How Prop Firms Work — A Complete Guide for Indian Traders

A proprietary trading firm — or "prop firm" — is a company that gives traders access to its own capital to trade. Instead of using your savings, you trade with firm money. In return, the firm keeps a share of the profits and the trader keeps the rest. This model has existed for decades on Wall Street; the modern retail prop firm simply opened it up to anyone who can prove their skill.

The way it works is simple. You pay a one-time evaluation fee to take a challenge. The challenge has clear rules — a profit target you have to hit, a maximum loss you cannot cross, and a minimum number of trading days. If you pass, you get a funded account. If you do not, you can buy another evaluation and try again.

For Indian traders specifically, prop firms solve a real problem: most retail traders never have enough capital to scale their strategy. A trader with a ₹50,000 account who makes 5% a month is a great trader, but ₹2,500 a month does not change anyone's life. The same trader on a ₹10,00,000 funded account is making ₹50,000 a month — and now we are talking about a real income.

At DhanFunded, the entire evaluation is simulated. We do not place real orders on NSE or BSE. The market data is real, the rules are real, the payouts are real — but the trading environment is a simulator built specifically for evaluating skill. That is why we can offer this service legally as an educational and evaluation platform.