# What is Prop firm?

> A retail prop firm is a business that sells paid trading evaluations and pays performance rewards to traders who pass, usually within a simulated trading environment.

- Source: https://pipvalley.com/glossary/prop-firm
- Publisher: PipValley - web design studio for prop trading firms
- Updated: 2026-10-03

In the retail sense, a prop firm differs from a traditional proprietary trading firm, which trades its own capital with employed traders. A retail prop firm sells evaluations to the public, and most of its revenue comes from fees; its main cost is the performance rewards it pays to traders who pass.

Retail prop firms operate in forex and CFDs, futures, crypto and stocks, each with different platforms, rules and regulatory considerations. Some are backed by brokers, some run on white-label technology, and some build their own stack.

How a retail prop firm is treated by regulators varies by jurisdiction and by how the product is structured, which is why many firms take legal advice on structure, marketing and terms before launch.

## Why it matters

For a founder, the business is pricing, rules, risk, payments and trust, with technology as the enabler. Every one of those shows up on the website: the pricing table, the rules page, the payout proof and the legal pages. A firm whose site explains its model plainly is easier to trust and easier to defend.