Crypto Prop Trading Firms | Breakout Prop (2024)

FAQs

Do prop firms actually pay out? ›

There is nothing inherently scammy about the business model of prop firms. But how do they make money then? For starters, prop firms, of course, do not give money to just anyone who asks. Typically, they have a multi-stage evaluation process to make sure the traders they employ know what they are doing.

According to it, 4% of traders, on average, pass prop firm challenges. But only 1% of traders kept their funded accounts for a reasonable amount of time. While this result is not nearly as bad as the one discussed earlier, it still looks bleak for prospective prop traders. But why is the percentage of failure so high?

Actually, one could compare the 95% of prop companies to a pyramid scheme. They either set you up to fail or compensate you with other traders' losses. They use effective marketing and eye-catching graphics to keep new traders coming in.

According to FTMO statistics, only about 10% of traders are able to pass the funded account challenge at any account level. This means approximately 90% of aspiring funded traders fail the evaluation and are unable to gain access to the firm's capital.

There is estimated to be a 90% fail rate of traders that take the FTMO challenge. The reason behind this is due to traders chasing the profit target with a time restriction in place. A trader doesnt know when a winning streak might occur, or when they may take a string of drawdowns.

FTMO have told us that 92% of traders fail their challenge (10% in one month). Not sure about the verification stage where you need to make 5% in 2 months. {quote} FTMO have told us that 92% of traders fail their challenge (10% in one month).

Understanding the Prop Firm Challenge

This is because some sources have the failure rate of prop trading challenges at 90%. So for every 10 traders that buy a challenge, 9 will fail. That can be a lot of money for a prop firm.

If so, then you may have heard about the prop firm challenge. This is a popular way for traders to prove their skills and potentially secure funding from a prop firm. However, passing this challenge can be quite daunting and requires a lot of hard work and dedication.

How fast can you pass a prop firm challenge? ›

In conclusion, it can take around 4-5 months to pass a prop firm trading challenge and become a funded trader. However, it can take much longer than that to become a profitable trader beforehand – which is a necessity.

To pass this trading account challenge and secure the position of a prop-funded trader, it is crucial to have an in-depth understanding of the financial markets and the potential to make profitable trades while managing risks effectively.

Among many other potential factors, the main disadvantages of prop trading arise from being classified as a market professional, unfavorable profit sharing, and whether your net trading profits are taxed as capital gains or ordinary personal income.

Prop firms are an excellent source of accessing further capital to increase profit potential. Passing a prop firm's evaluation means reaching a profit target while staying within its risk management rules. Prop firms require traders to use their brokers, which can be positive or negative depending on the broker.

Profit Split: The average prop firm will offer a 80-20 profit split once you become a funded trader. TFT, on the other hand, gives up to a 90% split, — even as high as 95% in some promotions — the highest in the industry.

In a typical challenge model, the prop firm will give the trader a certain amount of virtual money to trade with. The trader will then have to meet certain profit targets in order to pass the challenge. Once they pass the challenge, they will be given a funded account that they can use to trade with real money.

Profits from trades are generally divided between the firm and the prop trader; however, the risk distribution is asymmetric. This means that in the event of a loss, the trader bears 100% of the losses, while they don't receive 100% of the profits.

All FTMO Traders can request payout on-demand. The payout can be processed just after 14 days, but you also have the ability to choose your own Profit Split Day, which can be even changed up to three times. In conclusion, we make sure that you will always receive your withdrawal on your most convenient day.