The Truth About Prop Firm Challenge: Trading Success or Trading Trap? - FundYourFX (2024)

Introduction to Prop Firm Challenge

The prop firm challenge is a critical step for traders aiming to go professional. It tests your trading skills under real market conditions. However, an important question arises: Is this challenge a fair way to identify top trading talent, or is it just a way for challenge prop firms to make money from failed traders? In this article on the prop firm challenge, we’ll talk about the pros and cons and provide actionable tips for success, including insights into instant funding options like FundYourFX.

Understanding the Prop Firm Challenge

At its core, the prop firm challenge can be a way for prop firms to make money from failed challenges. 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. However, a prop firm challenge can also be a way for trading firms to see if you, the trader, can make profits and handle risks well. It’s like a trial run where you need to hit certain profit goals following specific rules.

Here’s what you need to know:

  • Goal Setting: You’re given profit targets to hit.
  • Rules: There are strict trading rules you must follow.
  • Risk Management: Managing your risks is as important as making profits.

Success in this challenge isn’t just about trading well. It’s also about smart risk management. Want to get better at this? Check out our guide on Risk Control in Funded Forex Trading. It’ll show you how to balance risk and reward, a must-have skill for beating the prop firm challenge.

Common Mistakes During the Prop Firm Evaluation Process

When taking on the prop firm challenge, traders often fall into a few common traps. Being aware of these can help you navigate the challenge more effectively:

  • Overtrading: Trying to trade too much to hit profit targets quickly.
  • Ignoring Rules: Breaking the firm’s trading rules can disqualify you.
  • Emotional Trading: Letting stress and emotions dictate your trading decisions.

Avoiding these mistakes is key. For a deeper dive into preparing yourself for full-time trading, including managing the emotional aspects, check out 5 Things You Need Before Day Trading Full-Time.

Alternatives to the Prop Firm Evaluation

While the prop firm challenge is popular, it’s not the only path to professional trading. Here are some alternatives:

  • Instant Funding Prop Firms: Firms like FundYourFX offer instant funding without the traditional prop firm evaluation phase. This better approach allows traders to bypass the usual prop firm challenges and start trading with real funds instantly. Discover more about FundYourFX’s instant funding options at
  • Social Trading Platforms: These allow you to follow and copy trades of successful traders.

Each option has its pros and cons. Instant funding firms may have higher fees or different risk management rules, while social trading requires choosing the right traders to follow. For insights into strategies that work in different trading environments, explore Essential Strategies for Forex Trading Mastery.

Strategies to Successfully Pass the Prop Firm Challenge

To increase your chances of passing the prop firm challenge, consider these strategies:

  • Set Realistic Goals: Don’t aim for huge profits immediately. Focus on steady, consistent trading.
  • Stick to Your Plan: Have a trading strategy and stick to it, even under pressure.
  • Learn from Mistakes: Use each trading session as a learning opportunity.

Remember, risk management is crucial. Setting realistic profit targets is part of this. For more on this, read How to Set Profit Targets for Your Funded Trading Account. This guide will help you create targets that are challenging yet achievable.


The prop firm challenge is a significant stepping stone in a trader’s career. While it’s demanding, understanding its nuances and preparing adequately can set you up for success. Remember, it’s not just about trading skills; it’s also about mental resilience and strategic planning. For those looking to explore different trading styles, compare Prop Trading vs Retail Trading. Whichever path you choose, the key is to stay informed, prepared, and adaptable. For those interested in a more direct route to trading with substantial capital, FundYourFX’s instant funding options offer a unique and appealing alternative.

The Truth About Prop Firm Challenge: Trading Success or Trading Trap? - FundYourFX (2024)


What percentage of people pass prop firm challenges? ›

The article from Lux Trading Firm provides slightly different results. 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.

Do prop firms really pay out? ›

Statistics on Average Trader Payouts

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.

Is trading for a prop firm worth it? ›

Is working with a prop firm worth it? There are many unique advantages that make working with a prop firm worth it. These include access to unique software and information, trading with the firm's capital, and cashing in a large portion of your winnings.

Are prop firms a pyramid? ›

There is a very slim likelihood that they will succeed if the prop firm does not have their best interests in mind. 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.

What is the failure rate of FTMO? ›

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.

What is the success rate of the FTMO challenge? ›

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.

What is the problem with prop firms? ›

Limited Control Over Capital and Payouts:

- Traders in prop firms often have limited control over the firm's capital. They may need to deposit their own money as collateral or risk management. - Additionally, payouts are subject to the firm's rules, which may restrict a trader's access to profits.

How many traders pass prop firm challenges? ›

How Many Forex Traders Get Prop Firm Funded Accounts? It's hard to be entirely sure of how many traders are failing prop firm challenges across the industry, but we have a pretty good idea! We estimate that around 5% of forex traders are actually obtaining funded accounts.

What are the disadvantages of prop firms? ›

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.

Can you make a living with prop trading? ›

Prop traders can operate under their own rules-based system using the fund's capital, not money from outside investors. Prop traders also get to keep a large portion of their profits, which brings up the next primary perk: compensation. Prop traders often get a base salary, a cut of the profits and performance bonuses.

How much does the average prop trader make? ›

The salary of a prop trader can vary greatly depending on several factors such as experience, performance, and the size of the firm. On average, a junior prop trader can expect to earn anywhere between $50,000 to $100,000 per year, while a senior trader can make upwards of $500,000 annually.

Which prop firms are funded without challenge? ›

Prop Firms With No Evaluation – Instant Funding
  • Funded Trading Plus. Rating: 4.9. REVIEW SUMMARY. Funded Trading Plus is a Forex prop firm, located in London, UK. ...
  • FTUK. Rating: 4.8. REVIEW SUMMARY. FTUK is a Forex prop firm, located in USA. ...
  • City Traders Imperium. Rating: 4.8. REVIEW SUMMARY.

Where do prop trading firms get their money? ›

Proprietary trading firms trade their own capital instead of client's funds, which distinguishes them from brokerage firms. Unlike hedge funds, they typically do not seek external investors and their compensation is not based on a management or performance fee but on the profit generated from trades.

Is five rings a prop trading firm? ›

Five Rings is a proprietary trading firm founded with a vision of combining strategy, innovation and technology to succeed in today's global markets. Based in New York, we trade in various domestic and international markets, both established and esoteric. Five Rings does not depend on clients or outside investors.

Is it hard to pass 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.

Is it possible to pass the prop firm challenge? ›

With the Prop Firm challenges, it's not just about failing or winning. You must be profitable and fulfill certain trading objectives which makes it even harder. Less than 1% of traders who attempt the challenge pass and get funded. It's best to invest in a few challenges.

What happens if you pass the prop firm challenge? ›

Upon successfully passing a Prop Firm Challenge, traders may be required to fund their trading accounts with an initial amount. The firm may also have scaling plans that determine how much capital traders can access based on their performance. Understanding these conditions is vital for your success in the challenge.

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