Funding: How to Scale Up with Prop Firms | Falcon FX (2024)

Funding is arguably the biggest talking point of the retail trading space. Many traders seek to get funded from the major prop firms such as FTMO, MyForexFunds (MFF), TheFundedTrader (TFT), E8 and many more. In this blog post, we’ll cover the various topics surrounding funding as well as some of the benefits of our very own in-house funding program.

So, what exactly is funding? The modern funding process offered by 3rd-party proprietary firms AKA “prop firms” first requires applicants to pass certain assessments. Once they pass, they can gain access to initial capital ranging from 5-figures to 6-figures, which they can then scale to 7-figures and beyond. This opportunity is life changing to a vast majority of people. They can super charge their own accounts and build their empire with consistent payouts from a third-party fund. This is a great alternative to the traditional route of finding investor capital and dealing with all those logistics.

When should a trader go for funding?

After learning what funding is, traders often ask this question first.

The answer is more complex than you might imagine, and there are many ways to answer it. In an ideal world, a trader should go for funding when they are ready to scale up their trading. The problem is that this definition of readiness isn’t easily discernible for many people.

In many cases, people take on funding way too early. They see the allure of trading 6+figures in the very near future and their eyes glisten with all the possibilities of withdrawals. They end up jumping right in before thinking. Assessments aren’t cheap for the average person. It’s not uncommon to see assessment fees in the ~$1,000.00 dollar range for a 100K account, for example. Because the assessment cost isn’t cheap and greed is high, people commonly break their own trading rules (assuming they had any to begin with). In some ways, funding appears to be one of the world’s most winnable lottery tickets. Unfortunately, most assessments are just as effective at creating financial freedom as traditional lottery tickets. For genuinely good traders, however, third-party funding can be truly life changing. Let’s look at some stats.

Last year, MyForexFunds, one of the most popular prop firms, released some notable statistics around success rates with their funding programs.

Prop Firm Stats: The Numbers Don’t Lie

MFF’s main funding evaluation is a two-phase program. First, traders have to hit a profit target under a given set of rules. That’s when they unlock the second phase of the challenge with a profit target of its own.

Funding: How to Scale Up with Prop Firms | Falcon FX (1)

Credit: MyForexFunds

Digging In To The Details

When looking at the results from evaluation attempts in February of last year, they saw the following:

  • 31% of traders who took on the assessment made it to phase 2.
    • In other words, if 100,000 people took the assessment that month, 31,000 of them remained by the end of phase 1.
  • 45% of traders who made it to phase 2 passed the assessment.
    • Phase 2 is easier than phase 1 (lower profit target and more time), so the higher pass rate when compared to phase 1 isn’t surprising.
    • This means that 14% of the people who applied for the evaluations successfully completed the assessment.
    • It’s worth noting here that MFF did not release the percentage of those people who would go on to actually receive a payout. At the very least, we can safely assume this number is less than 14%.

It sounds obvious, but it’s important to remember that assessments test your trading abilities, and though trading can appear simple, it’s far from easy. Because of human psychology, however, people are quick to assume that they are the exception to the statistic. A lot of people will talk about the importance of psychology and agree that it is absolutely necessary to their trading success. Yet, they proceed to do no deep psychological work. Can you start to see the problem there?

The Story Continues..

MFF has released some of their statistics for February 2023. Let’s compare the stats from this year to last year and see what, if anything, has changed.

Funding: How to Scale Up with Prop Firms | Falcon FX (2)

Pass rate of Phase 1 is 19.05% in 2023, down from the previous year of 31%.

Pass rate of Phase 2 is 42.18% this year, down from 2022’s 45%.

Note: They did not include a proportion of people that then went on to get a payout, but using some other numbers MFF has published across social media, we can approximate that the proportion of people who went on to secure a payout after passing phase 2 was 3.5%, or around 0.5% of total applicants.

If you apply that proportion to this year’s numbers, from evaluation to payout you have a 0.28% chance of receiving a payout. Inversely, you have a 99.72% chance of failing to receive a single payout. Isn’t that absolutely shameful? I would argue that trading education is the best it has ever been, both inside and outside of Falcon FX. Access to even the free trading material is more ubiquitous than ever, and yet prop firm stats are worse than ever.

