Velotrade Study: Most Prop Firm Funded Accounts Closed by Rules, Not Losses

Rulebook Review Findings

Velotrade's comparative analysis of published rulebooks from Topstep, FTMO, FundingPips, and three other major prop firms found that most funded account terminations result from rule violations rather than reaching maximum drawdown thresholds tied to actual losses. The report examined drawdown rules, payout restrictions, daily loss limits, and account reset policies across the six firms.

Hidden Rules Drive Account Closures

The study emphasizes that trading firms often highlight profit-split percentages in marketing but bury the specific rules that trigger account closure. Conditions like consecutive loss limits, daily maximum losses, and minimum holding periods for trades frequently end accounts before traders exhaust their loss allocation. Velotrade's analysis suggests traders comparing prop firm offers should prioritize rulebook transparency over advertised profit percentages, as the terms determine how long a funded account remains active.

Transparency as Competitive Factor

The report underscores that firms publishing clear, detailed rulebooks reduce trader friction and set clearer expectations before funding is awarded. Traders who review rulebooks before purchasing a trading challenge can identify which firm's rules align with their own trading style, potentially avoiding costly surprises after account approval.

Why It Matters

For Traders

Understand your prop firm's drawdown and payout rules before funding; most closures come from rule breaches, not losses, so rulebook terms directly affect your funded account lifespan.

For Investors

Prop firm transparency and fairness in rule design may become a competitive moat as traders increasingly compare terms before committing capital to challenges.

For Builders

Platforms automating prop firm comparisons or rulebook parsing could capture demand from traders seeking neutral, readable summaries of complex account terms.