How do prop firms make money, is it from selling challenges?
Prop (proprietary) trading firms are companies that give traders access to their capital. In return, the trader shares a portion of any profits made. But the way prop firms earn money goes far beyond this.
Evaluation / Challenge Fees (Their Biggest Income Source)
Most modern online prop firms use a “challenge model.”
This means traders must pass one or two evaluation phases before they can access a funded account.
Traders pay a fee for the evaluation.
If they fail the challenge, the firm keeps the fee.
Many traders don’t pass because of strict rules or lack of experience.
This alone makes up the majority of a prop firm’s revenue. That's because thousands of traders buy challenges every month, and most of them don’t reach the funded stage.
i am also not buying that profit split lie that prop firms tell. I bet you prop firms hope you fail so you can buy another challenge while they smile to the bank.