Glossary
Simulated trading
Simulated trading is trading on an account that tracks results against real market prices without placing orders in the market.
What it means
The platform uses live price data, fills orders by its own model and reports profit and loss as if the trades were real. At most retail prop firms, both the challenge and the funded account are simulated. The trader's reward is a share of the simulated profit, paid by the firm from its own revenue.
Simulation lets firms offer large account sizes for a small fee, but it has to be transparent. The terms should say clearly that accounts are simulated, how fills, spreads and slippage are handled, and whether any trades are copied to live markets. Traders should read this before buying, because it explains where rewards come from.
Worked example
Illustrative case: a trader on a simulated $100,000 funded account buys 2 lots of EUR/USD. The platform fills the order at the live quoted price, including the spread, but no order reaches the market. When the trader closes in profit, the firm records the gain and pays the trader's share at the next reward cycle.
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