The prop firm industry has exploded in recent years, and for good reason. The promise is compelling: prove you can trade profitably, and we’ll give you capital to trade with. You keep a substantial share of the profits without risking your own money. Sounds perfect, right?
Well, it can be. But there’s a catch that many traders don’t realize until it’s too late: most prop firms operate on a B-Book model. They’re actually trading against you, hoping you fail. And here’s the kicker—about 90% of traders do fail their evaluations, which is exactly what these firms are counting on.
But there’s another type of prop firm emerging that changes this entire dynamic: A-Book prop firms. Let me explain why this matters and why it could be the difference between a legitimate funding opportunity and an expensive lesson.
Understanding the Traditional Prop Firm Model
First, let’s talk about how most prop firms actually work. You pay an evaluation fee (often $100-$500 or more), and in return, you get a chance to prove you can trade profitably under certain rules:
- Hit a profit target (usually 8-10%)
- Don’t exceed the maximum drawdown (usually 5-10%)
- Follow their trading rules
- Pass both Phase 1 and Phase 2 evaluations
If you pass, you get a “funded account.” This is where things get interesting—and where the business model reveals itself.
Most prop firms are B-Book operations. When you’re trading your “funded account,” you’re not actually trading real money in the real market. Your trades are internalized. The prop firm is taking the opposite side of your position.
Think about what this means:
- When you win, they lose
- When you lose, they win
- They’ve collected your evaluation fees upfront
- They’re betting that you’ll eventually fail
It’s a clever business model, I’ll give them that. But it creates a fundamental conflict of interest.
What Makes an A-Book Prop Firm Different
Now let’s talk about A-Book prop firms. These operate on a completely different principle.
An A-Book prop firm sends your trades directly to the market through liquidity providers. Your trades are real. The capital you’re trading is real. You’re actually participating in the live market.
Here’s how the business model works:
- You pay evaluation fees (they need to cover costs)
- You prove your trading ability
- When funded, your trades go to the real market
- The firm earns through your trading volume (spreads/commissions)
- They also share in your profits, but only when you actually make profits
Notice the difference? An A-Book prop firm wants you to succeed and trade actively. Your volume is their revenue. Your profits are their profits. There’s complete alignment of interests.
Why the Difference Matters
“Okay,” you might be thinking, “but if I’m passing the evaluation and making money, does it really matter if it’s A-Book or B-Book?”
Yes. It matters tremendously. Here’s why:
Sustainable Success
With a B-Book prop firm, if you start consistently making money, you become a liability. They’re losing money on your trades. What happens then? Often, they’ll find reasons to close your account, add more restrictions, or simply make it difficult to withdraw profits.
With an A-Book prop firm, your consistent profitability is exactly what they want. You’re generating volume, you’re making the firm money, and you’re proving their evaluation process works. They want you to scale up, trade more, and continue being profitable.
Real Market Conditions
A-Book prop firms give you experience in real market conditions. The fills you get, the slippage you experience, the behavior during news events—it’s all real. This makes you a better trader.
B-Book firms can manipulate your fills, widen spreads at critical moments, or create artificial slippage. After all, they’re on the opposite side of your trades.
Scaling Potential
With an A-Book prop firm, if you’re crushing it with a $50K account, they’ll happily scale you up to $100K, $200K, or more. Why? Because you’re making them money through volume and profit sharing.
B-Book firms often resist scaling successful traders or make it extremely difficult. Can you guess why?
Withdrawal Reality
Try googling “prop firm won’t pay out.” You’ll find countless stories of traders who passed evaluations, made profits, but couldn’t actually withdraw their money. Endless verification requirements, sudden rule violations, account closures.
A-Book prop firms have a much better track record of actually paying out because they’re making money whether you withdraw or not. Your success doesn’t hurt them.
How to Identify an A-Book Prop Firm
Here’s the challenge: many prop firms claim to be “real funded” or “live accounts,” but they’re still operating B-Book behind the scenes. So how do you tell?
Look for Transparency
A-Book prop firms are usually transparent about:
- Their execution model
- Which liquidity providers they use
- How they make money (volume + profit sharing)
- Their payout history
If a firm is vague or evasive about these points, be cautious.
Check the Business Model
Ask yourself: how does this firm actually make money?
If their primary revenue is evaluation fees from failing traders, that’s a red flag. If they make money from successful traders’ volume and profit sharing, that’s A-Book thinking.
Review Their Risk Management
A-Book firms have serious risk management because they’re putting real capital at risk. They monitor your trading carefully, not to catch you in violations, but to protect their actual capital.
B-Book firms’ “risk management” is often just a set of rules designed to trip you up and justify account closures.
Test Their Execution
How’s the execution quality during high-volatility events? Do you get slipped consistently in one direction? Are there mysterious platform issues during big news releases?
A-Book firms have the same execution quality in evaluation and funded accounts because it’s all going to the real market anyway.
The Economics of A-Book Prop Trading
Let’s talk numbers because understanding the economics helps you see why A-Book firms work.
