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Propfirms are companies offering traders an opportunity to use their skills to trade for them. They claim to offer real capital for you to trade, after passing what they call an evaluation test

Your relation with a propfirm goes through 3 phases in general:

1. The first phase is called the evaluation test phase

You start your relation with a propfirm by paying them to let you pass an evaluation test. During this evaluation test, you are given a virtual capital to trade with, a profit target that you should reach in a specific period of time and very strict maximum drawdown rules.

At the end, of this period of time, if you reached the profit goal without breaking any rule, then you successfully passed your evaluation test. And you can move on to the next phase

On the other side, if you didn't reach your profit goal, or you did break the rules, then you failed your test, and you should pay again for another evaluation test and start over the first phase

2. The second phase is where you trade to generate real profit

After you successfully passed your evaluation test, the propfirm will give you a digital certificate and make you sign a contract

The propfirm will claim allocating real capital for you to trade. This is not entirely true. What really happens is that the propfirm will use the money they collect from other customers who fail the evaluation tests, to pay you if you generate profit during this phase.

Propfirms make big profits from their customers who fail their evaluation tests, this profit is largely sufficient to pay anyone who succeed their evaluation test and later request a payout. Generally speaking only 10% of the customers pass evaluation tests

3. The third phase is when you raise a flag on the propfirm internal systems

Propfirms monitor all their customers activity. If you generate profit in a consistant manner, the propfirm will detect you and will flag your profile. This is not a bad thing

Each propfirm has its own way to manage their operational risk. If you generate much profit, then the propfirm will need to pay you from the money they collect from their customers, so you are basically eating into their profit. The solution for this issue is that propfirms will copy your trades while adding an additional layer of risk management so that they will reproduce your trades on their side. This way, they will pay you from the profit they generate from copying your trades. Off course, this will not happen the first month you generate profit. You need to consistantly generate profit on a long period of time for this to happen.

Rithmic is the company that provides the price and trade connection that you can use from your NinjaTrader software.

Suppose that you started your own propfirm company, then the first thing you need to do is to sign a contract with Rithmic to provide your users with NinjaTrader connections. Then link your backend service with Rithmic service and each time you get a new user, Rithmic will allocate him a new connection. Rithmic will also provide all transaction and order history for each user.

Yes. eventhough only 10% of propfirms users pass their evaluation tests. You can be one of those 10%

With propfirms, even though they claim allocating real capital for you to trade, your are never trading real money. You are always trading a virtual account with virtual money on it. But the profit you generate on this virtual account will be paid to you in real money.

Propfirms will decide to copy the trades of successful traders internally as a way to generate more income

So as you can see, propfirms don't have a legal issue with letting retail traders manage the money of other people. Legally speaking, they are paying you for a service that you provide for them, the service is your trading signals.

The answer to this question is straightforward.

If you are a beginner and testing this whole propfirm thing, then you should go with the cheapest option, which is Apex Trader Funding The monthly subscription amount is between 15$ and 29$, they always have an active promotion

If you are experimented and want to guarantee fast payouts, then you should go to Earn2Trade, They are bit more expensive but they are the best.