# How do prop firms make money? > Retail prop firms make most of their money from evaluation fees, resets, activation fees and subscriptions. Because funded accounts are usually simulated, payouts to successful traders come out of that fee revenue. Some firms also copy the trades of consistent traders onto their own real accounts and keep that trading profit. **Source:** https://propfirmpal.com/learn/how-do-prop-firms-make-money **Generated:** 2026-09-25 **Publisher:** Prop Firm Pal — independent prop firm comparison _Prop Firm Pal earns affiliate commission from some listed firms. This is disclosed on-site and does not affect the computed ranking order._ --- _Updated 2026-09-24._ ## Where the revenue comes from A retail prop firm has several sources of income, and the first is the one every firm has. - **Evaluation fees.** Every attempt is paid up front. The median cheapest $100,000 evaluation across the 23 firms with full terms in our [industry report](https://propfirmpal.com/industry-report) is $419. - **Resets and retries.** A trader who breaches can buy another attempt, often at a discount — see [reset fee](https://propfirmpal.com/glossary/reset-fee). - **Activation and subscription fees.** Many futures firms charge monthly during the evaluation and a one-off [activation fee](https://propfirmpal.com/glossary/activation-fee) on passing. - **Add-ons.** Paid upgrades such as a higher profit split, faster payouts or no time limit. - **Trading profit.** Some firms copy selected traders onto real accounts and keep the result. ## Why fee revenue can pay the winners Most funded accounts are simulated. FTMO, for example, states that its funded traders use [a demo account with fictitious capital](https://ftmo.com/en/faq/how-does-an-ftmo-account-work-from-the-technical-side/), and that it evaluates separately whether to execute trades for its own account. A simulated loss costs the firm nothing, and a simulated profit is paid as a reward from the firm’s revenue. That works as long as fees from all attempts exceed payouts to the few who earn them. It is why firms keep rules that end accounts quickly, cap payouts, and review payouts for prohibited practices. It is not a scam in itself — the terms say so — but it means your payout depends on the firm’s ongoing sales and solvency, not on a pool of capital set aside for you. ## Copying traders onto real accounts A firm that finds a consistently profitable trader can copy that trader’s positions onto its own brokerage account — the “A-book” side of an [A-book / B-book](https://propfirmpal.com/glossary/a-book-b-book) model — and earn real trading profit. FTMO describes monitoring funded traders and deciding [whether trades will be executed for its own account](https://ftmo.com/en/faq/how-does-an-ftmo-account-work-from-the-technical-side/). Topstep goes further and moves some traders to a [Live Funded Account](https://www.topstep.com/our-program) on real markets. ## When the model was challenged In August 2023 the CFTC [sued the operator of My Forex Funds](https://www.cftc.gov/PressRoom/PressReleases/8771-23), alleging it was the counterparty to substantially all customer trades rather than routing them to third-party liquidity providers, and that customers had paid over $300 million in fees. The allegations were never proven: in May 2025 a federal judge [dismissed the case with prejudice and sanctioned the CFTC](https://www.financemagnates.com/forex/my-forex-funds-parent-defeats-cftc-in-court-as-judge-imposes-sanctions/) for misleading the court. The case shows what a regulator scrutinised in the model — see [are prop firms regulated?](https://propfirmpal.com/learn/are-prop-firms-regulated). ## What this means when you choose a firm A firm that depends on fees needs steady sales to pay its winners, so its health matters as much as its rules. Check how long it has operated and whether its audience is growing or shrinking on the [firm health tracker](https://propfirmpal.com/firm-health), whether it has changed rules or payout terms recently on the [changes log](https://propfirmpal.com/changes), and whether traders report receiving payouts. [Are prop firms legit?](https://propfirmpal.com/learn/are-prop-firms-legit) lists the checks. ## Why rules and prices keep changing A fee-funded firm balances two numbers: what it takes in from attempts, and what it pays out to funded traders. When payouts rise faster than sales, the levers it has are the rules and the prices — a tighter drawdown, a new consistency rule, a lower payout cap, a higher fee. That is why rulebooks change so often, and why a change applied to existing accounts deserves attention. Our [rule & price changes log](https://propfirmpal.com/changes) records the changes we track, dated, so a trader can see whether a firm is tightening before buying from it. ## Frequently asked questions ### How do prop firms make money on funded accounts? Mostly