What’s In For Prop Trading? My predictions for 2026

Last week I was in London for the FMLS:25 event organised by Finance Magnates and had the opportunity to speak on a panel about Prop Trading titled “What’s In for Prop in 2026”. After some days to reflect, I want to share a few more thoughts. This article is aimed at people working in or following the prop trading industry and shares my view as a Marketing Consultant.

Why Prop Trading Continues to Attract New Traders

Prop trading is popular because it removes the biggest barrier in traditional trading: capital.
A meaningful start with a regular broker often requires more than 10,000 USD, and most beginners lose money quickly.

Prop trading offers an alternative. Traders can practise in a simulated environment that mirrors real markets without risking their savings.

From a marketing perspective, the key advantage is the size of the audience.

Regular trading is limited to people with capital and high risk tolerance. Prop trading is not. You can target almost everyone.

It reaches completely different types of people: the 18-year-old student who is good with numbers, or the competitive mum who solves Sudoku every morning and spots patterns naturally.

With Prop, they can give Trading a try.

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Areas that need improvement

While the model has clear advantages, there are also parts of the industry that need improvement. Many value propositions are still not presented in an honest or realistic way. A large number of brands rely on get rich quickly messaging. Flashy cars, luxury lifestyles and promises of effortless financial freedom dominate too much of the advertising. This sets unrealistic expectations and positions prop trading in a certain niche.

Another issue is the use of rules that have little to do with real trading. Trading strategy restrictions and vague consistency requirements often feel designed to limit payouts rather than reward skill. This happens because many firms earn most of their revenue from selling challenges, not from sharing profits with successful traders.

Traditional proprietary trading meant something different. Firms hired and trained traders, allocated real capital and provided professional tools and support. Their business model depended on trader performance.

The modern retail prop model is a derivative of that concept, built around demo environments, strict payout rules and high challenge volume rather than long term trader success.

Inflationary use of discounts can weaken brand value by conditioning users to wait for large offers.

Prop Trading Might Need a Rebranding

Perhaps the term prop trading does not accurately describe what most modern “prop trading” firms offer. The model mixes elements of trading, education and gamification. Users trade demo funds while following competition rules and attempting to qualify for a payout. This is not the same as trading real capital in a traditional prop environment.

Because of this, the industry may eventually need clearer terminology. Rebranding could help separate the modern challenge-based model from the older institutional meaning. Transparency would help both users and companies in the long run.

A Visible Shift in Positioning

Some firms have already started to change how they communicate. The direction is clear. The messaging is becoming more mature and avoids the usual promises like “trade with our capital” or even the term “prop trading” altogether.

FTMO now uses “grow and monetize your demo trading”, which emphasises development and transparency instead of hype.

The5%ers takes a similar route with “turn your passion into a trading career”, presenting it as a path you build over time rather than an instant shortcut.

I expect that other established brands will follow a similar approach to distance themselves from all the noise and the firms that overpromise.

The5%ers highlights its long history since 2016 and high ratings from traders.

Is Prop good or bad for the industry?

In a very entertaining debate at the FMLS:25 event, Drew Niv (ATFX) and Brendan Callan (Tradu) shared two very different views on the current state of prop trading.

Drew argued that it is still early days. The industry is young, needs to grow up, and will naturally evolve.

Brendan took a stricter view. He described prop trading as a gamified version of trading that imitates real markets without the same rules or oversight. Basically, traders are being sold access to demo accounts – something regular brokers offer for free.

Maybe It Is Time to Rethink Demo Accounts

Regular brokers offer free demo accounts, but not out of generosity. Demos are a marketing tool designed to lure new users into real-money trading.

Almost everyone performs well on a demo account. There is no risk, no pressure and no emotional friction. This creates the impression that trading is easy and profitable. Once users feel confident, many take the next step and deposit real money.

In the brokerage world, a small group of traders generates the majority of revenue. Because of this concentration, giving out unlimited demos costs brokers almost nothing. It is a low-cost funnel that channels beginners toward real-money activity, where the actual business happens.

