Short answer: In a forex fund or managed account, you invest your own capital and a manager (registered where required) trades it for a fee. In a prop-firm funded account, you pay an evaluation fee to trade the firm's capital (often a simulated account) and keep a share of any profits. They are opposite roles, investor versus trader, and they carry very different risks, costs and regulatory protections.
This guide is educational and is not financial advice. ForexFunds.com does not recommend or rank any fund, manager or prop firm. See our disclaimer and how we research.
The short answer
On this site, a "forex fund" means a pooled or managed forex investment: your money, traded by a manager. A "funded account" in the prop-firm sense is a product you buy through an evaluation so you can trade the firm's stated capital, often on a simulated account, and keep a share of any profits. Search results for "forex funds" often mix the two. They are not the same product.
| Point | Forex fund or managed account | Prop-firm funded account |
|---|---|---|
| Capital owner | You (managed account) or the pool you joined (fund) | The firm, on the terms it publishes |
| Your role | Investor | Trader taking an evaluation |
| Cost | Fees the manager charges on the capital or profits, as set in the agreement | An evaluation (challenge) fee, and any reset or retry fees the firm lists |
| What you can lose | The capital you invest; some arrangements can produce losses larger than the cash deposited, depending on the agreements | The fees you paid to evaluate or retry; you typically do not deposit the stated account size as your own money |
| Counterparty | Your broker or custodian, the manager, and (in a pool) the fund itself | The firm that sold the evaluation; if the account is simulated, it may not be a brokerage account in your name |
| Regulation | Where the activity fits a registration category such as commodity trading advisor (CTA) or commodity pool operator (CPO), look the firm up on the official register [S1][S2] | Depends on what the firm actually does; a claim of registration should match an official register entry [S2][S3][S4] |
| Payout | Gains and losses are yours after fees; withdrawals follow the account or fund terms | A share of profits, if and when the firm pays, on the schedule and conditions in its own terms |
What a forex fund or managed account is
A forex fund or managed account is an investment: you put up capital and someone else trades it. Two common structures sit under that label.
A separately managed account is opened in your name. You own what is in it. You may grant the manager trading authority (sometimes called a limited power of attorney, or LPOA). The scope of that authority, and how it is granted or revoked, is set by the account and management agreements, not by the label. This site's page on hedge funds versus managed accounts covers ownership and custody in more detail.
A pooled fund combines money from a number of investors. You receive an interest in the fund; the fund, not you, owns the positions. Contributions, withdrawals and reporting follow the fund's own documents. See redemption provisions for forex managed accounts for how withdrawals are often written.
In the United States, NFA registration categories include the commodity trading advisor and the commodity pool operator. A CTA is an individual or organization that, for compensation or profit, advises others on buying or selling futures, commodity options, retail off-exchange forex contracts or swaps. A CPO operates a pool that combines money from a number of people to trade those instruments and solicits funds for it. Depending on its activity, a firm must register unless it qualifies for an exemption or exclusion; registration is handled by the National Futures Association (NFA) [S1]. NFA's BASIC is a free lookup for derivatives industry professionals [S2]. For the role itself, see what a forex trading advisor (manager) is.
In the United Kingdom, the FCA Financial Services Register is a public record of firms and individuals authorised by the FCA or the PRA [S3]. In Australia, ASIC's registers let you search a person or organisation licensed with ASIC and check what they are licensed to do [S4]. Elsewhere, use the official register in the manager's jurisdiction, and match the name and number to the entity on your agreement.
"Funding" on this site usually means how an investor sizes a managed account, including notional funding (trading a stated size larger than the cash deposited). That is not a prop-firm evaluation.
What a prop-firm funded account is
A proprietary-trading ("prop") firm, in the sense people search for, sells an evaluation. You pay a fee, trade under published rules (profit targets, maximum daily or overall loss, position limits, and similar conditions), and, if you meet those rules, you receive a "funded account": permission to trade a stated account size and keep a share of any profits, on the firm's terms.
The stated account size is not, by itself, proof that you have been given a live brokerage account in your name. Some firms describe the funded account as simulated or as a demo that tracks live prices; some describe a live account. We have not established what share of the industry uses each model, and we do not treat either description as typical. The distinction matters for who the counterparty is and how any payout is funded. Read the firm's own published terms.
This page names no firms, ranks none, and is not a list of "best" prop firms. Whether any evaluation is worth taking is a judgment each trader must make independently. For published drawdown, profit-target, payout-split and fee figures, each linked to the firm's own rules page with the date we checked it, see the prop firm rule checker.
Who carries the risk and who earns the money
In a fund or managed account you are the investor. Trading losses land on the capital you put up (and, in some notional arrangements, can be larger than the cash deposited). The manager is paid according to the agreement, often a fee on assets and/or a fee on profits. You keep what remains after those charges. Forex risk management is the manager's job under that mandate; the economic risk of the positions is still yours.
In a prop-firm evaluation you are the trader. The money you put at risk up front is the evaluation fee and any reset or retry fees. If you reach a funded account and it is profitable under the firm's rules, you may receive a share of those profits; the firm keeps the rest, on its own split. If the account is simulated, a payout is a contractual payment from the firm, not a withdrawal from a brokerage account you own.
The two models put you on opposite sides of the capital. One pays a manager to trade your money. The other pays a firm for a chance to trade its stated capital.
Fees compared
Funds and managed accounts. Costs are set in the management agreement or fund documents. They may include a fee on assets, a fee on profits, brokerage and other expenses. We do not state a standard percentage. Industry shorthand is not a substitute for the numbers in the documents you would actually sign. Ask whether any performance record is net of all fees.
