14 Tricks Prop Firms Use
Explained So Simply Anyone Can Understand

Note: Not every prop firm uses all these tricks. Reputable firms are transparent and fair. This article helps you tell the shady ones from the legitimate ones.

All 14 tricks are researched and confirmed by independent sources (Finance Magnates, FPFX Tech, FunderPro, QuantVPS, BabyPips and others)

The 14 Tricks – One by One

Trick 1: Low Entry Prices That Create Dependency

Simply explained: Imagine an ice cream shop selling the first scoop for 50 cents – just to get you in the door. Once you're inside, you buy more. Prop firms do exactly the same thing. $97 for a challenge sounds cheap. But if you fail three times and buy resets, you've spent $300.

Real example: A 10k account costs $97. Sounds harmless. After 3 resets: $291 spent – for a simulated 10k account. Many traders then decide to buy a 50k account for $197 instead.

What to check: Calculate: How often will you realistically pass the challenge on the first attempt? Include reset costs in your total calculation.

Trick 2: Trailing Drawdown – Success Makes You Poorer

Simply explained: Imagine you're playing a video game and have 100 lives. You collect 20 extra – now 120. But suddenly the rule is: Your maximum limit is always 5 below your highest point ever. So now it's 115. You collected more – but your safety buffer stayed the same.

Real example: Account start: €100,000. Drawdown limit: €5,000 → Floor: €95,000. You make €3,000 profit → Account: €103,000. New floor: €98,000. Your buffer: still €5,000 – even though you made a profit. A good day doesn't make tomorrow any safer.

What to check: Ask: Is the drawdown "trailing" (follows the high-water mark) or "static" (stays fixed)? Static is ALWAYS better for you.

Trick 3: Floating Equity – Open Trades Already Count as Loss

Simply explained: Imagine playing Monopoly and someone counts debts you haven't even paid yet as "lost." Some prop firms do exactly that: If an open trade is temporarily in the red – it counts immediately toward your drawdown. Even if the trade recovers afterward.

Real example: Drawdown limit: €2,000. You have a trade currently at -€1,800 in floating. You're €200 away from the limit – even though the trade is still open and could recover. If the market moves another €200 against you – account blown. Even if it turns profitable afterward.

What to check: Ask: Is the drawdown based on "realized losses" (only closed trades) or on "equity" (including open trades)? Equity-based drawdown is more dangerous.

Trick 4: Profit Buffer – Your First Profits Are Untouchable

Simply explained: Imagine getting a job and your boss says: "The first €1,000 of your salary goes into a security account that I hold. You'll get it only after you've worked well for a year." At prop firms it's called: You have to build a profit buffer first before you can withdraw.

Real example: Funded account: €50,000. Drawdown: €2,500. Rule: First payout only when profit > €2,500 (= drawdown). You make €2,000 profit. You can't withdraw anything. You make €2,600 profit. Now you can – but only the amount above the buffer.

What to check: Ask: Is there a minimum profit or profit buffer I need to build before the first withdrawal is possible? How much is it?

Trick 5: Total Payout Limit – You Earn More Than You Can Get

Simply explained: Imagine winning the lottery – but the fine print says: Maximum payout: €15,000. No matter how much you win. Some prop firms limit how much you can withdraw in total before the account gets closed.

Real example: 50k account. You make €25,000 profit over 6 months (50% – very good). You can withdraw: maximum €15,000 (example). After that: account closed. Your profit above that? Gone. The upside is capped – the risk is on you.

What to check: Ask: Is there a maximum total amount I can withdraw before the account gets closed or deactivated?

Trick 6: Minimum Trading Days – You Must Trade Even When You Shouldn't

Simply explained: Imagine having to go to school every day – even when you're sick. Some prop firms require: You must trade at least X days per month or X days before your first payout. The problem: On some days there is no good setup. You trade anyway – and lose.

Real example: Rule: At least 10 trading days per month. Day 9 – no good setup available. But you still need one more day. So you take a trade you would never take without this rule. That's forced bad trading.

