Are prop firms a scam?

Prop firms aren’t the only way to scale up your trading… but they’re one of the fastest ways.

The thing is…

I’ve gotten comments like these over the past week:

“Nonsense! Prop firms are a scam, looking for traders who will pay for challenges and then fail. That’s how they make their $”

So I thought it’d be worth addressing it.


In case you weren’t aware of it…

Prop firms are companies that fund traders with certain rules once they pass an evaluation period.

(1) Why do they ask for an evaluation?

While there’s a sign up fee for it, prop firms can’t afford to risk capital on losing traders.

Back when I started trading in 2013, you could get a funded account but had to deposit $5k to cover your drawdown (5% on a $100k account).

Any loss would be taken on your “deposit”.

These days conditions are much better…

The sign up fee you pay (usually 1% of the account) helps cover those who get funded and blow up the account.

In many cases…

Once you’ve made a certain % on the account, the max drawdown is locked at the starting balance… so there’s no downside for the firm and they get paid from your profits.

You can make the returns you want collecting your profit share, but need to respect the rules (i.e. not lose too much).

It’s a good business model both for the trader who’s trading profitably… and the prop firm.

After all the prop firm gets paid too if you perform well… which is worth way more than just a sign up fee.


But I’m not saying all prop firms are legit though.

In the last year, some prop firms have closed while others have been accused of making trading conditions bad on purpose.

There's lots of bad apples making it look bad for everyone else 🙁

But that’s why picking a good prop firm who’s been around for a while… and backed by live capital is important.

And it’s always better not to put all your eggs in one basket.

Meaning, you can get accounts with multiple prop firms and diversify your funds.


Here are some other Qs you might be interested in:

(2) Why’s the max. drawdown so low?

While prop firms are offering a 5% to 7% max drawdown before the account gets terminated…. and some people are complaining about it, it’s really not uncommon in the trading industry.

Traders in big institutions have to stick to much stricter rules…

You can’t just get unlimited drawdown and expect no one will say a word if you blow up 20% of your account.

The easy way around it through is to reduce your risk per trade.

Yes, you’ll make less money… but you can focus on trading bigger account sizes.

(3) Why can’t I trade the news / over the week-end?

In most cases, that’s because trading during news events or holding trades over the week-end adds risk.

You get slippage during a news and could lose more than you anticipated.

There could also be a gap in the market after a week-end.

If you want to do these things and the prop firm incurs extra risk, they’ll let you do it… but might charge you a slightly higher sign up fee.

(4) What are my odds of passing?

From what I’ve gathered, nearly 90% of traders fail the prop firm evaluation they start.

It’s not that far off from the saying: *“95% of traders lose money.”*

But that’s because most of the traders who take on prop firm evaluations aren’t even profitable in the first place.

They’re hoping to get lucky…

I’ve been able to prove that with proper training and good trading strategies, that failure rate can get much lower.

Those who do what we teach in Ultimate Prop Firm Trading have an 80% chance of passing a prop firm evaluation on the first try.

Much better than the industry average of 10% 🙂

In the rare case they don’t pass…

I’ve got a guarantee of success with my program and will help them make it work the next time around.

And if I can’t, I refund them 🙂


This is what I do inside of Ultimate Prop Firm Trading

Not only will I teach you my proven strategies, build your mindset & funded traders skills…

I’ll also pay for your first $25,000 prop firm evaluation once you’re ready… which if you pass, will be trading on real capital.

So if you want to join us and get funded 5-6 figures by a prop firm… on your way to a full-time income in 2024?

You'll get all the info you need to start below:

Click here to read the details & get started

If you need a refresher, here's what you get by signing up now:

  • 9-module course to build professional trading skills
  • Complimentary prop firm challenge
  • Trading strategies with metrics prop firms will love
  • Risk management plan for prop trading
  • Monthly trader mastermind calls
  • Bonus #1: Complimentary $25k funded evaluation
  • Bonus #2: Pre-evaluation 1-1 coaching call
  • Bonus #3: Proven crypto strategy TradingView scripts

Keep crushing it 💪 📈

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Are prop firms a scam?