Does a prop firm's revenue come from challenge fees or from trading profits?
Quick answer
For most online prop firms, revenue comes mainly from challenge fees, not from trading. Evaluation and often funded accounts are simulated, so trader profits are paid out of the firm's revenue. A minority of firms also trade the strategies of their best traders in real markets.
Detailed answer
This is the most important fact about the model, and it shapes everything else:
- Fees pay for payouts. Payouts to funded traders are funded from challenge and add-on revenue.
- Pass rate matters. The share of traders who pass and then withdraw profit determines how much of each fee becomes a payout.
- Real trading is optional. Some firms mirror successful traders to a live broker account to earn real profit or hedge their liability. That carries market risk and needs a broker relationship.
Because of this, transparency about simulated accounts matters, and regulators in several countries have taken an interest in how prop firms describe them. Being clear in your terms that accounts are simulated, while paying reliably, is the foundation of trust. PropExecutor runs simulated accounts against live prices and never places orders on a real market.
What it means for your website
Describe the model accurately: traders pay for an evaluation, trade simulated accounts and earn payouts on their results under your terms.
PropExecutor team · Updated
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