Imagine you’re trading a $100,000 funded account profitably:
- You trade 50 lots per month
- The firm earns $3 per lot in spreads/commissions = $150 per month
- You make $5,000 in profits that month
- Your profit share: 80% = $4,000
- Firm’s profit share: 20% = $1,000
- Firm’s total monthly revenue from you: $1,150
Over a year, if you’re consistently profitable, that’s substantial revenue for the firm. And what did they risk? The evaluation fee mostly covered their costs. Your success is their success.
Now compare that to a B-Book model:
- You make $5,000 in profits
- The firm loses $5,000 (they’re on the other side)
- They made money on your evaluation fee
- They’re hoping you’ll eventually blow the account
See the difference in incentives?
What to Expect from an A-Book Prop Firm
If you’re considering joining an A-Book prop firm, here’s what you should expect:
Rigorous but Fair Evaluation
They want to fund traders who can actually trade. The evaluation will be challenging but fair. No tricks, no impossible rules, just a genuine test of your ability to manage risk and generate profits.
Real Trading Conditions
From day one of your evaluation, you’ll experience real market conditions. This isn’t just practice—this is real preparation for funded trading.
Transparent Profit Sharing
Clear, written agreements about profit splits. No surprise fees, no hidden charges, no reasons you can’t withdraw your profits.
Support for Success
A-Book firms often provide:
- Educational resources
- Trading tools
- Risk management guidance
- Community of funded traders
Why? Because they want you to succeed. Your success is their business model.
Opportunities for Growth
Start with $50K, prove yourself, scale to $100K, then $200K, and beyond. A-Book firms love scaling successful traders because it means more volume and more profit sharing.
The Evaluation Process
Most A-Book prop firms still use a two-phase evaluation process, but with an important difference: they’re actually evaluating your trading ability, not setting you up to fail.
Phase 1: Profit Target and Risk Management
You need to hit a profit target (typically 8-10%) while staying within maximum drawdown limits (typically 5-10%). But the rules are consistent with real trading conditions.
Phase 2: Consistency Test
This phase usually has a smaller profit target (4-5%) and focuses on consistency. Can you make money without taking excessive risks?
Funded Account
Once you pass, you get a real funded account. Your trades go to the real market. You start earning from your profit share.
Common Concerns About Prop Trading
Let me address some concerns I hear frequently:
“Isn’t prop trading still risky?”
Yes, trading is always risky. But with prop trading, you’re risking evaluation fees, not your entire capital. And with A-Book firms, if you’re good, you have a genuine path to trading substantial capital.
“Can I really make a living from prop trading?”
Absolutely. I know traders who manage multiple six-figure accounts across prop firms and make substantial incomes. But you need to be genuinely skilled and disciplined.
“What if I fail the evaluation?”
Most traders do fail their first evaluation. It’s a learning experience. The question is: with an A-Book firm, are the rules fair? Can you learn and improve? Or are you just feeding money to a firm that wants you to fail?
“How do I choose between different A-Book firms?”
Compare:
- Evaluation costs
- Profit splits
- Scaling policies
- Available markets
- Platform quality
- Payout track record
My Perspective on Prop Trading
I’ve traded my own capital for years, but I’ve also explored the prop trading world. Here’s what I’ve learned:
Prop trading with an A-Book firm is one of the best opportunities in retail trading today. It allows talented traders to trade significant capital without risking their own money. The leverage is incredible—not in the traditional sense, but in terms of capital access.
But—and this is crucial—you need to actually be a profitable trader first. Prop firms are not a shortcut around learning to trade. They’re an accelerator for traders who already have skills.
The Future of Prop Trading
I believe the industry is moving toward A-Book models. As traders become more educated about how prop firms work, they’ll demand transparency and aligned interests.
B-Book prop firms will still exist, but they’ll face increasing scrutiny. Traders will vote with their wallets, choosing firms that actually want them to succeed.
Getting Started with A-Book Prop Trading
If you’re interested in pursuing prop trading with an A-Book firm, here’s my advice:
1. Prove Yourself First
Before paying any evaluation fees, make sure you can trade profitably with your own money (even if it’s just a small amount). If you can’t be profitable in your own account, you won’t pass evaluations.
2. Understand the Rules
Read every rule carefully. Make sure you can trade profitably within those constraints. Don’t pay for an evaluation if the rules don’t fit your trading style.
3. Start Small
Most firms offer multiple account sizes. Start with a smaller evaluation. If you pass and do well with the funded account, you can always scale up.
4. Treat It Like a Job
Once funded, this is real capital in real markets. Trade with discipline, follow risk management rules, and take it seriously.
5. Keep Learning
Use the experience to become a better trader. The real benefit of prop trading isn’t just the money—it’s the growth and experience of trading larger capital in real market conditions.
The Bottom Line
The prop trading industry needed A-Book firms. The traditional B-Book model creates conflicts of interest that benefit the firm at the trader’s expense.
A-Book prop firms change that dynamic. They want you to succeed, they want you to trade actively, and they want to scale you up. Your success is their success.
If you’re a skilled trader looking to access significant capital without risking your own money, A-Book prop firms offer a legitimate path forward. Just make sure you’re actually skilled first—no amount of aligned interests can overcome a lack of trading ability.
The opportunity is there for traders who are ready to prove themselves and take advantage of it.