The prop firm business model, honestly

Two revenue streams, very different sizes

Welcome to chapter six. A prop firm is a company that funds traders. You pay a one-time fee — usually $100 to $700 depending on account size — for a chance to prove you can trade inside their rules. Pass the evaluation and they hand you a funded account, often starting at $25,000 or $50,000 in buying power. You don't put up that capital. You trade it, and when you make money, you split it with the firm. That's the headline pitch.

Now the part the marketing doesn't always say. Most people fail the evaluation. Industry-wide first-attempt pass rates sit somewhere in the 5 to 15 percent range. That means out of every 100 evaluation fees collected, 85 to 95 belong to traders who didn't pass. Those failed fees are a major revenue stream for the firm — possibly the largest one. That's not evil. It's just the model. But if you don't understand it, you'll buy a $400 evaluation thinking it's a job application. It's closer to a poker buy-in.

The second revenue stream is the profit split from funded traders who succeed. Common splits are 80/20 or 90/10 in the trader's favor. So if a funded $50k account produces $2,500 in a month, the trader gets $2,000 to $2,250 and the firm keeps $250 to $500. That sounds small per trader, but a firm with thousands of funded accounts compounds. Both streams — evaluation fees and profit splits — are real. Understand the proportions and you understand the offer.

The major players in 2026 split roughly into two camps. Futures-focused: TopStep, Apex Trader Funding, Bulenox, Earn2Trade, MyFundedFutures. Forex and crypto-focused: FTMO, MyForexFunds, FundedNext. Different rules, different fees, different payout cadences. We'll go through what those rules actually test in the next nine lessons.

Recap: prop firms make money from evaluation fees and from profit splits. Pass rates are low. The offer is real, but it's an audition you pay for — not a job. Going in clear-eyed is half the work.