Complete Beginner's Guide

How Prop Trading Works

Everything you need to know about proprietary trading, evaluation challenges, and how to build a funded trading career with Dolvero.

1

What Are Proprietary Trading Firms?

Let's start with the basics and build your understanding from the ground up.

The Simple Definition

A proprietary trading firm (or "prop firm") is a company that provides capital to skilled traders to trade with, rather than trading with the trader's own money. Think of it as a partnership: you bring the trading skills, they provide the capital, and you split the profits.

Key Concept

Instead of risking $100,000 of your own money, you can trade with $100,000 of the firm's money after proving your skills through an evaluation process. This allows talented traders to access much larger capital than they could afford personally.

Traditional vs Modern Prop Firms

Traditional Prop Firms

  • Require you to work in their office
  • Often require significant upfront capital
  • Limited to specific geographical locations
  • High barriers to entry

Modern Prop Firms (Like Dolvero)

  • Trade from anywhere in the world
  • Low-cost evaluation challenges
  • Accessible to traders worldwide
  • Merit-based qualification process

Who Benefits from Prop Trading?

Skilled Traders with Limited Capital

You have proven trading strategies and discipline, but lack the capital to scale your returns meaningfully. Instead of making $500/month on a $10K account, you could make $5,000/month on a $100K account.

Risk-Conscious Traders

You want to trade larger amounts without risking your personal savings, retirement funds, or family's financial security. Your maximum loss is limited to the evaluation fee, not your entire account.

Ambitious Traders

You want to build a professional trading career and potentially scale to institutional-level capital ($1M+) based on performance rather than personal wealth.

2

How Prop Trading Works

Understanding the fundamental mechanics of proprietary trading

The Basic Model

1

Evaluation Phase

You pay a fee (much smaller than the trading capital) to take an evaluation challenge. This proves you can trade profitably while following risk management rules.

2

Funded Account

Upon passing, you receive a funded account with the firm's capital. You trade this account following the same rules you proved you could follow during evaluation.

3

Profit Sharing

Profits are split between you and the firm. You typically keep 70-90% of profits you generate, while the firm keeps the remainder as compensation for providing capital and infrastructure.

Revenue Model: How Prop Firms Make Money

Understanding how prop firms generate revenue helps you choose the right partner:

⚠️ Red Flag: Challenge Fee Focused

Some firms make most money from evaluation fees, hoping traders fail. They have incentives to make rules unclear or change them unexpectedly. High failure rates = more repeat fees.

✅ Good Sign: Profit Sharing Focused

Quality firms make most money from their share of trading profits. They want you to succeed long-term because successful traders generate ongoing revenue. Clear rules, good support, fast payouts.

Types of Prop Firm Models

Instant Funding

  • Trade immediately after payment
  • No evaluation required
  • Higher fees typically
  • Stricter ongoing rules

Evaluation Model (Dolvero)

  • Lower upfront costs
  • Proves your skills first
  • Fee fully refunded on success
  • ~ Requires patience for evaluation
3

The Dolvero Difference

Why Dolvero stands apart in the prop trading industry

Our Core Principles

Transparency First

Every rule is written in plain English. No hidden clauses, no sudden rule changes, no subjective interpretations. What you see is what you get.

Trader Success Focus

We make money when you make money. Our business model aligns with your success, not your failure. Long-term partnerships over short-term fees.

Professional Standards

Built by former institutional traders who understand what professional trading requires. No games, no tricks, just professional trading infrastructure.

Scalable Growth

Clear path from evaluation to institutional-level capital. Performance-based scaling with no artificial limits on your growth potential.

What Makes Us Different

No Time Limits

Take as long as you need to reach profit targets. Quality trading over rushed decisions. This eliminates the pressure that leads to overtrading and blown accounts.

Rules Never Change Mid-Challenge

Your evaluation rules are locked when you start. No moving goalposts, no retroactive changes, no surprise violations. Consistency you can rely on.

24-Hour Payout Guarantee

Your profits are processed within 24 hours of withdrawal request. Track every step of the process in real-time. No delays, no excuses.

Automatic Scaling

Consistent performance automatically increases your account size. No applications, no waiting periods. Performance speaks, and rewards follow.

Industry Comparison

Feature Dolvero Typical Prop Firm
Time Limits None 30-60 days
Rule Changes Never Common
Payout Time 24 hours 3-14 days
Fee Refund 100% Rare
Max Scaling $10M+ $200K-$1M
4

The Evaluation Process

Step-by-step breakdown of how to become a funded trader

Two-Phase Evaluation System

1

Challenge Phase

Profit Target: 10%
Min Trading Days: 5
Time Limit: None
2

Verification Phase

Profit Target: 5%
Min Trading Days: 5
Time Limit: None
Pass Both Phases → Get Funded Account

Phase 1: Challenge (10% Target)

Objective

Demonstrate you can generate consistent profits while managing risk. This phase tests your ability to execute your strategy under realistic conditions.

What You Need to Do:
  • Reach 10% profit on your account
  • Trade on at least 5 different days
  • Stay within daily and total loss limits
  • Follow all trading rules consistently
What You Need to Avoid:
  • Losing more than 5% in a single day
  • Total account drawdown exceeding 10%
  • Risking more than 2% per trade (if applicable)
  • Violating any trading rules
💡 Phase 1 Success Tips
  • • Focus on consistency over speed - no time pressure
  • • Stick to your proven strategy - don't change approaches mid-challenge
  • • Document your trades and review performance regularly
  • • Take breaks if you're feeling pressured or emotional

Phase 2: Verification (5% Target)

Objective

Confirm your Phase 1 performance wasn't luck. This phase demonstrates consistency and prepares you for funded trading with a more moderate profit target.

Key Differences from Phase 1:
  • Lower profit target (5% vs 10%)
  • Same risk management rules
  • Same minimum trading days (5)
  • Still no time limits
Why Phase 2 Exists:
  • Eliminates lucky streaks
  • Confirms rule adherence
  • Tests discipline under different market conditions
  • Prepares you for funded account expectations
💡 Phase 2 Success Tips
  • • Apply lessons learned from Phase 1
  • • Lower target means you can be more selective with trades
  • • Focus on risk management - protect your progress
  • • This is your final step before real capital - stay disciplined

What If You Don't Pass?

No Shame in Not Passing

Even experienced traders sometimes fail evaluations. Market conditions change, strategies need adjustment, or sometimes you're just having an off period. This is completely normal and part of the learning process.

Your Options After a Failed Challenge:

1
Retake the Challenge

Purchase a new challenge and try again. Many successful funded traders passed on their second or third attempt after learning from mistakes.

2
Analyze and Improve

Review your trading history, identify what went wrong, refine your strategy, and come back stronger. We provide detailed analytics to help with this.

3
Start with a Smaller Account

If you struggled with a $100K challenge, consider starting with $25K or $50K to build confidence and experience before scaling up.

Common Reasons for Challenge Failure:

  • Overtrading: Taking too many trades to reach targets quickly
  • Poor Risk Management: Position sizes too large, no stop losses
  • Emotional Trading: Revenge trading after losses, FOMO entries
  • Strategy Abandonment: Changing approach mid-challenge
  • News Trading Violations: Trading during high-impact news events

Ready to Start Your Trading Career?

Join thousands of traders who chose Dolvero for transparent rules, reliable payouts, and unlimited growth potential.