What to check: Ask: How many minimum trading days are there per month or until payout? Do these requirements match your trading style?

Trick 7: News Trading Ban – Profits Simply Get Deleted

Simply explained: Imagine winning a race – but the organizers say afterward: "That wasn't an authorized race. Your win doesn't count." Some prop firms don't allow trading during economic news releases (NFP, CPI, FOMC). If you do it anyway – the profits get deleted. Not the account suspended. Just the profits gone.

Real example: Rule: No trading 2 minutes before and after NFP. You have a trade open that hits your take-profit exactly during that window: +€500. The firm deletes the €500. Account stays – but the profit is gone. And you might not even have known your trade was in the restricted period.

What to check: Ask: Which news events are restricted? Does the ban apply to opening trades, closing trades, or both? What happens to profits earned during the restricted period?

Trick 8: Consistency Rule – Your Best Day Punishes You

Simply explained: Imagine taking a test at school and scoring 100 points – but the teacher says: "That was too good. If any single test accounts for more than 30% of your total grade, it doesn't count." At prop firms this actually exists: No single trade or day may account for more than 30–40% of total profit.

Real example: Total profit: €1,000. Best day: €380 (38%). Consistency rule: Max 30% per day. Payout blocked until the best day falls below 30%. Solution: Trade more until total profit reaches €1,270. You're forced into more trading.

What to check: Ask: Is there a consistency rule? How exactly is it measured? What happens if I violate it?

Trick 9: Simulated Account – No Real Money Behind It

Simply explained: Imagine playing Monopoly – but someone tells you it's real money. Some prop firms run entirely simulated accounts. That means: Your trades are never actually executed. The firm risks no real money. When you win, they pay you from the fee pool of failing traders.

Real example: You trade on a "funded" 100k account. But the firm has no real 100k in the market. All trades run on demo. The firm pays out profits only as long as challenge fees from the many who fail finance it. 80–100 prop firms went bankrupt in 2024 for exactly this reason.

What to check: Ask: Are trades executed on real markets or on a simulated account? How is the firm regulated? Are there Trustpilot reviews from traders who actually received payouts?

Trick 10: Hidden Fees After the Challenge

Simply explained: Imagine buying a car and only hearing about the registration fee, delivery fee, and fuel costs at the dealership. At some prop firms you also pay after the challenge: Monthly platform fee, data feed costs, payout processing fee.

Real example: Challenge passed. Now: $50/month platform fee + $30/month CME data feed + 2.5% processing fee on every payout. On a $1,000 payout: $25 fee. Over 12 months: $960 in hidden costs.

What to check: Ask: Are there ongoing fees after the challenge? Platform? Data? Payout processing fees? Get everything confirmed in writing.

Trick 11: Rule Changes After Funding – The Rules Change

Simply explained: Imagine buying a monthly train pass – and after one week the railway changes the routes. At prop firms it's documented that some change the rules after funding. New restrictions that weren't there before.

Real example: You got funded with: News trading allowed. Three weeks later an email arrives: Effective immediately, no more news trading on funded accounts. Your strategy is based on NFP trades. You can no longer apply it.

What to check: Ask: Do the terms and conditions state that the firm can change rules retroactively? Is there a cancellation option for you if rules are changed?

Trick 12: Weekend Holding Ban – Open Trades Must Be Closed

Simply explained: Imagine a library where you can't borrow books overnight. Many prop firms don't allow holding positions over the weekend. The problem: If you have to close a trade – regardless of whether it's currently in profit or loss – you're sometimes forced into a bad exit.

Real example: You have a long trade on ES that's currently +$200 in profit. It's Friday at 4:00 PM – you must close before market close per the rules. You take the $200. Monday the market opens $500 higher. You would have been at +$700.

What to check: Ask: Is there a weekend holding ban? For all instruments or only specific ones?

Trick 13 (updated): Big Account – Small Real Room

This is one of the most underestimated tricks. Now explained with concrete lot numbers – so you can immediately see what it means in practice.

