How to choose a prop firm
Price and profit split are the last things I look at. The rules decide whether your strategy can survive at all. Here is the checklist I use.
Most people choose a prop firm the way they choose a phone plan: the cheapest evaluation and the biggest profit split. Then a perfectly good strategy fails the evaluation, and they blame the strategy. Often the strategy was fine. The rules did not fit it.
Do not ask which firm is best. Ask which firm's rules your strategy can live inside.
1. How the drawdown is measured
This is the rule that matters most. An end-of-day drawdown only moves with your closing balance. An intraday trailing drawdown follows your highest open profit, so a winning trade that comes back can still cost you the account. The same strategy can pass under one and fail under the other.
2. The daily loss limit
Some firms close the day, some close the account. Know which, and know whether open losses count. A strategy with occasional large losing days needs room here.
3. Consistency rules
Many firms limit how much of your profit can come from a single day, for the evaluation, for payouts, or both. If your edge comes from a few big days, this rule matters more than the profit target.
4. The real cost
Evaluation fee, activation fee, monthly fees, resets. Add them up for a realistic number of attempts, not for the best case. A cheap evaluation with an expensive activation is not cheap.
5. Payouts
Profit split, minimum trading days before a payout, payout caps, buffers you must leave in the account. Read the payout rules before you read the marketing.
6. What is allowed
News trading, holding over the weekend, automated strategies, copy trading between accounts, hedging between accounts. These differ a lot between firms, and breaking one can cost the account and its payouts.
Then test it
Once you have two or three candidates, run your actual trades through each firm's rules: how often would you have passed, how long it would have taken, how often you would have burned the account. That is the work I am building tools for, because the answer is usually not the firm you expected.
Rules change often. Always check the firm's current rules on its own site before you pay.
— Alon