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A Proper Way to Go

Barry Sadovsky

May 29, 2026

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Transformations in the US Prop Trading Industry

Since the turn of the millennium, and following a major intervention by the SEC in the rules governing proprietary trading, the prop trading industry has gently leaned away from commission-based models to higher-profit-based ones, in which a brokerage must incentivize its traders to succeed. The industry has gradually shifted away from 99% customer-acquisition that emphasized profit-split marketing based on extreme profit splits, and towards those that carefully encourage their users to practice disciplined risk. Today, more than before, these are usually the companies that succeed.

And yet, financial trading has always been an adventure in pitfalls, surprises and change, be it the 17^th century’s tulip scandal, 2008’s prime mortgage disaster, or – more recently – MetaQuotes’ decision to deny prop trading firms use of their MetaTrader platform.

Modern online funded-account firms differ substantially from traditional proprietary trading houses. Historically, proprietary trading firms employed traders directly and deployed firm capital into live markets under centralized risk management structures. Traditional proprietary trading firms offered salaried traders company funds and infrastructures to trade for a share of profits. By contrast, most contemporary retail prop firms operate evaluation-based models built around simulated trading environments and contractor-style payout agreements. Participants pay one-time or recurring evaluation fees, demonstrating their ability to hit profit targets on a simulated (demo) account. Trader payouts are contractually defined as “performance compensation” tied to simulated trading results.

By 2021, for evaluation fees ranging between $50 and several hundred dollars, traders could join the prop trading revolution. Prop companies insisted on a personal stake of anywhere from $5,000 to several hundred thousand dollars, and company commissions ranged around the 20% mark. In the following year, Google searches increased by 139%, active traders by 25%, and by 2024 the industry was worth about $12 billion. Complaints – as always – arose regarding fee structure and low profitability.¹

Present Props

The reason prop trading firms can operate in the US is that they are structured as “evaluation or educational service providers” rather than “investment managers” or “broker-dealers.” All their trading capital is officially owned by the firm. The relationship between trader and company is based on performance – for which they are compensated – rather than returns on investment capital. Thus returns are defined as “income” rather than “profits on invested capital”; and consequently, the trader is an independent contractor and not a services receiver.

Following the My Forex Funds landmark case and the MetaQuotes conundrum, the number of established firms offering prop trading diminished greatly, with many others continuing their activities well under the federal radar – as run by the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the National Futures Association (NFA).

Prop Trading Firms Closing Down

The first signs of industrial stress came after the industry reshuffle of 2024, which saw 80-100 prop trading firms shutter their activities – nearly 15% of the entire industry. The first major catalyst was MetaQuotes – the company that creates and operates the MetaTrader family of trading platforms – deciding it would no longer allow prop trading on its platform, driven by a mix of regulatory fear, licensing abuse, and reputational risk. An industry already populated to a great extent by new, financially mismanaged companies overreacted, and the chain reaction was bleak.

True Forex Funds was the first to go in May, owing about $1.2m to several hundred clients. It was followed by SurgeTrader, with The Funded Trader and MyForexFunds shuttered temporarily – and unfairly in the case of the former, leaving 135,000 traders owed about $310m. Funds were later returned when the CFTC’s case against the broker collapsed and the company returned to operations.

The period that followed was characterized by sectoral consolidation and a basic change in trader behavior. Today, only about 14% of traders make it into the market having passed their initial challenges, and profit levels remain low. Traders now use more than one broker at a time – 2.2 on average.² Trading platforms have also set new rules, such as limiting position timing to discourage scalping, increasing daily profit requirements, and reducing profit splits.

The damage was significant. During that one year, prop firm scam complaints increased by 74%, with a mere 7% of traders receiving payouts. At present, the US government’s CFTC blacklists over 240 companies and foreign entities, and France’s AMF/ACPR hundreds more. Italy, Belgium, and Spain have also issued anti-prop trading warnings against firms that deny payouts, apply retroactive rules, manipulate slippage, terminate accounts without cause, and impose hidden fees.

Specific Stories

MyForexFunds

Perhaps the first closure to examine is MyForexFunds, which shut down in August 2023 following fraud charges by the CFTC and an immediate overnight freeze on all assets. The commission charged that Traders Global Group – the company behind the MyForexFunds brand – had, rather than placing participant positions into the market, served as the counter-party to those trades. Moreover, profitable customers were allegedly transferred to more restrictive conditions, including misplaced fills and slippage imposition.

In late 2025, major portions of the case became legally compromised following allegations of procedural misconduct by CFTC attorneys and disputes surrounding evidence handling. Several attorneys were placed on administrative leave, company funds were returned by court order in December 2025, and by April the following year, frozen payouts were being restored. But the damage – in the meantime – had been done.³ This episode highlights the regulatory uncertainty surrounding simulated-funded trading models and the catastrophic consequences of sudden enforcement action without sufficient grounds.

MetaTrader / MetaQuotes

Before examining other collapses, it is important to understand the role of MetaQuotes – the technology provider behind the industry’s most prevalent trading platform. Established in 2000 by Renat Fatkhullin, it took five years before MT4 – today’s industry standard for online retail speculative trading – hit the markets. Even its successor, MT5, hasn’t managed to usurp this comprehensive tool, for which a dedicated programming language was developed allowing users to create and apply their own trading protocols.