Traders Will Be OK Paying for a Demo Account

Demo accounts have always been free, but that does not mean they must stay free. Traders can handle honesty. You can tell them exactly what they are getting: access to professional tools, structured education, a community of like-minded traders and, if they perform well, the chance to earn money from it. In return, they pay a subscription to be part of the program.

There is nothing unusual about this model. Twitch and TikTok creators receive donations and subscriptions every day for entertainment, education or simply being live. People are already used to paying for digital experiences that add value or give them something to follow.

Prop trading changes the perception of trading in a similar way. Instead of losing something, traders feel like they are gaining something: structure, feedback, community and the possibility of earning payouts. You are basically paying for the experience, not just for a demo account.

My Prop Trading Predictions for 2026

1. Established Firms Will Create More Distance

Stronger and well-established firms will continue to separate themselves from the rest of the market. They have already built a brand, gained user trust and developed internal processes that new firms cannot copy easily. Their strategy will focus on positioning. They want to reduce any association with low quality new entrants and present themselves as stable, mature and reliable.

The goal is to create visible distance between themselves and the dozens of upcoming firms that are trying to enter the market with shallow capital and no clear value proposition.

2. Challenger Brands Will Push Product Innovation

The firms in the second tier, the challenger brands will try to close the gap through product innovation. They know they cannot compete with the market leaders on size or reputation, so they focus on innovative features and USPs that can help them to stand out. Futures challenges, instant funding models and platform integrations such as TradingView are becoming important differentiators.

3. A New Wave of Prop Firms Will Enter the Market

Trading technology providers have made it possible to launch a prop firm for only a few thousand dollars. A full turnkey setup that includes CRM, platform, pricing feed, payment providers and risk management can be activated within a few days.

This creates the illusion that launching a prop firm is easy. In reality, marketing is the cost driver, not the infrastructure. More than one hundred prop firms closed in 2025. Most of them probably failed because they underestimated the marketing effort required.

The affiliate and influencer landscape is limited. There is only a small pool of partners, and every firm is competing for the same audience. This creates a race to the bottom. Larger firms with mixed business models that also operate brokers can afford to overpay affiliates, leaving smaller brands unable to compete.

FXIFY is growing fast also thanks to offering TradingView.

The Marketing Costs Behind Starting A Prop Firm

Marketing is often underestimated.

Think of it this way. A founder buys a turnkey prop setup for about 5,000 USD. Each challenge costs 100 USD, and the firm keeps roughly half of that as profit.

To simply break even, the business needs around 10,000 USD in monthly revenue. That means selling about 100 challenges every month.

On paper this sounds doable. Many founders assume their trading background, industry network or personal experience will make lead generation easy. In reality, it rarely works like that. The market is packed, affiliates are selective, paid ads are expensive, and organic growth only happens once your brand is actually known.

Below is a simple example of what the marketing spend might look like if you want to hit 100 monthly challenge sales.

Example: Marketing Spend Needed for 100 Challenge Sales

Required Leads	Conversion Rate	CPL 10 USD	CPL 20 USD	CPL 30 USD
2,000	Established brand at 5%	20,000 USD	40,000 USD	60,000 USD
3,333	Challenger brand at 3%	33,330 USD	66,660 USD	99,990 USD
10,000	New brand at 1%	100,000 USD	200,000 USD	300,000 USD

A Difficult Market for New Founders

Entering the market in 2026 without significant resources is extremely difficult. In simple terms, if you plan to start a prop firm next year without a strategic advantage, you are starting from behind.

In my opinion, there are only two realistic paths into the market.

1. The first path is capital driven. This means having a substantial marketing budget, a long runway and the ambition to build a differentiated product with genuine innovation and meaningful benefits for traders. Without strong unique selling points, the chances of survival are low.
   
2. The second path is brand driven. This applies to people who already built a strong personal brand, have a large community or operate a media platform with reach. In this scenario, you are not starting from zero. Your audience is an asset worth six figures in monthly marketing value. You already own attention, you just have not monetised it yet.
   

Both paths require long term vision, patience and a clear understanding that the era of easy growth is over.

Prop trading will continue to grow and evolve, but the next wave of winners will look very different from the firms that made quick money during the previous years.

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