Is prop trading legit? Why most traders fail and how prop firms make money

Is it real money?

Never during the evaluation, which takes place in a simulated environment. Prop firms are less clear about the funded account you get after passing. The FSMA writes that the consumer never actually trades but plays on a demo account, and that the firm alone decides which transactions it copies.

Kraken's own texts do not say the same thing here. Its product page speaks of a funded wallet with up to 200,000 dollars of Kraken's capital. Its EEA terms (Part S) say that all orders in the evaluation and in the funded stage are simulated, with virtual funds, and that Payward Oceanic uses those signals to decide whether to act on them itself. Your profit share, however, is paid out in real money.

Prop firm pass rates: how many traders pass?

Few prop firms publish a pass rate, and when they do, they do not always count the same thing. At Topstep, 16.8% of attempts passed, yet 51.8% of participants reached a funded account at some point: many people try several times. And passing is not the same as getting paid.

FTMO and The5ers publish no pass rate of their own. Neither does Kraken; it only says that most applicants do not pass on their first attempt.

Why most traders fail

It comes down to the ratio between the profit target and the loss limit. On Kraken Prop your account has to grow by 9 to 12%, while you may fall no more than 3 to 6% below your starting balance, and no more than 3% in a single day. On the Advanced plan the overall loss limit is as tight as the daily one: 3%. That means one bad day is enough.

Kraken sets no time limit, but the loss limit does not move up when you make a profit. Every new attempt is a new purchase. The calculator on our explainer page shows, plan by plan, how little room you have and what three or five attempts cost.

How do prop firms make money?

No prop firm publishes how its revenue breaks down between evaluation fees and profit sharing. Regulators are clear about where the money comes from, though: the FSMA writes that consumers often have to buy several expensive tests, and that this is how prop firms make money from them. At Ufunded, according to the AFM, the firm made money whenever clients lost.

Some prop firms do pay out a lot. According to Trade Informer, FTMO paid out around 55% of its revenue to traders in 2024 (revenue 322.8 million dollars, net profit 90.8 million). We have not seen the accounts ourselves. The FSMA and Kraken's terms also point to another possibility: the firm can copy traders' simulated orders itself.

Do prop firms really pay out?

Some do, but to few people. In the FPFX sample, 7% of all traders had ever received a payout, averaging 4% of the account size. At Topstep, a third of funded participants received a payout.

On Kraken Prop you request a payout from your funded account when you have no open positions or orders. According to Kraken, a request is usually reviewed within 12 hours and at the latest within 24; the money arrives in your Kraken account in dollars or USDG. Kraken does not mention a minimum amount or a maximum number of payouts per period.

Kraken Prop against the same checklist

The same questions you would put to any prop firm, answered from Kraken's own pages and terms:

• Who runs it? The evaluation: Breakout Trading Group, LLC. The funded account: Payward Oceanic Ltd in the British Virgin Islands. Kraken itself is not a party.
• Regulated? Not according to Kraken: it calls Kraken Prop an unregulated service, outside its MiCA authorisation.
• Do you get the fee back? No, not once you start trading, even if you pass. An evaluation costs 20 to 1,090 dollars.
• Pass rate published? No.
• Rules: no time limit and no consistency rule; daily loss limit 3%, overall 3 to 6%.
• Payouts: on request; Kraken says it reviews a request within 24 hours at the latest.
• Not available in the United Kingdom, Canada or India.