If you've been hanging out with trading groups for any length of time, you've likely seen one thing: prop firms like S&P 500 futures traders. And why shouldn't they? The S&P is liquid, trades nearly 24/5, and offers plenty of opportunities to prove yourself without the outlandish spreads you find in other vehicles. But the real question is, what exactly do prop firms look for when they are reviewing traders who wish to trade the S&P 500 futures on their accounts?
If you believe it's all about gaining huge profits, think again. Yes, profit is important—nobody's arguing against that. But it's much more than that to pass an evaluation or get recruited by a prop firm. These companies are not seeking gamblers who happened to win a few YOLO trades. They're seeking disciplined and consistent traders who know how to control risk like professionals.
Let's take it one step at a time so you understand just what these firms are interested in—and how to ensure you tick all the boxes.
Why Prop Firms Adore the S&P 500 Futures
In advance of going into detail on the assessment process, it's useful to know why the S&P 500 futures (a.k.a. the E-mini or Micro E-mini contracts) are so highly prized by prop firms.
First and foremost, liquidity. The S&P is among the most traded futures contracts in the world. That translates to tight spreads, loads of volume, and seamless order execution. For a prop shop, this is gold since it minimizes slippage and allows traders to have a level playing field.
Second, volatility. The S&P has sufficient movement to make good money in a brief period without going completely crazy like crude oil or natural gas. A good trader can cut out profits without assuming crazy risk.
Lastly, market hours. S&P futures are traded nearly 24 hours a week, which means that traders in other time zones still have opportunities. For prop firms, the flexibility means the S&P is a preferred option for evaluation programs.
So yeah, if you’re planning to join a futures prop firm, chances are you’ll be trading the S&P. But how do they decide if you’re good enough to manage their money? Let’s dig in.
The Big Picture: What Prop Firms Care About
Prop firms are in the game of generating money and preserving their capital. That is, they're not searching for some hotshot who can nail a major profit goal. They're seeking traders who:
- Manage risk like a hawk
- Are rule-abiders and remain disciplined
- Demonstrate good, consistent performance
- Are able to cope with losses without blowing up
Step 1: The Evaluation Account Rules
Most futures trading prop firms utilize evaluation accounts to try out new traders. These are demo or virtual accounts where you trade under conditions. Pass, and you receive a funded account. Fail, and you begin again (or quit).
Below are the standard rules you'll encounter for S&P futures evaluations:
Profit Target
You will typically need to hit a profit target- perhaps $3,000, $5,000, or $9,000, whatever the size of your account. This proves to the company that you can make money over time, not by gambling.
Daily Loss Limit
Blow through this, and game over. Prop firms put a firm limit on the amount you can lose in one day—perhaps $1,000 on a $50K account. This makes you respect risk and not let greed take over after a losing trade.
Drawdown in Total
This is the overall amount you can lose from your highest balance before you blow up. Some companies have trailing drawdowns, which increase as you are making profits. If your trailing drawdown is $2,000 and your highest balance is $52,000, you can go as low as $50,000. Drop below that, and you're blown up.
Minimum Trading Days
Most companies do not want you to achieve your target in one day and quit. They need consistency. You may therefore have to trade for at least 7 or 10 days, even if you've achieved the profit target.
No Overlevering
You don't just load 20 contracts hoping something will work out. Companies have position size restrictions based on your account. Violate this rule, and your assessment is over right there.
Rules like these aren't hoops to be jumped through—they're meant to simulate real-world risk control. If you can't stick with them, you're not prepared for a funded account.
Step 2: Risk Management – The Holy Grail
When prop firms review your trading record, they follow risk control rules. For real, it's bigger than your profit figure.
Here's what they're monitoring under a microscope:
- How much risk per trade do you take on? If you're risking $1,000 on a $50K account, that's 2%. Not bad, but pile up a few losing trades and you're toast. Good traders manage risk per trade—typically 0.5% to 1%.
- Do you move stops? If they notice you moving stops further away to prevent themselves from getting stopped out, that's a red flag.
- Do you revenge trade? Blowing up after a loss is the quickest way to fail. Prop firms like traders who can take a hit and stick to the plan.
- Max daily loss adherence. Do you close it down once you reach the daily loss limit, or do you continue trading out of aggravation? The second is a definite no-no.
Step 3: Consistency Is Everything
Prop firms don't care about one massive winning day. They want to see a sequence of sound judgment. That means:
- Even profits over several days rather than a single large spike
- Same lot sizes and trade sizes (no increasing from 1 contract to 10 overnight)
- Managed drawdowns—even the best traders lose, but how you lose counts
Step 4: Strategy and Execution
You don’t have to share your exact strategy with the firm, but your trades tell the story. Are you entering at random, or is there a method behind your moves? Do you manage trades actively, scale in and out, or just let them ride?
Prop firms don't care what your strategy is—so long as it's consistent and rule-abiding. They don't want the holy grail; they want repeatable processes.
Step 5: Psychology Under Pressure
This is something most traders don't realize: prop firms can identify when you're panicking. The evaluation rules are meant to test your psychology under pressure. They want to see:
- Do you adhere to your plan following a loss or begin doubling up?
- Can you go down for the day and close out trading?
- Do you trade based on emotions?
