If you have ever seen an ad promising to let you trade a $100,000 account after passing a trading challenge for a couple hundred dollars, you have seen modern prop trading in action.The industry has exploded from a niche Wall Street practice into a roughly $20 billion global market with more than 2,000 active firms, and it has become one of the most searched paths into trading for people who do not have large accounts of their own.Proprietary trading, or prop trading, is when a firm trades stocks, futures, options, currencies, or other instruments with its own capital rather than with client money, keeping the profits for itself.The traders who execute those trades are not managing customer accounts, so their only job is to generate returns on the firm's money while staying inside strict risk limits.In exchange, the trader typically keeps a share of the profits, often between 70% and 90% at retail-facing firms, while the firm absorbs the trading losses.That risk transfer is the entire appeal: skilled traders get access to far more buying power than they could fund themselves, and the firm gets a cut of the upside without paying a salary.How Modern Prop Firms Actually WorkTraditional prop desks at banks largely disappeared after the Volcker Rule restricted federally insured banks from trading for their own account, pushing the activity into independent firms.Today, most people encountering prop trading meet it through the funded trader model used by online firms.You pay an evaluation fee, often $50 to $700 depending on account size, and trade a simulated account that must hit a profit target, commonly 6% to 10%, without breaching a daily loss limit or a maximum drawdown.Pass the evaluation, and the firm gives you a funded account, frequently $25,000 to $300,000 in buying power, and splits the profits with you.Fail by hitting the drawdown limit, and you lose the fee and start over.Futures-focused firms dominate the U.S. side of this market, so understanding how futures contracts and margin work is essential before paying for any evaluation.How Prop Firms Make MoneyThe firm's revenue comes from two places: its share of profitable traders' gains, and the evaluation fees paid by the large majority of traders who never pass.Industry estimates put evaluation fee revenue alone at $2 billion to $4 billion per year, which tells you how many people are attempting these challenges and how few succeed on the first try.That structure is not automatically a scam, but it does mean a firm's incentives are healthiest when it has a documented history of actually paying out funded traders.The 2024 and 2025 period saw a wave of smaller firms collapse or vanish with unpaid balances, and the firms that survived generally did so because they had real risk infrastructure and verifiable payout records.Prop Trading vs. Trading Your Own AccountTrading your own brokerage account means keeping 100% of your profits, but it also means risking your own savings and facing regulatory hurdles like the pattern day trader rule, which requires a $25,000 minimum equity balance to day trade stocks freely in a margin account.Funded futures accounts sidestep that rule entirely, since the $25,000 requirement applies to stocks, not futures.The tradeoff is control: prop firms impose daily loss limits, position size caps, consistency rules, and sometimes restrictions on holding trades through major news events or weekends.Break a rule, even profitably, and the account can be terminated.For traders still building skills, a beginner's guide to day trading futures covers the risk management habits these firms are explicitly testing for.What to Look for Before Paying an Evaluation FeeCompare the profit target against the drawdown limit, because a 10% target with a 4% trailing drawdown is far harder than the marketing suggests.Check payout frequency, minimum payout thresholds, and whether the firm publishes proof of payments.Read the fine print on prohibited strategies, since many firms ban high-frequency tactics, copy trading across unrelated accounts, or news-event scalping.If you want to see how an established player structures all of this, Apex Trader Funding offers funded futures accounts with one-step evaluations, up to 20 simultaneous accounts, and frequent discount promotions on evaluation fees.It also helps to compare several firms side by side on rules, splits, and platforms, which is exactly what Benzinga's roundup of the best prop trading firms breaks down.With consolidation thinning out the weakest operators, the firms still standing in 2026 are generally publishing clearer rules and faster payout schedules than the industry offered even two years ago, which makes this a better moment to comparison shop than the gold rush years ever were.