“Funded” explained: simulated account, counterparty, fees

FTMO's own FAQ says that all trading via the FTMO platform is simulated, with fictitious capital only. That covers the Challenge, the Verification and the FTMO Account you get after passing^[5]. The FTMO profile therefore lists the account after the FTMO Challenge 2-Step as a simulated account^[13]. The footer of the same page says FTMO only provides simulated trading and educational tools, is not a broker and accepts no deposits^[5].

Even so, FTMO pays out a reward in money when you make a simulated profit on the FTMO Account and keep to all the rules^[6]. The payout is genuine; the trades behind it are not.

Topstep even splits the stages across companies. Per its website footer, the Trading Combine and the “Express Funded Account” (XFA) are simulated programmes of TopstepTrader, LLC. The “Live Funded Account” (LFA) is operated by the separate TopstepFunded LLC^[10]. Its terms of use say that trades on a simulated account are not placed in live markets and produce no actual profit or loss^[11]. The Topstep profile gives the account type after passing as: simulated account (XFA), with a live account as a possible later step^[20].

Whether you can reach the live account at all also depends on the country. For Germany, Topstep says you can pass the Trading Combine and receive an XFA, with at most USD 200,000 in total payouts, but not an LFA^[12]. The firm profile therefore marks Germany as restricted^[24].

On a simulated account your order has no counterparty in the market: it is not executed in a live market^[11]. The only party that money moves to or from is the firm. It runs the platform, takes the fee and pays the reward^[6], and it alone sets the rules^[1].

The FMA describes paid challenges with a comparison: a situation can arise that resembles the relationship between a player and a casino. One side's gain is often the other side's loss, the rules need not be balanced, and the firm at least has the means to steer that balance^[1].

Are your trades copied anywhere? Possibly, but that is the firm's call. FTMO reserves the right to use data from FTMO Accounts to trade on its own separate live accounts^[5]. Topstep's terms let it use your trading data for any business purpose, with no payment to you^[11]. Belgium's FSMA notes that the firm alone decides which simulated trades it copies, so consumers can hardly tell whether, and how much, they are owed^[2].

According to the FMA, traders often cannot tell where a platform takes its prices and spreads from. Traders with losses reported heavily inflated spreads compared with real brokers. The FMA's example: market spread 0.8 pips, prop firm spread 2.5 pips, so the position starts in the red before the market moves^[1].

A prop firm has two big money flows: fees that traders pay in, and payouts that it makes to traders. The FMA writes that the business model often lives primarily on the fees many traders pay for challenges, not on realistic trading^[1]. The FSMA notes that participants often have to pay for several attempts before they pass, that some probably never pass, and that this is where the firms' revenue from them comes from^[2].

FTMO itself says the fee covers the cost of building and running its platform and tools, and that the amount depends on the product and the size of the simulated account^[7].

Two firms with different models show which fees exist and which way the money moves:

How much a firm keeps in the end depends on how many buyers reach a payout. FTMO does not give such a rate on the pages we read for this guide. Topstep publishes its own figures for 2025 in its website footer^[10]:

At Topstep the “Funded Level” covers XFA and LFA together. The figures therefore mix simulated and live trading, follow the firm's own method and, per Topstep, are not indicative of future results^[10]. They do not carry over to other firms.

Worked example using the rules of the FTMO Challenge 2-Step with USD 100,000 of simulated starting capital: the fee at list price is EUR 540^[14]. In the first phase you need a profit of 10%^[15], so USD 10,000 on the simulated account. The maximum loss limit is 10%^[17] of the starting capital, so also USD 10,000. The Verification follows, with a target of 5%^[16].

Outcome A: your account drops below the loss limit. The challenge is failed, and the fee stays with FTMO, because on the 2-Step FTMO only refunds it together with the first reward^[7]. Money has moved one way: the fee, EUR 540 at list price, from you to the firm^[14].

Outcome B: you pass both phases and close the FTMO Account with USD 1,000 of simulated profit. At a reward ratio of 80%^[18] (90% with the Scaling Plan or Premium Programme) that would be a USD 800 reward^[6], plus the refund of the fee^[7]. Only in this case does money move from the firm to you. FTMO pays it, not a market, because the profit was simulated^[5].

For example, from the firm's side: if 100 people buy the same challenge at list price, that is EUR 54,000 in fees^[14]. How much of it flows back as rewards and refunds depends on how many reach a reward and how large their simulated profit is. FTMO does not publish that rate on the pages we read. To run it with your own assumptions, use the challenge cost, repeat attempts and payout calculators.

FMA (Austria)

Austria's Financial Market Authority published its page “Was ist Prop Trading?” (What is prop trading?) on 8 May 2026^[1]. Its key points:

• Most prop trading platforms are currently not subject to supervision and do not have to meet the strict requirements for regulated financial service providers^[1].
• Many advertise discounts of up to 90 percent and rely on performance pressure and gamification, so that traders pay challenge fees again and again^[1].
• Even when trading happens only in a simulated environment with fictitious capital, it can amount to investment advice that needs a licence. The FMA explicitly puts this question to you as the external trader too^[1].
• A blanket assessment is not possible; what matters is how the specific model is set up^[1].

FSMA (Belgium)

Belgium's FSMA warned on 7 March 2024 against a paid “shadow investment game”^[2]. In its account, even consumers who pass the challenges never make actual trades; they play on a demo account. Prop trading firms hold no authorisation and may not provide investment services, and the same applies to prop traders. The gaming element can lead to overconfidence and reckless behaviour^[2].

Consob (Italy)

Italy's Consob warned on 8 July 2024 about a phenomenon known, among other names, as “funded trading”^[3]: trading in a simulated environment on demo accounts with foreign companies, together with the prospect that the firms will replicate the virtual trades of successful participants with their own capital. The challenge is designed not to be easy to pass, Consob says, and harder stages may require further payments. According to the reports it received, participants who had paid then got no economic benefit from the prop firms^[3].

ČNB (Czech Republic)

The Czech National Bank supervises the country where FTMO, for instance, is based^[9]. On 28 September 2023 it set out a general position on simulated trading on demo accounts^[4]: purely simulated trading, without actual execution and settlement of orders, is generally not an investment service and needs no ČNB licence. A footnote adds a caveat: if the size of the reward depends on the results on the demo account, the activity would have to be assessed under the rules for financial derivatives. Mirroring demo orders to live accounts is outside the position's scope, and it names no prop firm^[4].

FINMA and BaFin

While researching this guide we did not find a statement by FINMA or BaFin specifically on prop challenges. You can check whether a firm is on a warning list through the regulator links at the end of this page.

• Simulation or market? Look for the word “simulated” in the terms or FAQ. FTMO and Topstep both state it openly^[5][11].
• Who runs what? At Topstep the challenge and the live account belong to different companies^[10]. If the terms name no company and address, it is unclear who your contract partner is.
• Can you reach a live account at all? Your country and the firm's partners can rule it out, as Topstep's rules for Germany show^[12].
• One-time fee or subscription? FTMO charges a one-time fee^[8]; Topstep charges a monthly fee, plus reset or activation fees where they apply^[21].
• Is the fee refunded? At FTMO only on the 2-Step and only with the first reward; on the 1-Step and the Instant Account it is not^[7].
• Who can change the rules? According to the FMA, the firm alone sets them^[1]. Topstep reserves the right to change its terms of use after giving notice^[11].