A review of six prop firms' rulebooks: why funded traders rarely get paid

It is possible to pass every phase of a funded challenge, exit a position at a profit, and still lose the account, not through a losing trade, but through a term that was never read at the point of purchase.

That sounds like an outlier. The available data indicates it is nearer to the rule: of more than 300,000 funded accounts examined, roughly 7% of traders ever received a payout, and the cause was rarely a matter of skill.

That is the premise of Velotrade's 2026 Prop Firm Transparency Report, which compared the published rulebooks of six firms, Topstep, FTMO, FundingPips, Blue Guardian, HyroTrader, and Velotrade, to identify the provisions that in practice govern whether a funded trader retains their profits.

The argument it makes is straightforward: attention goes to profit splits, while the conditions set out in evaluation guides and help-center pages are what bring most accounts to an end.

Rules, not losing trades, end most funded accounts

Two independent industry datasets underpin that finding:

• In a 2024 study by FPFX Tech covering more than 300,000 accounts (reported via Finance Magnates), only 7% of traders ever received a payout, with roughly 14% clearing a challenge to begin with.
• A separate hoc-trade analysis of 500,000 traders found that about 70% of failures stemmed from breaching loss limits rather than falling short of profit targets.
• Consistency rules can strip out 33% to 50% of the profit generated on one strong day. Four of the six firms in the review operate one.

The conclusion is the same throughout: the trade is rarely what fails. The rulebook is.

"Could a trader read our rules once, in one sitting, and know every way their account could end? If the answer is no, the rulebook is not finished. Most of this industry has treated that as a marketing problem. We think it is the entire product," said Gianluca Pizzituti, Chief Executive Officer of Velotrade.

Rapid growth alongside visible failures

Interest in funded accounts has expanded sharply even as the field of providers narrowed. Monthly search volume for "prop firm" rose from around 880 in early 2020 to roughly 49,500 by 2025, a 56-fold increase, bringing successive cohorts of first-time buyers into a market where the terms that matter most are not on the sales page.

The counterpart to that growth is less favourable. Following MetaQuotes' withdrawal of MT4 and MT5 licenses from prop firms serving US clients in February 2024, a number of established names failed.

The Funded Trader suspended operations and subsequently acknowledged more than $2 million in denied payouts.

True Forex Funds closed on grounds of insolvency, leaving about 300 traders owed $1.2 million. SurgeTrader wound down within days, with its CEO accepting that roughly 10% of payout obligations were never met.

One trade, two firms, two results

Every prop account carries a maximum-loss threshold, but the methods used to set it differ substantially, and that difference can produce opposite outcomes on the same trade.

A fixed drawdown is calculated from the opening balance and does not move: on a $100,000 account with a 10% limit, the account fails at $90,000. A trailing drawdown rises with equity and does not retreat.

The report models a single account under both methods. A routine day-seven pullback troughs around $10,000 above a fixed $90,000 floor, leaving the account intact and ending the period up approximately $6,500.

Against a trailing floor that has advanced close to the equity peak, the identical pullback crosses the threshold and terminates the account.

FTMO fixes its maximum loss at 10% of the opening balance; Topstep's trailing limit advances with the end-of-day balance and locks at the starting figure.

Neither firm withholds its methodology, but the choice between fixed and trailing is not a technicality. It determines the outcome.

When a strong session works against you

A consistency rule restricts the share of total profit that may originate in any single session.

Perform too strongly in too short a period and the evaluation fails regardless.

With a 40% single-day cap against a $1,000 target, a $450 session accounts for 45% of profit, exceeding the threshold, so the evaluation is failed despite the target having been reached.

Topstep, FundingPips, Blue Guardian and HyroTrader each operate a variant, at evaluation or on a payout tier.

FTMO maintains a 50% Best Day Rule on its 1-Step product, set out in its help center rather than in the principal rules.

The most restrictive single-day caps tend to attach to the more appealing payout options.

Velotrade states that it operates no consistency rule at any stage. For those assessing the crypto-focused segment of the market, Velotrade's rundown of the top crypto prop firms compares these provisions directly.

The provision that can end a profitable trade

Loss limits account for the largest share of closures. The report, however, identifies a less prominent provision as the most difficult to anticipate, since it can terminate an account on a trade that never settles at a loss.

A max-risk-per-trade rule limits the amount any individual position or trade idea may be down at any point, assessed on unrealized, floating, profit and loss rather than on closed positions.