they do not: funded accounts are usually simulated, and payouts come from fee revenue. Some firms copy profitable traders onto real accounts and keep that trading profit. ### How do prop firms not lose money? Loss limits close accounts before simulated losses grow, fees from every attempt fund the payouts, and payout caps and reviews limit what any one trader can withdraw. ### What happens if you lose a prop firm’s money? On a simulated account nothing is lost but the fee: the account closes when you breach a limit. You are not liable for the loss on the account balance. ### Do prop firms want you to fail? The fee model earns from failed attempts, but a firm also needs funded traders who get paid to keep selling evaluations. Rules and payout reviews show where a firm draws that line. ### Do prop firms make money from traders who pass? Directly, only through activation fees, add-ons and any trading profit from copying them. Their payouts are a cost; most revenue comes from attempts. ### Is a prop firm a B-book? In effect, when funded accounts are simulated: the firm is the other side of the trader’s result and pays profits from its own revenue. Firms that copy trades to a real account are A-booking those traders. ## Sources - [FTMO — how an FTMO Account works technically](https://ftmo.com/en/faq/how-does-an-ftmo-account-work-from-the-technical-side/) - [Topstep — how the funded program works](https://www.topstep.com/our-program) - [CFTC — complaint against My Forex Funds (2023)](https://www.cftc.gov/PressRoom/PressReleases/8771-23) - [Finance Magnates — CFTC case dismissed (2025)](https://www.financemagnates.com/forex/my-forex-funds-parent-defeats-cftc-in-court-as-judge-imposes-sanctions/) ## Related pages - [What is a prop firm?](https://propfirmpal.com/learn/what-is-a-prop-firm) - [Are prop firms legit?](https://propfirmpal.com/learn/are-prop-firms-legit) - [A-book / B-book in the glossary](https://propfirmpal.com/glossary/a-book-b-book) - [Simulated funded account in the glossary](https://propfirmpal.com/glossary/simulated-funded) - [Firm health tracker](https://propfirmpal.com/firm-health) - [What is a prop firm?](https://propfirmpal.com/learn/what-is-a-prop-firm) — markdown: https://propfirmpal.com/learn/what-is-a-prop-firm.md - [How funded trading accounts work](https://propfirmpal.com/learn/funded-trading-accounts) — markdown: https://propfirmpal.com/learn/funded-trading-accounts.md - [How to get a funded trading account](https://propfirmpal.com/learn/how-to-get-a-funded-trading-account) — markdown: https://propfirmpal.com/learn/how-to-get-a-funded-trading-account.md - [How prop firm challenges work](https://propfirmpal.com/learn/how-prop-firm-challenges-work) — markdown: https://propfirmpal.com/learn/how-prop-firm-challenges-work.md - [Instant funding vs evaluation](https://propfirmpal.com/learn/instant-funding-vs-evaluation) — markdown: https://propfirmpal.com/learn/instant-funding-vs-evaluation.md - [Why traders fail prop firm challenges](https://propfirmpal.com/learn/why-traders-fail-prop-firm-challenges) — markdown: https://propfirmpal.com/learn/why-traders-fail-prop-firm-challenges.md - [Prop firm drawdown types explained](https://propfirmpal.com/learn/prop-firm-drawdown-types) — markdown: https://propfirmpal.com/learn/prop-firm-drawdown-types.md - [How to scale a funded account](https://propfirmpal.com/learn/how-to-scale-a-funded-account) — markdown: https://propfirmpal.com/learn/how-to-scale-a-funded-account.md - [Futures vs forex prop firms](https://propfirmpal.com/learn/futures-vs-forex-prop-firms) — markdown: https://propfirmpal.com/learn/futures-vs-forex-prop-firms.md - [How to choose a prop firm](https://propfirmpal.com/learn/how-to-choose-a-prop-firm) — markdown: https://propfirmpal.com/learn/how-to-choose-a-prop-firm.md - [Prop firm vs broker vs hedge fund](https://propfirmpal.com/learn/prop-firm-vs-broker-vs-hedge-fund) — markdown: https://propfirmpal.com/learn/prop-firm-vs-broker-vs-hedge-fund.md - [How prop firm payouts work](https://propfirmpal.com/learn/how-prop-firm-payouts-work) — markdown: https://propfirmpal.com/learn/how-prop-firm-payouts-work.md - [Can you make money with a prop firm?](https://propfirmpal.com/learn/can-you-make-money-with-a-prop-firm) — markdown: https://propfirmpal.com/learn/can-you-make-money-with-a-prop-firm.md - [Prop firm taxes](https://propfirmpal.com/learn/prop-firm-taxes) — markdown: https://propfirmpal.com/learn/prop-firm-taxes.md - [Are prop firms legit?](https://propfirmpal.com/learn/are-prop-firms-legit) — markdown: https://propfirmpal.com/learn/are-prop-firms-legit.md - [Are prop firms regulated?](https://propfirmpal.com/learn/are-prop-firms-regulated) — markdown: https://propfirmpal.com/learn/are-prop-firms-regulated.md - [Are prop firms going away?](https://propfirmpal.com/learn/are-prop-firms-going-away) — markdown: https://propfirmpal.com/learn/are-prop-firms-going-away.md