How to compare prop firms

What it is

With dozens of prop firms now operating in the retail trading space, comparing them can feel overwhelming. The key is knowing which metrics actually matter — and which are marketing language that obscures the real terms. This article breaks down the most important comparison points.

The five things that actually matter

1. Drawdown rules

This is the most important factor. Check:

• What is the daily drawdown limit? (4–5% is standard; anything lower is more restrictive)
• Is it static or trailing? (Trailing drawdown is significantly harder to pass with)
• Is daily drawdown measured from the day's opening balance, or from the highest equity of the day?
• What timezone do the rules use?

2. Profit split and payout reliability

• What percentage of profits do you keep? (70–90% is standard)
• How frequently can you withdraw? (Monthly is most common)
• Is there a minimum payout threshold?
• Does the firm have a track record of paying out consistently? (Check independent review sites and trading forums)

3. Challenge fee and refund policy

• What is the challenge fee for the account size you want?
• Is the fee refunded on the first withdrawal? (Some firms offer this)
• What happens if you fail — can you retry immediately, and at what cost?

4. EA and strategy restrictions

• Are automated EAs explicitly permitted?
• Are martingale or grid strategies allowed?
• Are there restrictions on trading during news events?
• Is there a minimum holding time per trade?

5. Platform and broker

• Does the firm use MetaTrader 4, MT5, or a proprietary platform?
• Which broker provides the execution? (Execution quality matters)
• What spreads are offered on the instruments you trade?

Red flags to watch for

• Unusually high profit targets (above 12%) — harder to pass legitimately
• Trailing drawdown with very tight limits — designed to be difficult
• No verifiable payout history or independent reviews
• Firms incorporated in unregulated jurisdictions with no physical presence
• Rules that are vague or subject to wide interpretation — creates room for dispute

Common misconceptions

• Higher profit split is not always better. A 90% split with trailing drawdown and tight daily limits may be harder and riskier than an 80% split with static drawdown and generous daily limits.
• The cheapest challenge fee is not always the best value. A cheap challenge at a firm with poor payout reliability is worse value than a more expensive challenge at an established, reliable firm.

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Written and reviewed by the Karnek Research team. Last updated August 2026.

Educational content only - not financial advice. Past performance does not predict future results. Trading carries significant risk.