Why are the numbers so bad?

Two main reasons come to mind as to why these numbers look the way they do:

  1. People are trading too many strategies simultaneously and are attempting to combine them all. Positive confluences do not necessarily stack on top of one another.
  2. People have put in no psychological work and assume they will be the exception to the rule, though the stats show that there are very few exceptions.

The problem is that people want to scale up, but they’re fighting emotions they’ve never felt until the assessment. No wonder the failure rate is so high. After all, how often do you do well on your first attempt at something difficult?

Couple that with the steep price of assessments and you’ll likely feel choked the entire duration of the assessment. Additionally, some of these prop firm assessments have brutal targets like 10% in 30 days, which not all market conditions provide. This is why we’ve created our Rewired program, a psychological course built around improving all dynamics of your trading psychology using practical modules developed to help you utilize and scale up your capital.

In Rewired, the modules are designed in a way to help create practical steps on how to not just dissect your psychology but to literally rewire it in a way to help you succeed. In Rewired 2.0, which is being released later this year, the focus is around funding.

We’ve analyzed the prop firm industry for the last few years. We know the struggles people go through as they attempt to get funded and consequently stay funded. These modules are meant to combat the majority of these issues head on.

Are all prop firms legit?

So, passing legitimately established assessments is difficult. The stats don’t lie. However, what about finding legit assessments in the first place?

We don’t blame traders for asking questions given all the noise in industries like ours. A common question we see is, “Is the money in the accounts real?” Well, with the way prop firms are designed, no. It would be too much risk for them.

Here’s the good news: if you are trading on any of the big firms (or our exclusive in-house fund), it’s likely they can and will give you your payout. But they also need to hedge their positions.

If they put every new trader on a live account, they are running a very high risk of ruin because of the number of people who choose to gamble rather than trade responsibly. Therefore they need to be strategic about who they put onto their live capital.

Some people get upset that they are trading a demo account, but the reality is, if they pay out your entitled profit split, why does it matter? People are also bothered that firms make money from assessments.

Well the reality is that if most people who applied were better traders, firms wouldn’t be making as much as they are from assessments. But the sober truth is that a majority of these traders are not ready to take on funded capital.

How to Become a Funded Trader Using Prop Firms

Here’s a simple outline to follow if you want to beat the statistics and scale up as a funded trader:

  1. Learn to trade to the absolute best of your abilities, and make sure that your trading psychology is in line with that.
  2. Apply for an assessment with a reputable company and pass by following the relative criteria.
  3. Scale up your funded capital and use payouts to build your personal capital.

As amazing as prop firms are, you also need to make sure that you are prepared to lose that capital. Some of these firms are not hedged properly and therefore do run the risk of blowing up. Many of these firms also don’t see you as a real person. It’s not because they are evil, it’s because they have too many traders.

To them, you are a statistic, a number in a column that they have to decide where to place you.

What makes our funding program different?

This is where our funding program shines brightest. Between profit target requirements, trading time allowance and program pricing, we’re pretty much on-par with the leading programs in the industry. But that is not our true advantage. Our advantage is that it is in-house, bespoke, and built specifically for the individual.

At this time, the funding program is only open to Falcon students. We know how Falcon trades. Imagine a market scenario where some really bad slippage occurs beyond your control. In any other firm, they’ll likely just unfund you, and you’d be back to square one. It’s not even their fault. They just don’t know how you trade, and they need to protect themselves. But because we are familiar with the way you trade as a Falcon student, we have the ability to take a closer look and add context to your situation, and can therefore see you were just hit with a sequence of unluckiness or if your trading needs more work. If you were just unlucky, we have the ability to reinstate you at the same or a very similar level.

Think of the advantage of having that level of peace of mind! People tend to fixate on the upside potential. As a responsible trader, however, you have to look at the possible downsides associated with each opportunity. We have downside protective measures unlike others in the funding industry, and hopefully this demonstrates how much we care about the success and scale of Falcon students.

If you’re interested in scaling up alongside other Falcon students with a tried-and-true strategy in a bespoke funding program like no other, join the Falcon family today. Simply send us a message through our live chat to get started, or sign up with this link.

