How it works:
You pay a fee (e.g., $50–$500+)
You take a “challenge” or evaluation
If you hit the profit target
Stay within drawdown rules
If you pass → you get a “funded account”
You trade and supposedly split profits (e.g., 80% for you/20% for the firm)
Most of these will be total scams. They take your fee and you will never “win.”
Let’s evaluate a firm that is NOT considered a scam. I will not list their name since I don’t want to advertise for this system.
1. Key companies and roles
Alpha
Proprietary trading firm that sells access to trading “challenges”
Users pay a fee and must meet profit targets and risk rules to qualify
Successful users receive access to a “funded account” (often simulated)
Beta
The broker infrastructure used within the Alpha’s ecosystem.
Handles execution, pricing, and platform access. Structurally linked to Alpha as part of the same broader ecosystem.
Gamma
A third-party service selling automated trading systems (“AI trading”)
Markets the ability to pass prop firm challenges and generate income with minimal user involvement.
2. How the system Functions
The ecosystem operates in layers:
Layer 1: Client entry
The user purchases a challenge from Alpha.
Layer 2: Tooling and assistance (optional but commonly marketed)
The user may purchase a system from Gamma to increase chances of passing
Layer 3: Trade execution
Trades are executed through Beta or in some cases a connected broker infrastructure.
The most import part: Each layer earns revenue independently regardless of the user’s success.
3. Expected value analysis
Assumptions:
Challenge cost: $250
Pass rate: ~10%
Profit split: 80%
Average payout for successful traders: $2,000
Expected value(EV) per attempt:
EV = (Probability of success × Expected payout) – Cost
EV = (0.10 × $2,000) – $250
EV = $200 – $250
EV = –$50
If a Gamma financial system is purchased (e.g., $2,000):
Total cost = $2,250
EV = $200 – $2,250 = –$2,050
The model is statistically negative for the average participant
4. Step-by-Step Loss
Step 1: Entry
The user is introduced to Alpha and purchases a challenge
Often also purchases Gamma financial software or services
Step 2: First attempt
Most users fail due to drawdown limits or missed targets
Step 3: Reattempt
Users believe they were close and purchase additional challenges
Step 4: Scaling activity
Users open multiple accounts simultaneously (encouraged by systems like what Gamma is selling)
Step 5: Funded stage (if achieved)
Accounts are tightly controlled and often lost due to volatility or rule breaches
Step 6: Withdrawal stage
– Payouts may involve verification steps, delays, or rule-based reviews
Step 7: Long-term outcome
– Users accumulate repeated fees while only a minority achieve consistent payouts
5. Structure:
Alpha generates revenue from challenge fees
Beta generates revenue from trading activity
Gamma generates revenue from selling systems and coaching
There is no requirement that any of these entities depend on the user being profitable.
6. CONCLUSION
This ecosystem is not necessarily fraudulent, but it is structured such that:
Most participants lose money
The expected value is negative for the average user
Multiple entities are compensated before the user earns a profit
7. WHAT TO DO
The questions you should be asking yourself or you should be asking your loved one:
Why would Alpha let you risk 100% of their capital and only take 20% of the profits while giving you 80%?
If Gamma’s system actually worked reliably, they wouldn’t sell it. They’d just run it internally and keep 100% of the profits
How many attempts are you planning to do? The system only works if you keep paying until you win — and most people run out of money before that happens.
If you look at it like a business decision instead of an opportunity, does it make financial sense?