Same Skill, Pass Rate Drops from 89% to 22% — The Truth Behind the "Mathematical Formulas" Set by Prop Firms

nyanco_lab / Verification

A "prop firm" allows you to trade with borrowed capital if you pass an evaluation test. It is said that the pass rate is 5-14%, and only about 7% of people actually manage to withdraw money. "It's not your skill that makes you fail, it's the 'mathematical formulas of the rules' like trailing DD and consistency clauses." Is this true? I tested 'good strategies' through these mathematical formulas.

Method: Monte Carlo simulation / Create strategies with positive expected value using win rate x RR, and run them through actual rules (FTMO-style = static / Apex-style = trailing) / 1% risk per trade, 40,000 trials per setting / Code independently verified

The dream of retail FX has shifted from "winning with your own capital" to "passing a challenge and borrowing capital". And what always follows is the low pass rate and the lament that "it's the rules, not your skill, that make you fail".

I understand the sentiment. But feelings don't settle the matter. So — I created 'good strategies' with positive expected value in various winning forms, and ran them through the actual rules tens of thousands of times to measure how the pass rate changes. The conclusion, neither hype nor defense, was that it is "half true".

(1) Prop firm rules (simplified)

The four main characters of evaluation rules

Profit target (e.g., +10% of account), while adhering to Maximum Drawdown (DD) (e.g., -10% is disqualification), Daily loss (e.g., -5% in one day is disqualification), and Minimum trading days. It looks simple, but there are two 'effective mechanisms' here.

The first is Trailing DD. This is a type where the maximum DD line follows the account's highest value, including unrealized gains, and moves up (it does not go down). Once unrealized gains reach +1% and then pull back, the disqualification line rises accordingly, and the safety margin shrinks forever. In many firms, the trailing stops (locks) once the account returns to near the initial balance level.

The second is the Consistency clause. A rule stating that "daily profit must not exceed X% (often 30-40%) of total profit". It filters out forms of earning through "a single big win in one day".

The design differs depending on the firm. For example, FTMO-style is static (maximum DD is fixed, no consistency clause), while Apex-style has trailing DD + consistency clause. This time, I simulated both of these types.

(2) Running 'good strategies' through the mathematical formulas

Each trader is defined by "Win rate" and "RR (Profit / Loss = size when winning)". Risk per trade is fixed at 1% of the account. Expected value (average performance per trade) being positive = 'good skill' with a real edge. When this is executed with discipline and composure, what percentage passes? First, let's look by strategy type.

Two things are already visible. First, the trailing DD type has almost half the pass rate of the static type (e.g., 98% -> 69%). Even with the same skill, the pass/fail result changes significantly just by the rule design. Second, the big-win type, despite having the highest expected value (+0.40R), is the hardest to pass (52% with trailing). There is already a hint of a "paradox".

(3) Result Part 1 — As skill improves, the pass rate rises straightforwardly

So, does "skill have nothing to do with it"? No. As you increase your win rate (= expected value = skill), your pass rate grows straightforwardly.

With a real edge + discipline, the pass rate grows to 7% -> 94.6%. Skill is the biggest deciding factor. However, even a coin toss (expected value 0) passes 22% = the element of luck is not small. (Trailing DD type, 1% risk per trade)

In short, saying "skill has nothing to do with it/it's a completely rigged scam" is an exaggeration. If you have a genuine edge and discipline, your pass rate will certainly increase. If you have a negative expected value (lack of skill), you cannot win mathematically. Skill is the biggest driver of pass rates.

④ Result Part 2 (Paradox) ── Even with the same skill, you can be failed based on your "style of winning"

This is the core of today's discussion. Let's set everyone's expected value (skill) to +0.25R and only change their "style of winning." From a steady, consistent style to a 'big hit' style that relies on occasional massive wins. The skill level is identical for all.

Even though everyone's skill (expected value) is the same +0.25R, the pass rate drops from 89.5% for the steady style to 22.2% for the big-hit style. The consistency clause and trailing drawdown are penalizing the "magnitude of variance" inherent in a winning style that relies on big hits.

