Prop firm fees are an important factor when selecting your favorite prop firm challenge. Here is my list of the 8 most important fees that you should be aware of.
| Type of Prop Firm Fee | Impact on Profitability |
|---|---|
| Prop Firm Evaluation and Trading Challenge Fee | Medium-High |
| Reset Fee for Trading Challenges | Medium |
| Live Account Activation Fee | Medium-High |
| Profit Split | High |
| Withdrawal Fee | Low |
| Trading Platform Fee | Low |
| Data Feed Fees | Medium-Low |
| Trading Commissions | Medium-Low |
Prop Firm Evaluation and Trading Challenge Fee
Prop firms require traders to complete a trading challenge before they fund a trader. Often they are called challenges, but also evaluations or examinations. All of them have in common, that the trader needs to pay a fee to get started with the challenge.
In the futures trading prop firm space, it’s typically that it is a monthly recurring fee. So, if you start a trading challenge, you pay for it every month until you chancel.
Keep in mind, that your subscription does not end automatically. Make sure to cancel it in case you don’t want to get charged for another month.
Reset Fee for Trading Challenges
Futures prop firms offer you to reset a trading challenge in the case that you fail with the attempt to master the challenge. The typical price range of a reset is $60 – $80.
Alternatively, you can also wait until the next monthly payment in case you fail a challenge, then the new challenge will start with the new monthly payment. However, it can be beneficial to pay the reset in case you want to quickly complete the new challenge for a lower reset fee compared to your monthly subscription price. Let’s say you have a 150K challenge for $149 per month, then a reset for $80 might be the better choice.
Live Account Activation Fee
We now have more prop firms than ever before on the market and traders can choose between so many different options. This increased competition led to price reductions for the prop firm challenge, but prop firms also needed to refinance their own expenses.
The introduction of live-account activation fees is one consequence that found its way to the market.
So what does that mean? It means that once you have completed a trading challenge, you need to pay a one-time activation fee for the funded account. The range of the one-time activation fee is wide and goes from $0 to even $800, depending on the prop firm and account size.
Profit Split
Once you trade a funded account, be it a real live account or a simulated live account, you will have a profit split agreement with your prop firm. The profit split agreement defines how much of the money you make in a funded account, you can withdraw.
Let’s say this profit split is 90/10, which means that you can withdraw 90% of your profits. In that case, the remaining 10% will be held by the prop firm. So, overall it is an additional fee. The higher the percentage of what you can keep, the better for you.
Withdrawal Fee
Withdrawal fees are costs associated with transferring profits to your bank account. Those fees differ from prop firm to prop firm. Typically, prop firms send you the money without fees if you reach a certain amount, like a minimum of $250. But you have to check that detail with your firm to be 100% sure how it is in your case.
Trading Platform Fee
Many prop firms have their own proprietary trading platforms, which are often based on popular tools that are white-labeled, and using those is typically free of charge. However, prop firms also work with popular trading platform providers to offer a greater choice to their traders.
In many cases, those trading platforms offer their platform also for free during the trading challenges but then require you to pay a monthly subscription fee for the live accounts. An example is NinjaTrader, if you use NinjaTrader during the challenge, it is free. But once you move on to a real live account with real money trading, you have to pay a subscription fee or buy a NinjaTrader license.
Data Feed Fees
The data feed is free during evaluation and prop firm challenges. However, once you get funded with a real-money trading account, you have to pay relatively high exchange fees. These fees are not for the prop firm, but for the exchange itself, like the CME, CBOT, or NYMEX.
The tricky part here is that as a funded trader, you are treated as a professional trader by the exchange, which leads to high real-time market data fees. Per futures exchange, you pay about $130 per month.
Trading Commissions
Not everyone talks about it, but trading commissions are also a thing in proprietary trading. No matter if you trade during a challenge, or in real futures trading accounts – each buy and sell transaction with futures contracts leads to commissions that will be taken off your trading account balance.
If you trade standard lot futures contracts, you typically pay about $3-$4 per futures contract and side / half-turn. So a full trade, in and out, buy and sell, per futures contract is about $6-$8.
On top of that, you pay a small amount in clearing fees and regulatory fees, which are also collected by other institutions and those are charged per trade and contract.
If you trade micro-futures, the fee per micro-futures contract is lower than for the standard-lot futures contract. You can expect to get charged about $1 per contract, depending on what micro-futures contract and what type of asset (Crude oil, gold, corn, etc.) you trade.
Published By Steven Kibbel CFP