Simulated trading is a trading environment designed to replicate real market conditions as closely as possible, using virtual funds instead of real money. Prices, spreads, and order execution all reflect live market data, but no actual capital is at risk.
Most prop firm evaluations and challenge programs take place in simulated accounts. This allows the firm to assess a trader’s skills and decision-making without putting real capital on the line during the testing phase. For traders, it also removes the pressure of risking personal savings while working toward a funded account.
Some prop firms continue to use simulated accounts even after a trader has been funded. In this model, payouts are made from the firm’s own funds rather than from real trading profits. This is a legitimate and common structure, but it is different from trading a live account with real market exposure. Checking which model a firm uses before joining helps set accurate expectations from the start.