Prop-firm evaluations. The published price is usually an evaluation or challenge fee for a stated account size. Some firms also charge to retry after a rule is broken (a reset). Some advertise that they refund the evaluation fee after a payout; whether they do, and after how many payouts, is in that firm's terms. We have not established typical fee levels or pass rates from a primary source, so this page states none.
Compare like with like. A management fee is a continuing charge on invested capital. An evaluation fee is a one-off (or repeated) payment for a test. They answer different questions: what it costs to have someone trade your money, versus what it costs to sit an evaluation.
Track records in each world
For a manager who would trade your capital, start with registration and a written performance record. Our guide on how to check a forex manager's track record is the checklist: confirm registration, read the written record, ask whether returns are net of fees, look at drawdowns and record length, and understand what any third-party "verified" label actually checks.
A prop firm's marketing figures are a different kind of claim. Pass rates, average payouts and "funded trader" counts are not a manager track record, and we have not established industry-wide figures for any of them. If a firm publishes such numbers, treat them as that firm's own statement. Hypothetical, simulated or backtested results are not a record of live trading in client accounts.
Red flags for both
These are questions, not a ranking, and they name no firm.
If you are the investor (fund or managed account):
- You cannot match the legal entity on the agreement to an official register entry, or the firm will not say whether it is registered or relies on an exemption [S1][S2].
- There is no written performance record, or results are not labelled as actual, hypothetical or simulated.
- You are asked to send money to a personal account rather than a named broker, custodian or fund.
- The documents you are given do not state fees, trading authority, or how you get your money out.
If you are the trader (prop-firm evaluation):
- The legal entity and jurisdiction are not stated, or do not match the site you are paying.
- The terms do not say whether the funded account is simulated or live, or who the counterparty is.
- Payout, refund and reset rules are missing, or the firm can change them without a dated public record of the change.
- The pitch guarantees profits or treats an evaluation fee as an investment with an expected return.
On the managed-account side, ask for the written documents the manager actually uses, and read what they say about strategy, fees, risk and termination.
Which fits whom: investor versus trader
This is a map of roles, not a recommendation of either model.
A forex fund or managed account is for someone who has capital and is considering paying a manager to trade it. The work is due diligence on the manager, the structure (account versus pool), the fees and the documents. You remain the investor. Past performance is not indicative of future results, and forex trading involves a substantial risk of loss.
A prop-firm funded account is for someone who wants to trade and is considering paying for an evaluation in order to trade the firm's stated capital for a share of profits. The work is reading that firm's rules, fees and payout terms, and deciding whether the evaluation fee is a cost you can lose in full. You are not investing in a fund.
If those two descriptions feel interchangeable, the labels are being used loosely. They describe opposite sides of the money.
Common questions
What is the difference between a prop firm and a hedge fund?
A hedge fund is a pooled investment vehicle: investors contribute capital and own an interest in the fund. A prop-firm funded account is an evaluation product for traders. One is a way to invest; the other is a way to sit a test and, if you pass, trade on the firm's terms. See fund versus managed account for the investment-side comparison.
Are prop firms legit? How do I choose one?
Legitimacy is a firm-by-firm question, not a property of the model. This page names no firms. Generic checks: identify the legal entity and jurisdiction; read the fee, payout and refund terms before you pay; find out whether the funded account is described as simulated or live; and, if the firm claims a registration, look that entity up on the official register [S2][S3][S4]. None of those checks is a recommendation.
Do prop firms use real money or demo accounts?
Both descriptions appear in firms' own published materials. We have not established an industry-wide share for simulated versus live funded accounts, so we state none. Ask the specific firm, and treat the written terms as the answer, not the marketing headline.
How do prop firm payouts work?
In general terms, a trader who meets the firm's rules may request a share of profits on the schedule the firm publishes. Minimum trading days, profit targets, consistency rules and how a simulated account is converted into a payment all vary. We do not state typical payout amounts or frequencies. Read that firm's current terms.
Is prop trading illegal?
This page does not treat an entire model as legal or illegal. Whether a particular activity requires registration depends on what the firm actually does and where [S1]. Managing other people's money can fall into categories such as CTA or CPO. Selling an evaluation to trade the firm's stated capital is a different activity; whether any given firm must register is a factual question about that firm. Check official registers and the firm's own description of its business.
What is the 2% rule in prop firms?
Some evaluation rules include a maximum daily or overall loss expressed as a percentage of the stated account size. Whether any firm uses 2%, and what that figure applies to (daily loss, per-trade risk, or something else), is in that firm's own published rules. We have not established an industry-wide "2% rule" from a primary source.
How do prop firms make money?
Published terms often include an evaluation or challenge fee, and sometimes a fee to retry after a failed evaluation. Some firms also keep a share of profits on funded accounts. We do not have a primary source for how the industry as a whole splits revenue among those sources, so we do not state a split.
What is a forex fund?
On this site, a forex fund is a pooled or managed forex investment: you invest your own capital and a manager trades it, for a fee, in an account in your name or in a pool you have joined. It is not a prop-firm evaluation.
Is a managed forex account better than a funded account?
They serve opposite roles, so "better" is the wrong comparison. A managed account is an investment of your capital. A funded account in the prop-firm sense is an evaluation you pay for as a trader. Which description matches what you are actually trying to do is the first question; this page does not recommend either.
Sources
Access dates below are the dates each page was fetched.
- [S1] NFA, Who Has to Register (accessed 24 Oct 2026)
- [S2] NFA, BASIC (accessed 24 Oct 2026)
- [S3] FCA, Financial Services Register (page last updated 13 Feb 2026; accessed 24 Oct 2026)
- [S4] ASIC, Search ASIC registers (accessed 24 Oct 2026)
Simulated-account share, evaluation pass rates and typical fee or profit-split percentages: not established. No primary source was found. This page states no figure for those claims.