MetaQuotes clamped down on prop trading primarily because prop firms were using non-revenue generating demo accounts for simulated trading. Because most prop trading firms operate below the regulatory radar, MetaQuotes risked being penalized by US regulators for allowing its platform to be used without proper licensing. Prop trading firms were accepting US customers without proper regulation and implementing ‘gray-label’ setups – and MetaQuotes recognized the fragility of most prop firms.

The immediate result was the movement of prop firms to other platforms such as cTrader, Dxtrade, and MatchTrader – most of which offer differing execution characteristics, lower quality tooling ecosystems, and weaker execution. A trader who had passed challenges using MT4 could conceivably perform much worse in a different trading environment. This demonstrates that many retail prop firms are not fully independent trading institutions, but ecosystem-dependent businesses critically reliant on third-party infrastructure providers outside their own control.

SurgeTrader

SurgeTrader, founded by individuals connected to the wider Florida trading education ecosystem, became one of the earliest major casualties following the MetaTrader licensing disruptions. Alternative platforms also refused to provide service. Officially, the reason for cessation of operations was the company’s “inability to fulfill the formal obligations specified in our contract.”⁴ Founded by the wife of a man later charged in Florida for running a Ponzi scheme,⁵ SurgeTrader flourished so long as competition was for high profit splits, easy challenges, and fast payouts. However, once traders became more adept, the broker found it impossible to contend with the increasing percentage of challenge successes and higher payouts.

FundingTicks

FundingTicks went bankrupt after offering a “zero account” for a one-time fee rather than a monthly one, with no minimum hold time for positions on futures – which are logistically more complex to administer than CFDs. A long rally in gold was their downfall, as participants simply opened short-term long positions repeatedly. The episode exposed the difficulty of modeling retail trader behavior under unusually favorable market conditions, and exposed a broader industry problem: inadequate modeling of payout exposure during abnormal market conditions.

My Forex Funds and True Forex Funds

My Forex Funds was another company that shuttered after its MetaQuotes license was revoked. True Forex Funds ceased operations in February 2024, citing their MetaQuotes license termination – though the official reason was insolvency. Both cases underscore how quickly a firm can unravel when its operational and financial foundations are inadequate.

Propable Cause

Although the circumstances surrounding each closure differed – ranging from regulatory intervention to infrastructure dependency and liquidity strain – together they expose several recurring structural weaknesses within the modern retail prop trading ecosystem.

The most common reason for the failure of prop companies seems to be an unstable budgetary regime based on collecting commissions without a clear business plan.⁶ Another is that they are marketing endeavors more so than market trading entities. They rely on rented technology, including backend systems, dashboards, and trading servers, and fail to recognize the need for prudential risk management. Because they resemble storefronts, there is little differentiation between companies and little room to maneuver. Their regime is too narrow to enable the limitations of growing regulatory scrutiny – they simply can’t afford to go legit, and eventually cannot pay out trader profits.

And nowadays, transparency is achievable. VSO suggests cryptographically hashed event recording, digitally signed trading activities, and tamper-resistant blockchain records that make transparency an “operational architecture … whereby cryptographic proofs can be independently verified by external parties.”

Proper Precaution

Marcus Reed in ForexTradeLab⁸ divides prop trading firms into three tiers:

Warning signs for Tier C firms may include double-digit discount codes, ‘last chance’ multi-channel campaigns, and drawdown rules that change mid-challenge or are impossible to find through nested documents. Minimum trading day rules, referral rewards, and heavy marketing pressure tactics are also clear warning signs – as are reports of breached profitable traders, easily found in online communities.

Before committing your capital: demand documented proof of payment entities – who is paying, from where, and whether the latter is in an offshore account in a non-disclosure jurisdiction. Demand verifiable and independent payout records, including bank statements, public ledgers, and third-party verification.

Leadership matters too: reliable companies employ reliable people who can be found on LinkedIn or other professional platforms. Support teams should be approachable, readily available, and provide timely responses. An unstable trading platform should be avoided at all costs. One-sided feedback and fake reviews are a warning sign – especially if these repeat themselves across multiple platforms.

Once a warning sign appears, begin gathering additional information. Stop trading immediately – this cannot be overstressed – and minimize exposure and risk. Contact support and demand they process pending profits. Collect all trading records and emails. If you encounter difficulties, begin reporting issues on community platforms and to the relevant authorities.

Conclusion

Since 2024, much has changed in the prop trading environment. Major top-tier brokers with legitimate regulatory credentials have begun offering funded accounts: IC Markets’ IC Funded, ThinkMarket’s ThinkCapital, and Blueberry’s Blueberry Funded are all battling the trust deficiency rampant in the sector. Oanda’s Otakar Šuffner and Marek Vašíček launched FTMO in 2015, generating $329m in revenue in 2024. And FPFX continues to lead the way, even providing technological solutions to smaller brokers.

Axi Select also deserves honorable mention – one of the first serious attempts by an established retail broker to reinvent prop trading before the MetaQuotes crackdown. Axi Select replaced the ‘pay-for-a-demo-challenge’ model with a live account using the trader’s own capital. If the trader shows promise, Axi gradually allocates more of its own money to trade with – a regulator-resistant version of proprietary trading that rewards consistency, managed risk, performance stability, and responsible trading behavior.

The Proper Way Ahead

Before embarking with a prop trading firm, take the following precautions:

And remember: the proper way to go is the profitable one.