account remains active.
Can I work for multiple prop firms simultaneously?
Generally yes, with considerations. Verify no non-compete clauses. Ensure can manage multiple accounts. Don't correlate strategies across accounts. Follow each firm's distinct rules. Some firms require disclosure of other relationships.
Japanese Market Questions
Which prop firms offer Japanese language support?
Primary options include Fintokei with native Japanese support as largest in Japan, international firms with limited Japanese support (verify individually), and more firms adding Japanese support in 2025.
Do I need to pay taxes on prop trading income in Japan?
Yes. Income is typically classified as miscellaneous income. Tax rate is progressive income tax (5%-45%) plus residence tax (approximately 10%). Annual tax return required. Maintain detailed income records. Seek professional tax advice for compliance.
Are prop firms regulated in Japan?
Currently no specific regulation for prop firm industry. Partnered brokers may be FSA-licensed. Limited specific consumer protections. Extra caution required - verify firm legitimacy. Regulatory framework may develop as industry grows.