Even with the same ability, you have a 90% chance of passing with a steady style, but only 20% with a big-hit style. What is causing you to fail is not your "skill," but your "style of winning (variance)."

Why? The big-hit style has extreme ups and downs, making it easy to hit the trailing drawdown line before the edge can manifest. Furthermore, when a large profit day occurs, you get hit by the consistency clause (a single day cannot exceed X% of total profit), and the additional trades required to smooth out the ratio increase the risk of a drawdown again. ── Experienced traders who "occasionally take big wins" through news trading, breakouts, or swings are the ones most likely to get caught in this net. It is exactly as people say: "win too much, you lose."

⑤ Conclusion ── "It's not skill, it's a formula" is half true

The accurate answer

Skill is the biggest deciding factor for pass rates (7% → 94.6%). If you have a genuine edge and discipline, you will pass with a high probability, especially with static rules. Therefore, saying "skill is irrelevant/it's all a scam" is an exaggeration. ── But at the same time, the trailing drawdown and consistency clause are mathematical formulas that penalize "variance", so even with the same skill, those with a big-hit style are more likely to fail. While the actual fatal blow is often triggered by excessive lot sizes (a failure of discipline), it is the trailing drawdown that makes it "irrecoverable," and the consistency clause that rejects big wins. The reason you failed may not be because you lack skill. It might just be that your "style of winning" was incompatible with these rules.

The practical implication is mundane. If you want to pass a prop firm, you must hone your edge (skill) + use small, consistent sizes (discipline) + smooth out your profits (lean toward a steady style). A winning style that relies on one-off big hits, even if it has a high expected value, does not mesh with these evaluation rules.

Get new posts, fast. / List of series

I am currently serializing verification articles and data analysis articles. In addition to following on note, I also announce new posts on X (formerly Twitter) (following on X is the most reliable way to read them quickly → @Nyanco_Lab0301). For a list of individual verifications, see the magazine "Thorough Verification of FX Methods", and to see the conclusions of all methods at a glance, go to the summary of verification articles. If you want to run the same Monte Carlo simulation with your own win rate and profit/loss ratio, please use the Backtester with Luck Detection (Free).

About this verification: We defined a positive expected value strategy as "Win Rate × RR (Profit:Loss)" and ran 40,000 trials for each setting, with a 1% risk per trade, 5 trades per day, and a maximum of 40 days, testing against actual rules (FTMO-type = +10% target / -10% max DD (static) / -5% daily / 4-day minimum / no consistency rule; Apex-type = +6% target / -5% trailing DD / consistency clause). This is a pure probability model with no look-ahead bias, and the calculation code has been independently verified.Disclaimer: This is a model of an "ideal trader who trades with discipline and constant risk." Please discount the fact that real-world pass rates are lower due to the significant impact of excessive lot sizes and emotions (which are not included in this model). Additionally, trailing DD is calculated by approximating it as the "highest point of the realized balance"; the actual rules that track including unrealized profits areeven stricter (= the conclusions of this article are on the conservative side). Figures such as a 5–14% pass rate and a 7% payout achievement rate are industry benchmarks based on company disclosures and third-party aggregations. The rule specifications for FTMO-type/Apex-type areas of June 2026 based on company disclosures and may have changed since (the focus of this article is not on specific companies, but on the "difference between static DD and trailing DD types").This article is a verification for educational purposes and does not recommend any specific firm or trade.

Reference

・Pass rates/payout achievement rates (5–14%, approx. 7%) are industry benchmarks based on public disclosures by each prop firm and third-party aggregations (Finance Magnates reports, industry statistics sites, etc.).

・Specifications for trailing DD and consistency clauses refer to the official rules of each firm (FTMO, Apex, etc.). Examples include "daily profit limited to 30–40% of total profit" and "max DD locked near the initial balance."

・Pass rate simulations were implemented by our lab (Monte Carlo, 40,000 trials per setting, code independently verified).