Reports indicate that between 80 and 100 prop trading firms shut down in 2024. While MetaQuotes’ crackdown on prop trading firms played a part, many firms failed because of basic business flaws. They used weak risk controls, couldn’t properly evaluate traders, and created profit-sharing deals that simply couldn’t last.
As a company looking to enter or improve your prop trading offerings, you need systems that ensure long-term profitability while attracting and retaining talented traders. This is where Prop Pulse on cTrader comes in.
Why cTrader?
cTrader is known for its low-latency execution, which minimizes slippage and enables traders to respond promptly to market movements. Its advanced charting tools and customizable trading options cater to novice and seasoned traders. For prop firms, offering cTrader means providing a reliable and efficient platform to attract and retain a diverse clientele.
Understanding the Prop Trading Business Model
Prop trading creates mutual benefits for both parties involved. Traders gain access to capital far beyond their means that lets them take larger positions and potentially earn more significant profits. As the broker, you earn passive income by investing in skilled traders who’ve proven themselves through your evaluation process.
For this model to work effectively, you must have proper systems to identify genuinely skilled traders, control risk exposure across your trader portfolio, and structure profit-sharing in ways that reward performance while protecting your bottom line. Without these systems, you’re essentially gambling rather than running a sustainable business.
Prop Pulse + cTrader
Prop Pulse, developed by Brokeree Solutions, is a comprehensive account management solution for prop trading firms. When integrated with cTrader, it allows brokers to design multi-stage challenges with customizable trading objectives. Prop Pulse ensures you can scout and evaluate traders so only the most competent individuals manage your capital.
The integration also provides intuitive dashboards that offer real-time insights into traders’ performance. Such transparency is invaluable for risk management and strategic decision-making.
How Prop Pulse on cTrader Increases Prop Trading Profitability
Prop Pulse provides a complete infrastructure for running a profitable prop trading operation. Each feature directly contributes to your bottom line in specific ways.
Challenge Plans: Your Profit-Generating Evaluation System
The evaluation phase serves two critical business functions for your brokerage.
First, it generates immediate revenue through registration fees. When traders pay to attempt your challenges, you create a revenue stream before risking any capital. Second, it acts as your quality filter to ensure only traders with proven skills can access your funds.
To structure challenge plans for maximum profitability, create multi-step challenges that test different aspects of trading skills. For example, your first step might focus on consistent profitability with an 8% profit target and a 5% max drawdown limit. Your second step could test risk management under pressure with a 12% profit target and an 8% max trailing drawdown.
This progressive difficulty weeds out lucky traders and identifies those with genuine skills. It creates a natural selection process where only the most disciplined, skilled traders advance to funded accounts.
Risk Management: Protecting Your Investment
Failed prop firms often collapse because of inadequate risk controls. Prop Pulse gives you multiple layers of protection that work together to safeguard your capital.
The risk threshold system creates two-stage risk management with “warning” and “failure” levels. When a trader hits the risk threshold, you can suspend trading temporarily, close all positions automatically, or terminate the participation entirely. These automated controls prevent emotional override decisions and protect your capital around the clock, even when you’re not actively monitoring accounts.
There are several risk threshold settings like Max Static Drawdown and Max Trailing Drawdown. These create a hard floor for potential losses on any account.
Max Static Drawdown limits losses based on initial balance. If you fund a trader with $10,000 and set a 10% static drawdown limit, the account gets suspended when equity drops to $9,000. Similarly, the Max Trailing Drawdown locks in profits as equity grows. If a trader grows an account from $10,000 to $15,000 with a 10% trailing drawdown limit, the suspension level moves to $13,500.
Max Daily Drawdown prevents catastrophic single-day losses that can occur during volatile market events. A 5% daily drawdown limit on a $10,000 account means trading stops if the trader loses $500 in one day, preventing emotional revenge trading that often follows initial losses.
Partnership Phase: Structured Scaling for Growing Profits
The partnership phase is where your long-term profitability comes from. Prop Pulse lets you create a scaling plan that balances trader motivation with business sustainability in a structured way.
Start traders with modest funding between $10,000 and $25,000 and prove their consistency before increasing your exposure. This initial cautious approach limits potential losses while you gather more data on a trader’s performance patterns.
Structured profit sharing incentivizes growth while maintaining your margins. A common model starts traders at Level 1 with a $25,000 account and a 70/30 split, giving 70% to the trader. Level 2 might offer a $50,000 account with a slightly better 75/25 split and Level 3 could provide $100,000 with an 80/20 split.
Each level can have its own set of objectives and constraints. As account sizes grow, you might tighten drawdown limits to reflect the increased risk. A $25,000 account might have a 10% max drawdown, while a $100,000 account could be limited to 7%. This scaled-risk approach protects larger investments while still giving traders reasonable freedom.
Profit Splitting: Balancing Trader Satisfaction and Cash Flow
The profit-splitting mechanism directly impacts both trader retention and your cash reserves. Proper management here is crucial for long-term profitability. Some of the best practices are:
- Set minimum thresholds for profit splits, such as $100, to prevent administrative overhead from tiny withdrawals and save your team’s time while ensuring splits are meaningful for traders.
- Enable trader-initiated requests with approval workflows to reduce your manual monitoring. This automation lets traders feel in control of their earnings while giving you final oversight on all withdrawals.
- Control split percentages on a case-by-case basis for flexibility. While your standard might be 70/30, you can adjust to 60/40 for particular splits if a trader has been inconsistent or if market conditions warrant extra caution.
The comprehensive reports feature lets you track all splits to monitor your payout ratios over time, giving you data to refine your profit-sharing strategy based on actual performance.
Allowing regular but controlled profit splits keeps traders engaged and satisfied while maintaining sufficient capital in trading accounts for continued trading activity.
Implementation Strategy: Rolling Out Prop Pulse for Maximum ROI
A practical implementation approach for Prop Pulse focuses on creating balanced challenge structures, proper risk controls, and effective account management automation.
Design your challenge structure with two evaluation steps and three partnership levels for a complete trader journey. Configure risk controls with cascading thresholds for early intervention. Finally, automated account management should be implemented to reduce operational overhead. Configure account creation rules to generate demo accounts automatically when traders register for evaluation and live accounts when they pass to the partnership.
Avoiding Common Profitability Pitfalls
The prop firms that failed in 2024 provide valuable lessons on what not to do. Their mistakes can guide your implementation for greater stability.
Unsustainable profit targets destroyed many firms. Some set easy 5% targets with 60-day windows, leading to mass payouts to lucky traders rather than skilled ones. Fix this using time-weighted return metrics and minimum trading day requirements that reveal true trading ability over luck.
Inadequate risk controls can prove fatal. Many companies use only static drawdown limits, allowing traders to build up equity and lose it all in market downturns. Implement trailing drawdowns that automatically lock in profits as equity grows to prevent this scenario.
Excessive leverage also amplifies losses beyond sustainable levels. Offering 1:100 leverage on funded accounts can lead to catastrophic drawdowns during volatile markets. Prop Pulse’s Accounts Creation rules limit leverage based on account size to avoid this issue.
Putting It All Together
Prop Pulse on cTrader provides all the tools you need to run a profitable prop trading business. Success comes from strategically using these tools to create a balanced system that generates immediate and long-term revenue.
The failed prop firms of 2024 showed what happens when fundamentals are ignored. With Prop Pulse, you have the infrastructure to avoid their fate and build a sustainable, profitable business model that benefits you and your traders.
