[2026 Update] Are Prop Firms Shady? Reasons Why They’re Called “Don’t Do It” and the Truth

Shinjo-kun

“Aren’t prop firms shady?” “Some people say ‘don’t do it,’ but what’s the reality?”

If you’ve been doing overseas FX trading, you may have had this question at some point.

I myself operate a YouTube channel called “Prop Firm Dissection” and have implemented over 30 giveaway campaigns, as well as participated in Expo 2025 Dubai, where I’ve seen both the front and back of the prop firm industry.

To put it bluntly, the prop firm industry has a stark contrast between “shady operators” and “reliable operators.” That’s why, if you have the right knowledge, prop firms can be a powerful alternative to overseas FX.

Shinjo-kun

Professor Kaitai! When I search for prop firms online, it says “shady” and “don’t do it” – is it really okay?

Professor Kaitai

That’s a good question. There are reasons why they are called “shady.” But if you understand those reasons correctly, you can actually identify “not-shady operators.” Let’s take a look together.

6 Reasons Why “Prop Firms Are Shady”

First, let’s organize the reasons why prop firms are called “shady” and “don’t do it.”

Recently, @manbou_sousai, known for providing information on overseas FX, posted on X about the “Reasons why major overseas FX brokers don’t enter the prop firm business,” which became a hot topic.

These claims are factual to some extent. That’s why voices saying “shady” also make sense.

However, if you dig deeper into each reason, the conclusion is not “they’re all bad,” but rather “that’s why operator selection is important.”

Thoroughly Examining the 6 “Shady Reasons”

Reason 1 “The business model is the opposite” → That’s why they can coexist

What’s being said: Prop firms’ revenue source is exam/retry fees, while overseas FX is from spread revenue. They’re fundamentally different.

The facts: It’s true that they’re different. But that’s why they’re in a “complementary relationship” rather than “competing.”

• Overseas FX → For those who want to trade with high leverage using their own funds
• Prop Firms → For those with skills but no funds, or who want to limit risk

Just because a ramen shop doesn’t serve curry doesn’t mean curry has no value. There are players with different strengths in each market.

Professor Kaitai

“Major firms don’t enter = no value” may be an oversimplification. Rather, it’s because the specialized prop firms like FTMO and Fintokei were able to grow rapidly in this niche that the major brokers haven’t touched.

Reason 2 “Users winning means operator loses” → Overseas FX has the same structure

What’s being said: Prop firms have to pay profits to successful challengers, so they lose money when users win.

The facts: This is fundamentally the same as the “B-Book” structure of overseas FX brokers.

Many overseas FX brokers use the “B-Book” model, where they take the client’s orders internally instead of routing them to the market. This is a structure where “the operator profits if the client loses,” which is the same issue of conflict of interest as prop firms.

In fact, prop firms generally have a 5-20% challenge pass rate, and they build their business on challenge fee revenue.

Reason 3 “Withdrawal issues and backlash are common” → The difference between operators is huge

What’s being said: Can’t withdraw, poor support, sudden service termination, etc.

The facts: Unfortunately, there are unscrupulous operators that exist. That’s why “operator selection” is so important.

On the other hand, reputable veteran operators are completely different.

Shinjo-kun

FTMO is listed on Deloitte and Forbes? It’s definitely not shady at all!

Professor Kaitai

That’s right. The fact that “there are shady operators” is very different from “the entire industry is shady.” If you choose a reliable operator, you can use it with peace of mind.

【Comparison Table】 Reliable Prop Firms vs. Operators to Avoid

So, which operators should you choose? Please refer to the comparison table below.

✅ 2025 Recommended Prop Firm Comparison

※Ratings are based on information as of November 2025. Please check the latest information on each official website.

❌ Characteristics of Prop Firms to Avoid

On the other hand, operators with the following characteristics are best to avoid.

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