Funding: How to Scale Up with Prop Firms | Falcon FX (2024)


Funding: How to Scale Up with Prop Firms | Falcon FX? ›

The modern funding process offered by 3rd-party proprietary firms AKA “prop firms” first requires applicants to pass certain assessments. Once they pass, they can gain access to initial capital ranging from 5-figures to 6-figures, which they can then scale to 7-figures and beyond.

What percentage do prop firms take? ›

A prop trading firm looks to recruit talented traders and fund them with the company's capital. The funds that a trader makes, is then split between the trader and the company. The profit share is between 50 – 95%, with the trader taking the lion's share.

How do prop trading firms raise money? ›

Commission: Prop firms may charge a commission on each trade made by their traders. Profit Split: In some cases, prop firms may take a percentage of the profits earned by their traders as a form of compensation. Training Fees: Some prop firms offer training programs for new traders, which may come at a cost.

What is the maximum funding for a prop firm? ›

After successfully progressing through stage 2, traders can receive up to $2.5 million in funding with an 80% profit split. Phase 1 has an 8% profit target and a 10% maximum drawdown limit. The profit target goes down to 5% in phase 2, while the maximum allowed drawdown remains at 10%.

What percentage of traders pass prop firm challenge? ›

The FTMO challenge has a reputation for being extremely difficult to pass. Across FTMO's various account levels, it is estimated that only around 10% of traders are able to successfully complete the evaluation and become a funded trader. This means approximately 90% of those who attempt the challenge end up failing.

What is the failure rate for FTMO? ›

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.

How many people fail prop firms? ›

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?

How much does the average prop firm trader make? ›

In conclusion, the income of prop firm traders 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.

Can you make a living with prop trading? ›

Also known as “prop trading,” it offers higher earnings potential much earlier in your career than jobs like investment banking or private equity. It's arguably the most merit-based industry within finance: if you make millions of dollars for your firm, you'll earn some percentage of it.

What is the profit split for prop firms? ›

Agreements typically range from 50/50 to a more favorable 80/20 split after certain thresholds, with some firms offering as much as 90% to the trader.

Which is the cheapest prop firm? ›

Best cheap forex prop firms
  • FTMO: evaluations starting at $399.
  • TopStepTrader: Challenges starting at $375.
  • T4tCapital: Flexible evaluation options starting at $299.
  • Funded Trading Plus: Starting at $25.
  • Earn2Trade: $99 Mini challenge.
  • True Trading Group: $49 evaluation with a $25,000 virtual account.
Feb 27, 2024

Are prop firms worth it? ›

Pros: Rewards

The biggest reason traders consider a prop firm is access to more capital and keeping a high percentage of the profits.

What happens if you lose money in a prop firm? ›

Proprietary trading firms often provide evaluation accounts where you prove your trading skills. Usually, you pay a one-time fee to enter this "challenge." If you lose money during this evaluation, you won't owe anything beyond the initial fee.

Is it hard to get funded by a prop firm? ›

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.

Why do most people fail prop firm challenges? ›

The most common reasons traders fail prop firm challenges are simply overleveraging their trades, not understanding the rules, and not having a profitable trading strategy.

How stressful is prop trading? ›

Prop trading isn't all pomp and glamour either. It's a competitive, high-stress field with drawbacks like any other career. It's also awash with less-than-reputable firms that offer zero base pay, limited profit sharing and often make new hires pay for training and tech.

Does Prop firm really pay? ›

Yes, prop firms do pay. While there are some scams out there popping up everyday, reputable prop trading firms like True Forex Funds, FTMO,5%ers,FundedNext are legitimate and pay traders according to their profit-sharing agreements. As for True Forex Funds, I can vouch for their credibility.

How much does a prop firm cost? ›

To summarize, the amount of money you need to open a prop firm can range from $10,000 to $1 million, depending on the type of prop firm, the technology, the registration, the liquidity, and the CRM tool.

What is the profit split percentage for FTMO? ›

We don't charge any commissions for withdrawals.

You don't need to score any minimum profit to receive a Profit Split, only just enough to cover the transaction fees* Whatever amount of profit you generate, you are entitled to withdraw 80% of it.


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