It operates below the advertised daily loss limit. Should an open trade's paper loss reach the cap at any moment during the session, however briefly, the provision can activate and the account is closed, even where that trade would subsequently have settled in profit.

Three characteristics make it easy to overlook at the point of purchase:

• It is assessed on unrealized loss. The trade need never close in the red.
• It may take effect only after funding. A trader can complete the full evaluation without encountering the provision that subsequently governs the funded account.
• It may aggregate re-entries. Closing a losing position and reopening in the same direction can see the losses combined against the cap.

Terminology varies between firms. Blue Guardian's "Guardian Shield" force-closes positions at approximately 1-2% unrealized, depending on account type; an initial breach reduces the split to 50% and a second closes the account.

FundingPips operates a "Risk Per Trade Idea" rule at the funded stage which aggregates re-entries. HyroTrader mandates a stop-loss within five minutes of each trade, monitored in real time. Velotrade states that it publishes no secondary per-trade or per-idea cap beneath its daily limit.

None of these is objectionable as risk management. The report's contention concerns disclosure: a provision capable of ending a funded account arguably belongs alongside the price rather than several pages into a help center.

The six rulebooks compared

The full rulebook comparison assesses all six firms against the provisions that most frequently determine a payout.

As Velotrade both produced the report and features in the final column, that column represents a market participant's own account rather than an impartial assessment, and traders should confirm current terms directly with each firm.

Where the incumbents retain an advantage

The report is open about the opposing considerations. Velotrade is a recent entrant, having launched its challenges in 2026, whereas FTMO (2015) and Topstep (2012) have operated trader evaluations for considerably longer.

Paying funded traders at scale is demonstrated only over time, and on that measure the incumbents hold years of record while Velotrade is at an early stage.

Several firms also scale funded accounts well above Velotrade's $200,000 ceiling and support a wider range of platforms. A clear rulebook can be established at launch; a payout record cannot, and the report recommends weighing both.

A ten-minute check before purchasing a challenge

The report's practical recommendation is that ten minutes spent reading the terms may count for more than any comparison of profit splits. Drawing on its review of six prop firm rulebooks, it directs traders to establish:

• Drawdown mechanics: fixed from the opening balance or trailing equity? If trailing, is it end-of-day or tick-by-tick, and at what point does it lock?
• Consistency rules: evaluation, funded, or both? Attached to a payout tier? What is the precise single-day cap?
• Per-trade caps: does a secondary cap sit beneath the daily limit, is it assessed on unrealized losses, and does it aggregate re-entries?
• Funded-stage changes: do provisions activate, tighten or fall away once funded, and does the account open at a reduced balance?
• Payout conditions: minimum trading days, withdrawal frequency, waiting periods before a first payout, and whether a payout may be refused at the firm's discretion.
• Location of the terms: are all account-ending provisions held on one page, and can support identify each of them in writing?

Regulatory attention is increasing

Oversight is building. The US Commodity Futures Trading Commission is expected to launch a public consultation on 1 August 2026, with comments closing 30 November 2026, on whether challenge fees constitute "commodity-pool participation interests", a classification that could bring evaluation-based US futures prop firms within CFTC and NFA registration.

In Europe, the FCA and ESMA have restated that prop marketing to retail clients must display prominent risk warnings and avoid misleading performance claims, while regulators across Europe, Australia and North America are considering whether charging a fee without providing funding constitutes a pay-to-play arrangement.

None of this is settled law, and some authorities, including CySEC and, at present, ESMA, have indicated that prop trading is not an immediate priority. The trajectory, however, points toward standardised disclosure at the point of sale, the shift most other consumer financial products have already undergone.

Conclusion

The report concludes that the prop model is fundamentally sound, since backing capable traders with firm capital is a reasonable proposition. What has not kept pace is disclosure at the point of sale.

Comparing rulebooks, it argues, warrants at least the weight traders currently give to comparing profit splits, because the rulebook ultimately determines whether the split is paid at all.

About Velotrade

Velotrade is a proprietary trading firm offering funded trading challenges across crypto, forex, stocks, indices and commodities, built around a single, fully published rulebook and a fixed drawdown model.

The firm puts transparency at the center of its offering, aiming to ensure that every rule capable of ending an account is disclosed in one place before a trader buys.

Velotrade Re Limited is incorporated and registered in Hong Kong, where its founding team has operated a licensed invoice-finance business since 2016, with founders drawn from JP Morgan, Bank of America and Dresdner Kleinwort.

All trading services are provided in a simulated environment using demo accounts with simulated funds. For more information, visit velotrade.com.