A simulated account is a trading account that mirrors live market prices without sending your orders to a real exchange. Your trades are recorded against simulated prices, and fills follow the firm's simulation rules rather than a live order book. Most funded accounts run this way, because the firm pays your split from its own funds rather than from market profits.
Simulation does not make payouts fake. A funded profit on a simulated account still pays real money under the split, the schedule, and the minimum payout. What changes is execution: fills, slippage, and spreads follow the firm's simulation, which can differ from what a live broker would give on the same trade.
This matters for two reasons. First, a strategy tuned to live fills may behave differently on simulated fills, especially around fast news moves. Second, prop firms are not regulated like brokers, so the protections and the complaints route are not the same. The firm's own terms, not broker regulation, govern the account.
The common trap is either dismissing simulated accounts as worthless or assuming they behave exactly like live ones. Read the firm's terms for how simulation works on your plan, and judge the account on its payout record, not on whether it is simulated. Prop trading can cost you every fee you pay.