Everything you need to know about prop firms

[Fairman]

MyFundedFX's shutdown, as a base-rate lesson rather than just a cautionary story

A firm with a genuinely large trader base shut down with limited warning earlier this year.

If you're allocating challenge fees or holding funded balances across firms, the relevant lesson isn't "avoid this specific firm."

It already doesn't exist anymore.

It's updating your base rate for firm failure risk across this entire, relatively young industry.

If you estimate even a modest annual firm-failure probability — say, something in the low single digits per firm, per year, which is a defensible ballpark given how young and lightly regulated this space still is — the math changes.

Holding meaningful funded balances or pending payouts concentrated in a single firm, for extended periods, carries more tail risk than most traders price in.

Spreading funded activity across two or three established firms, rather than concentrating everything in whichever has the best current promo, reduces this specific tail risk.

The same way normal portfolio diversification does for any other asset class.

[Fairman]

Sizing down during an evaluation, quantified instead of just recommended

A common piece of advice is "risk less during a challenge than you do on your personal account."

Here's the actual math for why.

If your personal-account risk is 1% per trade and you drop to 0.5% specifically for an evaluation, you've roughly halved your position size relative to the same stop distance.

A losing streak that would cost 5% of your account at 1% risk per trade now costs roughly 2.5% at 0.5% risk.

Likely staying under most firms' daily and overall drawdown limits, where the same streak at full personal-account risk would have breached them.

The tradeoff is time.

Half the risk per trade generally means roughly half the pace toward your profit target, all else equal.

So evaluations take meaningfully longer.

That's a real cost. But it's a calendar cost, not a capital cost.

And unlike a breached account, calendar time is recoverable.

[Fairman]

News trading restrictions, and the probability cost of ignoring them "just once"

If a firm prohibits new entries within, say, 5 minutes before and after high-impact releases, and you trade through that window anyway because a setup looks clean, you're not just taking on the market risk of the news event.

You're stacking that market risk on top of a separate, binary rule-violation risk.

One that has nothing to do with whether the trade itself wins or loses.

Even a trade that would have been genuinely profitable on pure price action can result in a violation flag purely from timing.

And once flagged, some firms void the trade, or the day's results, regardless of outcome.

The expected value of "just this once" isn't the expected value of the trade.

It's the expected value of the trade multiplied by the probability the rule violation doesn't get caught or doesn't matter.

For most firms' monitoring, that's not a number worth betting an evaluation on.

[Fairman]

A simple framework for choosing between two firms whose rules look genuinely close on paper

When two firms' daily limits, max drawdowns, and splits are within a percentage point or two of each other, that happens more often than marketing pages suggest.

The tiebreaker worth weighting most heavily is payout reliability. Not the marginally better rule.

A firm with a well-documented, independently corroborated 99%+ on-time payout track record, and a slightly tighter daily limit, is in expectation a better choice than a firm with a marginally looser daily limit but a thinner, less verified payout history.

Because the entire point of passing the evaluation is eventually being paid.

And a 1-point difference in daily loss limit matters far less to your actual expected take-home than a meaningful gap in the probability you actually get paid promptly when you hit a payout milestone.

[Fairman]

Why firm-hopping after every failed attempt is close to the worst strategy available, expected-value-wise

Failing an evaluation and immediately buying a different firm's challenge, rather than reviewing what specifically went wrong, resets your effective sample size to zero every single time.

Say your actual skill and process would produce a 35% pass probability once genuinely dialed in.

But your raw first-attempt-with-any-given-firm probability, before any real review, is closer to 15%.

Firm-hopping keeps you trading at that lower, undialed-in probability indefinitely.

Because you never accumulate the specific, firm-relevant experience that closes the gap.

Staying with one firm, reviewing failures against that specific firm's specific rules, and improving your process before the next attempt is the path that actually lets your pass probability climb toward your true underlying skill level.

Rather than resetting toward the lower, inexperienced baseline every single time.

[Fairman]

The comparison I wish existed before I bought my first challenge

Forget the table. Here's the same information written out plainly, firm by firm.

FTMO

Structure: 2-step evaluation.

Daily loss limit: 5%.

Max drawdown: 10%.

Profit split: starts at 80%, climbs to 90% through the scaling plan.

Typical fee for a 100K account: around €540.

[Fairman]

FundedNext

Structure: 1-step or 2-step, depending on the program.

Daily loss limit: 3% to 5%, tighter specifically on the Stellar track.

Max drawdown: 6% to 10%.

Profit split: up to 95% with add-ons.

Typical fee for a 100K account: around $550.

[Fairman]

FundingPips

Structure: multiple account models to choose from.

Daily loss limit: 3% to 5%, varies by model.

Max drawdown: 6% to 10%.

Profit split: up to 100% on some reward cycles.

Typical fee: industry-typical range, roughly $100 to $500.

[Fairman]

Topstep
Structure: futures, not forex. Contract-based, not percentage-based.

Daily loss limit: doesn't really apply the same way — it's a trailing drawdown tied to contract value.

Max drawdown: trailing, contract-specific, not a flat percentage.

Profit split: different structure entirely, not directly comparable.

Typical fee: not comparable to the forex firms above.

[Fairman]

THE5ERS FUNDED