Prop trading, short for proprietary trading, is trading in financial markets using the capital a prop company provides. To become a prop trader, you must complete a challenge—a two-stage evaluation of your trading system on demo accounts. During this process, you are required to meet specific conditions: avoid exceeding the allowed drawdown limit, reach the set profit target, and strictly follow risk management rules.
Once you complete the challenge, you will be granted real funds from the company to manage. This allows you to make larger trades, similar to professional traders, without putting your own money at risk.
Each prop company sets its own requirements for traders. Gerchik & Co offers one of the most rewarding prop trading terms:
- Two available tariffs designed for different strategies and levels of experience.
- Flexible challenge terms — duration of the challenge is anywhere from 1 week to 1 year.
- Affordable entry—participation fee starts from just $59.
- Capital up to $200,000—available if you pass multiple challenges simultaneously.
- Unlimited attempts—if you fail the challenge, you can always try again.
So, which is better: prop trading or independent trading? Let’s compare and see.
Trading with your own funds: Everything depends on your financial capacity. If you only have $1,000–$5,000 in your trading balance, your options for strategies and assets will be limited.
Prop trading: You gain access to significantly larger capital than you could typically afford. For example, by investing $59–$599 in a challenge, you can receive $5,000 to $100,000 to manage or even increase it to $200,000 by completing several challenges. This boosts your profit potential but requires strict risk management.
Trading with your own funds: Every mistake directly impacts your actual money. This often holds traders back from being confident when trading or scaling their income. Many are stuck at the beginner level for years because they fear losses and therefore avoid taking risks.
Prop trading: You trade using the company’s funds, and your loss is limited to the fees you pay for the challenge. Even if you break risk management rules and incur losses, it’s the company's capital at stake, not yours. This gives you more confidence and allows you to grow your earnings without constant fear.
Trading with your own funds: You are free from limits on drawdown, losses, or other restrictions. This freedom may appeal to those who wish to have full control. That being said, freedom can often result in impulsive decisions, heightened risks, and emotional trading.
Prop trading: You must observe limits on drawdown, daily losses, and other parameters. While these rules may feel restrictive, they encourage you to stay disciplined and make you stick to risk management. As many traders have learned, discipline is a key when it comes to long-term success in the market.
Trading with your own funds: You keep 100% of your profits, which is obviously very appealing.
Prop trading: You keep 80% of the profits, with the remaining 20% going to the prop company. However, your total profit can still be much higher thanks to the larger capital available.
For example, earning 20% on your own $2,000 deposit gives you $400. On a $10,000 prop account, the same 20% return yields $2,000, and your 80% share would be $1,600, which is four times more than with your own funds.
Trading with your own funds: Traders often experience stress because of the need to protect their deposit. The fear of loss can trigger greed and the urge to bounce back quickly, which in turn results in violations of the trading plan and leads to even bigger losses.
Prop trading: There is less emotional pressure since your money isn’t at risk, but some traders may feel intimidated by managing large external capital. However, with a proven strategy and a disciplined approach, you’ll find that trading larger sums doesn’t necessarily make the process so much harder. The key is to keep your emotions in check, and prop trading can become highly rewarding.
| Parameter | Prop Trading | Self-Funded Trading |
|---|---|---|
| Capital | Access to large capital | Depends on your investments |
| Risks | Limited;no own losses | Your deposit is at risk |
| Limitations | Strict risk management rules | Unrestricted freedom |
| Profit | 80% of the profit is yours to keep, the remaining 20% goes to the broker | 100% of the profit is yours |
| Psychology | Emotions must be cept under control when trading large capital | Pressure triggered by risks |
If having complete freedom matters to you, or if you are comfortable with your current level of trading income, trading with your own funds might be a better fit.
If your capital is limited or you want to significantly boost your trading profitability and are ready to follow strict risk management, then prop trading is an excellent option!
How to Avoid Mistakes When Taking the Prop Challenge?
Decided to go for prop trading? To get money from the prop company, you need to complete a challenge that evaluates your discipline, profitability, and risk management. Many traders fail not because their strategy is necessarily bad, but due to psychological or technical mistakes.
Here are practical tips to help you ace the challenge and get your hands on a prop account:
Your goal is not to grow the deposit as fast as possible, but to demonstrate consistency. Even if the challenge requires, for example, +10%, it doesn’t mean you should chase profits. It’s more important to avoid losses.
❌Mistake: A trader tries to hit the target too quickly, takes excessive risks, and as a result loses control.
➡️What to do?
Break down the goal. For example, if you need to make 10% in 30 days, it’s just 0.3–0.5% per day. This will ease mental pressure.
Set a daily maximum loss limit (around 2–3%).
Prop trading has strict risk limits:
✔️ Maximum daily drawdown (e.g., 5%)
✔️ Overall loss limit (e.g., 10%)
✔️ Restrictions on holding positions open over the weekend
❌Mistake: The trader goes into red, tries to recover losses, and violates limits, ending up with a stop-out.
➡️What to do?
Before starting the challenge, outline your risk management plan:
- What lot sizes will you use?
- How many trades will you make per day, at most?
- What will be your risk per trade — 1%, 2%?
If your day isn’t going well, just close the terminal. The key is to avoid triggering a stop-out.
- Reduce mental pressure—stick to disciplineOne of the biggest challenges is the stress caused by the fear of failing.
❌Mistake: The trader rushes to make 10%, opens overly aggressive positions, violates their system, and eventually loses the account.
➡️What to do?
- Act as if you are already managing a live prop account, not just taking a test. This helps to stay disciplined.
Some traders treat the prop challenge like a place for experimenting, but that could be a recipe for disaster. It’s better to stick to a proven strategy to increase your chances of passing.
❌Mistake: A trader realizes their strategy is progressing slowly and suddenly switches to scalping, martingale, or other “fast-track” methods, which often leads to failure.
➡️What to do?
- Use a proven strategy that has been tested for at least 3 months.
- If results are weak, review your statistics and, if needed, work on adjustments alone or with a mentor.
- Pick the right prop company
Different prop companies offer different conditions. Choose one that matches your trading style.
❌Mistake: A seasoned trader who prefers long-term trades signs up with a prop that doesn’t allow holding positions open over the weekend, or a scalper chooses a prop company with very high commissions charged for trades.
➡️What to do?
Check the details:
- Which assets are available? (FX, stocks, futures)
- What are the drawdown limits?
- Are there any hidden fees?
- What percentage of the profit goes to the trader?
Gerchik & Co offers some of the most trader-friendly conditions for all experience levels and trading strategies. The targets for profit and drawdown are achievable if you have solid money management skills. Anyone who approaches trading seriously can pass the challenge successfully. You will get access to hefty capital and keep 80% of the profit resulting from your trades!
Prop trading is an excellent opportunity for traders who wish to scale up in the market quickly and without risking personal funds. At Gerchik & Co, you have everything you need to succeed in prop trading and take your skills to a professional level.
Learn to trade, continue improving your trading system, stay disciplined, and you have every chance to pass the challenge and become a real prop trader!
Pass the challenge
181