Prop Trading Course | The5ers Forex Prop Firm (2024)

FAQs

How hard is it to pass a prop firm challenge? ›

In September 2023, Forex Prop Firm published their challenge passing rates, revealing that only 10.59% of participants were able to pass the first level, and a mere 9.26% qualified for the advanced pro level.

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.

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.

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.

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. Instead of purchasing a 200K FTMO Challenge, take five smaller 10K challenges.

The reason the instant funding prop firms typically fail is due to the business model they operate. It's important to understand that these prop firms typically offer 'simulated capital'.

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.

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.

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.

What are the negatives of prop firms? ›

👎 Cons of Prop Trading

Less Regulation: Many prop trading firms, especially those offering remote trading, are not heavily regulated. This can reduce operating costs but increases the risk of losing capital due to potential fraud or mismanagement.

A career in prop trading, especially within the dynamic crypto market, opens doors to both professional growth and financial success. Beginners can leverage the resources, knowledge, and capital offered by reputable prop firms to start a promising trading journey.

In what appears to be related to the latest MetaQuotes crackdown on the proprietary trading landscape, prop firm FTMO has stopped onboarding US clients, Finance Magnates has learned. New traders attempting to register from a US IP address were unable to complete the registration form.

The Costs of Prop Firm Regulation & Company Registration

Some prop firms may opt to be regulated which puts costs significantly higher. One should expect to pay a one time fee of around $10,000 for company registration and payment options while regulation involves a minimum budget of $75,000.

Becoming a funded trader with a prop firm involves showcasing your trading skills and adherence to risk management during an evaluation process. While the difficulty can vary, it's achievable with consistency, dedication, and a solid trading approach.

Follow Your Strategy 100%

One of the most crucial aspects of passing a prop firm challenge is having a well-defined trading strategy. A trading strategy is a set of rules that guide your decision-making process in the market. It includes entry and exit criteria, risk management rules, and trade management techniques.

Since they are virtual funds, they are not real losses, either to the prop firm or to you. The fee is all you can lose. You will not owe money if you lose while trying to pass a challenge with an evaluation account for a prop firm.