The Simple Analogy

Imagine someone says "You get a 200m² house!" But 180m² is basement. The house sounds big – but the actual usable space is minimal. The same applies to large prop firm accounts.

The Lot Calculation – As Simple as Possible

Let's use NQ (Nasdaq Futures) as an example. Each point on NQ = $20 per contract. With a 10-point stop you risk $200 per contract.

Even More Concrete: What Does 1 Lot Cost at Different Account Sizes?

We use 1 NQ contract with 10-point stop = $200 risk:

Account Size	Drawdown	1 Lot Share	Max. Losing Trades
$25k	$1,500	13.3%	7 Trades
$50k	$2,500	8.0%	12 Trades ✅
$100k	$3,000	6.7%	15 Trades ✅
$150k	$3,500	5.7%	17 Trades
$300k	$4,000	15.0%*	6 Trades ⚠️

* On the 300k account you're expected to trade 3 contracts → $600 per trade. That's why the ratio is poor despite the higher absolute drawdown.

The table shows: The 100k account often has the best ratio. The 25k account is relatively dangerous. And the 300k account – which sounds so tempting – often has the worst ratio of all when you trade proportionally.

What You Should Do With This

1. Convert your stop-loss to dollars Before you buy an account: Convert your own stop-loss into dollars.
2. Divide by the drawdown Then divide it by the account's drawdown.
3. Calculate the percentage The result is: How much percent of your drawdown a normal trade costs.
4. Evaluate If the answer is above 8–10% – the account is too tight for your style.

Formula: (Stop in $ × Contracts) ÷ Drawdown in $ × 100 = % of drawdown per trade

Example: ($200 stop × 1 contract) ÷ $2,500 drawdown × 100 = 8% → 12.5 possible trades. Okay.
Example: ($200 stop × 3 contracts) ÷ $4,000 drawdown × 100 = 15% → 6.7 possible trades. Too tight.

What to check: Ask: How does the drawdown scale with account size? Calculate: Drawdown in % = Drawdown in dollars divided by account size times 100.

Trick 14: IP Monitoring and Account Sharing Bans – You're Being Watched

Simply explained: Imagine two students writing the same answer on an exam – the teacher automatically suspects them. Prop firms monitor IP addresses. If you and a friend use the same firm from the same WiFi – both accounts can be suspended. Copy trading is also often detected automatically.

Real example: You and your brother both trade at the same prop firm – both from your home network. The firm detects: Two accounts, one IP. Both accounts get suspended for "account sharing" – even though you trade completely independently.

What to check: Ask: Are there IP restrictions? What counts as "account sharing"? Can I have multiple accounts with the same firm?

THE MASTER CHECKLIST – What You Must Check Before Every Challenge

Print this out. Fill it out for every firm you're considering. If you can't answer a question – ask support. If support doesn't give a clear answer – don't buy.

The Most Important Thing in One Sentence

A prop firm is only fair if, after reading all the rules, you can say: "I understand exactly what I can earn, what disqualifies me, and why." If there's even one point you don't fully understand – ask. If you don't get a clear answer – don't buy.

Frequently Asked Questions

How do I recognize a reputable prop firm?

Five signs: 1) All rules are clearly and completely explained on the website. 2) Support answers specific questions concretely – not evasively. 3) There are current Trustpilot reviews (not just older ones) from traders who actually received payouts. 4) The drawdown is static and balance-based. 5) There is no total payout limit and no hidden profit buffer.

What is the biggest mistake traders make before a challenge?

Not reading the rules completely. According to multiple studies and trader communities, the most common reasons for challenge failure are: News trading violations the trader didn't know about, equity drawdown violations from temporarily open losses, and consistency rule violations. All three would be avoidable by studying the rules completely before buying.

Should I buy multiple small accounts or one large one?

Statistically, traders often perform better on smaller accounts than on large ones – because the relative drawdown is proportionally larger and there's less pressure. Trading multiple small accounts in parallel can distribute the risk of total capital invested – but increases administrative overhead and the risk of IP violations at the same firm.