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If you’ve ever tried to do some kind of work with a prop firm then you may have encountered the following problem.
You go on their LinkedIn, look through current employees to find the relevant person, and then realise that they have about 10,000 people claiming to work for them. This is because every person that has an account with them also lists themselves as a ‘proprietary trader’ with the company.
Very annoying.
What this conceals is the fact that prop firms often have a fairly small number of employees. I once met a decent sized company, in terms of revenue and stature, and I would guess they did not have more than 5 – 10 people working for them.
Why?
There are a couple of reasons for this. One is that prop firms do not need so much of the infrastructure that brokers do.
There is no compliance team, for example. To draw a comparison, FTMO’s headcount costs appear to be under 10% of revenue, compared to almost 25% at IG Group.
This is why I think regulation is one of the biggest risks that prop firms face in 2026. If there is equivalent regulation to what exists in the broker space in the prop market, then I think the industry will be severely handicapped.
Right now props seem to pay out about 50% to 70% of revenues (if they are honest) to traders.
Operational costs at a good broker are usually around the 40% to 50% mark. If the equivalent thing were to happen in the prop space then it’s hard to see how the model could work. Hence the risk that props face if regulation does come.
But I think the small number of people that props have is reflective of something else as well.
Speaking with props, a lot of the time you realise how e-commerce brained many of them are.
Lots of them are a skeleton crew of guys, who just think of selling challenges in the same way you would sell clothes or any other product online. A lot of the time they even outsource a lot of their marketing activity to agencies, which is why so much advertising in the space looks the same – it’s the same people doing it.
To draw a comparison, the broker space is semi-divided between brokers that run an IB-driven model and those that use a pure play digital marketing model.
There is no right or wrong model here. However, what is clear is that in gray markets and areas where you cannot do digital marketing, the IB players kick the ass of the companies that primarily do digital marketing.
Right now the large majority of prop firms sit in the digital marketing sphere. They do a lot of online ad spend and that appears to basically be it, besides potentially throwing in some trust markers, like social media accounts and fake reviews on Trustpilot.
So now imagine the following – regulation (or something similar) comes into play. At that point, the ability to do digital marketing for firms is turned off. RIP. With some exceptions, I would imagine that most firms will lose their main source of revenue overnight.
If that does happen then you may see exactly the same split as in the broker space, with firms that can still access Google and Meta doing well in certain markets, and props that managed to build a more IB-style business doing much better in other markets.
And the third risk that we used to title this clickbait-style article?
That’s obvious because we looked at it already last week.
Gold is still going up.
