What is prop trading? It's when a firm gives traders money to trade. These traders don’t use their own cash. They use company funds. If they make a profit, the firm takes a cut. The trader keeps the rest.

This is not new. Big banks used to do it a lot before 2008. But after the financial crisis, regulators stepped in. Banks had to pull back. That opened space for new types of prop firms to grow. Today, in 2025, what is prop trading is being asked by thousands of new traders each month as the model grows fast.

One example is Pipstone Capital. It backs skilled traders with real capital and zero gimmicks. The focus is on fair rules, consistent funding, and payouts tied to actual performance—not passing some trick challenge.

So why are more traders switching to prop firms? Here's a breakdown.

1. What Is Prop Trading's Edge? Less Risk, More Capital

Most new traders don’t have much capital. Maybe $1,000. Maybe less. It’s hard to grow that fast.

What is prop trading's biggest draw? Firms give traders access to much more. Some offer $50,000. Others go up to $500,000 or more.

If a trader wins, they share profits with the firm. Usually 70% or more goes to the trader. Some firms offer up to 90%.

If a trader loses, it’s not their money on the line. The worst-case scenario is losing access to the account. Not losing their own cash.

Some firms go a step further. Pipstone Capital is one of them. It funds traders based on real skill, not trick evaluations. There's no fake pressure to hit fast targets. If you can manage risk and stay consistent, they scale you up and let your results speak. That kind of setup is rare—and it’s why many serious traders are taking notice.

That’s why traders find prop trading less stressful.

Here’s a quick recap of why prop firm trading model stands out:

• You get access to large capital, not your own.

• Most profit splits favor the trader—some up to 90%.

• You risk the firm’s funds, not your savings.

• No pressure to rush trades if the firm rewards consistency.

• Skilled traders can grow funding over time.

• Rules are fair and clear. No surprises.

Want to understand how that works in more detail? Check out our article on what is funded account in forex.

2. You Don’t Need to Be Rich to Start

With prop firms, you can start with as little as $100 to $500.

This small amount covers a test or challenge. The firm checks your trading skills. If you pass the funded account challenge, you get access to real capital.

Compare that to starting your own account. You’d need thousands to make decent gains.

Take a basic forex trade: say you spot a clean setup on GBP/USD with a tight stop. You risk 1% to aim for 3% in return. With your own $500, that's a $5 risk to maybe make $15. Not bad, but it won't move the needle.

Now imagine trading a $50,000 funded account. Same setup, same risk control. You’re risking $500 to target $1,500. That adds up fast—and you're not touching your own savings.

What is prop trading if not a low-barrier chance to scale? You don’t need a finance degree or family money.

It’s also why many ask what is prop trading in forex—since it's a common entry point for new traders.

3. Flexible Work, Anywhere

Most prop firms let you trade from home. Or a coffee shop. Or anywhere with Wi-Fi.

There are no dress codes. No office politics. No commute.

All you need is a laptop and a trading plan. Some use a simple setup—a trading platform, news feed, and basic chart tools. Nothing fancy.

This freedom draws in people from all walks of life. Teachers. Engineers. Even college students. One guy trades GBP/JPY during the London session from a shared apartment in Manila. Another monitors Nasdaq futures from his camper van in Spain.

They want a chance to earn more. They want control over their time. Prop trading gives them that shot without forcing them into a rigid schedule or draining their savings.