is prop firm profit split a scam?

Profit splits are just a way to reduce the amount the prop firm would have paid you. This is why these prop firms be declaring huge annual profits.

I mean come to think of it, you are not trading real money, the prop firm only sells you a demo account. You trade on the demo account with simulated capital and manage to win against all the odds and they now reduce your winnings in the name of profit split?

If you were trading real capital then a profit split wouldnt have been out of place but since with a prop firm you trade simulates/fke capital, then the idea of profit split is out of place.

Most prop firms, for even their funded traders (who pass the challenge), they never send orders to any liquidity providers.

What this means is, even if you get funded after passing the challenge, you are essentially trading against that prop firm, because that prop firm is the market maker.

You are essentially trading a fake market. The broker can set any conditions they want, widen the spreads, bad fills etc.

Will the prop firm have any incentive to see you win, when they are on your opposite side? You can decide that.

If they did send orders for funded traders to actual market via LPs, you could make an argument that they are incentivized to see you win & share the spit, because they are not the counter party. In which case they will actually be funding winning traders.

But are they really?

Yes.
Prop firms are a scam and so the profit split is also a scam.

They will go to any lengths to deny payout, and even if a firm is paying out it will not be long before they shut shop.

Imagine a casino staying in business if all the patrons start winning. That is why they remove any consistent traders from their books using random clauses from their terms.

As a new trader you should get your own capital, learn to trade it and respect it. You will go far.

I never thought about this, but seeing this threa has got me thinking. Since prop firms give us demo accounts to trade with, why do we have to split/share the profits we realize with the prop firm? Thanks for shedding light on this.

The profit splitting is a mechanism for the props to give you a handicap. A houses edge to be crude.

If you make 1000 and the house takes 200 you have 80/20 split. You either have to consistently pay the prop to have bigger cut of what you make or you get reduced potential out of the trades you make.

I have been vocal about props they limit the traders potential by tapering the growth you can make in your account. The longer you trade with the prop more chance you have you might destroy your funded account and have to buy another evaluation. The split tapers the growth making you work harder for more money and they can monetize your desire to make more money.

Sincerely, I don’t see anything wrong with profit splitting. The traders still takes the highest of the share. Besides the firm gave you the platform to trade even if it’s simulated. I believe the profit splitting is a fair game.

@headies when the prop firm declares profit at the end of the year do they share it with you? So, why are you sharing yours with them?

Well, they gave me the platform and simulated funding so it’s fine if they want a share.

It's gamification why should anyone care about the details. if people feel they can get better opportunity using props the business model works.

I am not denying people doing consistent withdrawals from props but they are very few just like in trading.

Props need your money to survive and will add mini games and rules for that every step of the way.

Biggest gotcha is the account size limitation. They know a lucky streak on a 10 million funded account could bankrupt them hence they prolong the game. More manageable payouts over the course of years. All the while bullshitting people into believing they are trading and not playing a game.

Gone are the days when people used to show case their trading account and the capital in it. Now they show case the payout certificate and the demo account number. The danger of that is the prop firm could create a fake certificate to promote an influencer that will evangelize the industry. This will draw fresh blood to the props. You see the authority is now the funded trader certificate rather then actual authority of having real funds.

It's the wild west, Have fun while it lasts.