How big is the prop scam?

Well, if you haven't figured out already. You are where the scam begins, in every piece of content that pushes you, every motivational word that drives you. You are the business. See props are quite difficult, as to say all are a scam would be violating the objective stance, there are definitely authentic ones out there. In todays world its just hard to distinguish.

You see, to some degree, regardless of guaranteed payouts, the model itself is a scam. The same like getting a mortgage, the bank has collateral no matter what, and has made money from you the minute you've down payed. Meaning they win no matter your result with the actual house. That's the same in prop firms, they take a fee regardless of a win or a loss. So is the whole model a scam? Well, its the same question as asking is a bank a scam, its opinion based.

So, according to figures from the year so far, the rough estimate would be between 2-4 billion dollars in fees. With a 5-10% pass rate. Meaning more than roughly 90-95% will be returning to pay again. That is how big the scam gets. As due to this fact, they've a lot of money for marketing campaigns and to pay influencers.

Now, let it be noted, these are figures suggesting how big the industry is, that's not to say that for that 5-10% that pass, they don't take their fair share of that, there is just no public data to account for it. As no matter how you cut it, it is a highly skilled task to pass and stay consistently funded, so the 5-10% is made up of incredibly skilled traders.

This is to show the scale, as even if that's split between 5 different top dogs, that is A LOT of money being made on a recurring basis. Not indicating any wrong doing, but, you think of it yourself. 

There is two levels to the alleged scam, it is not just the prop firms. You see with the increasing push coming from places like TikTok and Instagram, there has been a huge influx of young, hungry traders that want a big lifestyle, fast. This push coming from Instagram created an alleyway to be fulfilled, an industry that could promise this "fast money". As it used to be copy trading but that died out.

That is the first tier of the scam, the fact that trading has become less of a profession and more of a scheme, for kids to attempt to get rich. Granted, some may slip through the cracks and make it work, but the odds are against you. This need for wanting to get rich fast has manifested the demand of exactly what the prop firms promise, giving them a huge platform regardless of marketing.

Now, the second tier of it remains the prop firms. As just because the demand exists, doesn't make it right to extort it for your own gain, the same like drugs. Meaning the props were presented with a means to steer a industry, and, in a lot of cases, have steered it to the wrong direction. 

The problem doesn't lie with solely the prop firms, as they are businesses. The problem is with the more experienced traders presenting a case that you don't need to be experienced to see the full value of them. That is why the number of passing is so low, not because the business model itself(plays a part) but because traders are coming in under experienced thinking they will get rich fast.

To answer the question you came here for though, yes, they are a scam. Contingent on one factor, your experience.

Prop firms are a scam for the newer-mid level traders, that are being funneled there via there Favorite creators purely for a monetary purpose. In that case, it will be a scam, because they wont stop taking your money, as it is a business at the end of the day.

The thing is, it doesn't have to be a scam forever. It's only a scam for as long as you stay a beginner. This means practicing properly, and not just jumping head first into things without the proper training. A pro boxer would never be allowed in the ring if he wasn't experienced first. Remember that.

With all that said, there are prop firms out there, usually smaller ones, that will use the business model to run scams. Luckily for you, there is a very simple way to combat these small level scams. Remember this one line, especially in the world of prop firms.

That may sound extremely simple. It is, but its quickly forgotten in the face of fast money promises. With props as a model, it makes it very easy to scam.

The final answer would be this, is there prop firms out there running scams? Absolutely. You have ways to watch out for them. 

But even with that, is there good ones out there, that can seriously help you once you reach a certain experience threshold. I believe there is.