A new report from Velotrade sheds light on a frustrating reality for many traders: passing a prop firm challenge and exiting in profit doesn't guarantee you'll keep your funded account. The report, which analyzed more than 300,000 funded accounts, found that only around 7% of traders manage to hold onto their accounts long-term. The main culprit? Unread terms and conditions.
Why traders lose their funded accounts
According to the Velotrade report, the majority of traders who lose their funded accounts do so because they violate rules buried in the fine print. Even after successfully completing a prop firm's evaluation challenge and making a profitable trade, many traders find their accounts terminated. The report suggests that traders often skip reading the full agreement, missing critical clauses that can lead to disqualification.
These clauses might cover things like maximum position size, holding periods, or restrictions on certain trading strategies. The report doesn't name specific rules, but it emphasizes that the terms are often lengthy and easy to overlook. For traders who rely on quick profits, the temptation to skip the legal text can be strong — and costly.
What the data shows
The Velotrade study examined over 300,000 funded accounts across multiple prop firms. The findings paint a stark picture: only about 7% of traders who pass the initial challenge go on to keep their accounts funded. That means 93% of successful challenge passers eventually lose their accounts, often within a short period.
The report doesn't break down the exact reasons for each loss, but it points to a pattern. Many traders assume that once they pass the challenge and make a profit, they're in the clear. In reality, prop firms enforce ongoing rules that can trip up even experienced traders. The report's authors argue that the problem isn't just about skill — it's about awareness.
The role of unread terms
Velotrade's analysis highlights a recurring issue: traders who fail to read the terms and conditions are far more likely to lose their accounts. The report notes that prop firms often update their rules, and traders who don't keep up can find themselves in violation without realizing it.
This isn't a new problem, but the scale of it is striking. With hundreds of thousands of accounts examined, the 7% success rate suggests that the current system favors the firms, not the traders. The report doesn't name any specific prop firm, but it calls for greater transparency in how terms are presented.
For traders, the takeaway is clear: read every word of the agreement before you start trading. The Velotrade report doesn't offer a solution beyond that, but it raises a question that many in the industry are now asking: should prop firms make their rules easier to understand?
