Prop Firm Trading Rules for Futures: What You Need to Know

You’ve got your eyes on futures trading through a prop firm. It’s the best option. Whether you’re completely new or already experienced trading, one thing’s for sure—trading someone else’s capital comes with a rulebook. And if you’re not tuned into those rules from day one, then there are more chances that your funded account will not last very long. So if you want to maintain your funded trading account then it is important to first know about them. Let’s talk about what the rules actually are, why they exist, and how you can use them to your advantage.

What Are Prop Firms?

Let’s get this out of the way real quick.

A proprietary trading firm or prop firm for short is a company that hands you their capital to trade with. You make money, they make money—it’s a win-win if you follow the rules. Futures prop firms are a specific flavor, focusing on derivatives like crude oil, gold futures, and S&P 500.

You usually start with a challenge or evaluation period. Pass that and you get access to a funded account. But the real test begins after you’re funded. Because now, you’re not just trading—you’re trading responsibly with someone else’s cash.

Why Do Prop Firms Even Have Rules?

To protect their money. If you’re a prop firm then you can’t just hand out tens of thousands of dollars to every trader who walks through the door and hope they know what they’re doing. That’s a recipe for disaster.

These firms create structured environments that reward disciplined, strategic trading. It filters out gamblers and dreamers and promotes serious, risk-aware traders. If that sounds like you then you’re in the right place.

The Daily Drawdown Rule

The daily drawdown is the maximum amount of money you’re allowed to lose in a single trading day. Blow past it even by a few bucks and you’re out. That’s it. Game over.

Why it matters

Prop firms don’t want you trying to revenge trade your way back from a bad start to the day. They want consistent, calm decision-making, not emotional blowups.

Tips to stay in check:

• Use trailing stop losses.
• Set a hard daily loss limit in your trading platform.
• If you’re down early then walk away. The market’s not going anywhere.

Max Drawdown (Trailing or Static)

This one trips up a lot of folks.

The difference:

• Static drawdown is a fixed amount below your starting balance.
• Trailing drawdown moves up with your profits but it doesn’t trail back down.

Let’s say you have a $100,000 account and a trailing drawdown that starts at $95,000. If you grow the account to $102,000 then the drawdown might trail up to $97,000. But if your account drops back to $98,000, that drawdown doesn’t budge. You lose another $1K? You’ve breached.

How to handle it:

• Know exactly how your firm calculates it.
• Don’t overtrade after a good streak—protect those gains.
• Keep a spreadsheet or use tools that track your trailing threshold.

Trade Size Limits (Contracts)

In the future, it’s all about contracts. The more you trade, the more potential profit but also way more risk.

What firms want:

Prop firms often cap how many contracts you can trade based on your account size. For instance:

• A $50K account might only let you trade 5 micros or 2 minis.
• Some firms use scaling plans—you earn more size as you prove yourself.

Why?

To stop you from going all-in and nuking the account. Futures trading are wild and leverage can work for you or destroy you fast.

How to respect the rule:

• Double-check position sizing before entering a trade.
• Know your firm’s margin and tick value rules.
• Don’t scale in aggressively just to try and salvage a loser.

Trading Hours Rules

Not all hours are created equal in futures trading.

Most firms restrict:

• Trading during major economic news like FOMC or NFP.
• Overnight positions.
• Trades outside of active hours, usually 8:30 AM to 4 PM EST.

Why?

Liquidity dries up during off hours. Slippage increases. Volatility spikes unexpectedly. The firm wants you trading when the market is smooth—not when it’s a landmine.

Pro tips:

• Know when your products are most liquid like crude oil vs. ES.
• Use a news calendar to plan ahead.
• Don’t open new trades minutes before a news event unless your firm allows it.

Holding Onto News Events

This one’s critical.

Most prop firms don’t want you holding open positions during major economic reports. Why? Because these events can cause insane volatility and whip you out of a trade in seconds—even with a stop loss.

Common restricted events:

• Non-Farm Payrolls (NFP)
• FOMC meetings
• CPI/PPI releases
• Fed rate decisions

Best practices:

• Close positions at least 5–10 minutes before high-impact events.
• Don’t open fresh trades during the release.
• If your strategy is based on news, look for a firm that allows it—and read the fine print.

No Copy Trading or Signal Services

It might be tempting to just copy someone else’s trades. But guess what? That’s usually a big no-no.

Why firms hate it:

• They want you to be a trader.
• They can’t verify your skill if you’re just mirroring someone else.
• Too many traders copying the same signal can mess with execution and risk.

Bottom line:

Use outside ideas for education or inspiration. But when it comes to actual execution, make your own calls.