The 5ers vs FTMO 2023: Which prop firm should you choose?

When evaluating forex prop firms, I have narrowed my choice down to FTMO↗︎ and 5ers↗︎. These two major players stand out in an industry plagued by deceitful practices and lack of regulation, as highlighted by the recent MyForexFunds shenanigans. I have analysed both FTMO and 5ers’ business models and revenue sources to understand their trustworthiness and incentives in working with traders.

Building complete trust with prop firms is difficult given the lack of regulation in the sector. One would reasonably expect and hope for full transparency from these companies. However, current oversight remains limited – in part because prop firms do not directly handle client funds like brokers. This regulatory grey area allows questionable practices to slip through unseen.

Prop firms should empower trader success, aligned with a profit-share model benefiting both parties. However, the reality is some firms rely on unethical tactics, set up to profit from trader failure rather than genuine success. This precise deceit led to MyForexFunds’ downfall – luring in retail traders with fancy marketing buzzwords but relying on deception. Some of these companies are set up with the sole intention of profiting from individuals, devoid of any genuine interest in their success. 

The way most of these prop firms make money is by anticipating your failure during the evaluation process. These businesses understand that retail traders often lack the necessary skills, and they are well aware that approximately 95% of traders are destined to lose. Despite leading you to believe that successfully passing their evaluation will grant you access to a live trading account, this is far from the truth. Instead, they provide you with an account where the prop firm acts as a counterparty to your trades, and no orders are forwarded to authentic third-party liquidity providers. The money you earn through trading is taken from their evaluation fee pool. For example, My Forex Funds collected $310 million in evaluation fees, so they had plenty of cash available to pay profitable traders; however, their greed and deceitful tactics cost them in the end and there is no doubt that others in the game are doing exactly the same.

What about FTMO and 5ers, how do they operate?

Given the turmoil caused by My Forex Funds, I reached out to both companies to understand their business model and whether it mirrored that of My Forex Funds.

5ers promptly responded, confirming that upon a trader’s successful completion of an evaluation, they receive a genuine live account where all trades are directed to authentic third-party liquidity providers. They explained that income from evaluation fees is reinvested into their platform and used for staff remuneration.

Shortly afterwards, the CEO of 5ers released a video addressing these concerns, recognising the worry among traders about the potential repercussions of My Forex Funds’ actions on other prop firms. For a deeper understanding, you can view the video on the 5ers website↗︎.

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Best forex prop firms for 2023

I then contacted FTMO. The company confirmed that trader accounts remain internal simulations and that they do not provide access to real trading accounts upon evaluation completion. Their revenue model centres around evaluation fees and replicating successful trader strategies in their own accounts.

Their exact words, “FTMO has multiple sources of revenue, among them also fees from the FTMO Challenges. Profits from these activities are then allocated towards running our operations, including providing payouts. Also, FTMO may at its discretion choose to use data from these simulated trades to perform own trades on financial markets.”

While FTMO’s model of not providing real trading accounts is disappointing for such a prominent company, it is not entirely surprising since this is how most of these firms operate.

FTMO profits from traders who fail evaluations, rather than directly funding successful traders like 5ers. However, there is a distinction between unethical deception and running an ultimately self-interested business. FTMO remains committed to fair practices without the underhanded tactics seen elsewhere. Additionally, by mimicking profitable trader strategies, it is in FTMO’s financial interest that traders succeed in evaluations, even if the model itself limits direct benefits.

The lack of “dirty tricks” provides some comfort, but the incentive structure does not align as well with traders as 5ers’ provision of real accounts. Ultimately for traders, while FTMO does not cross ethical lines, weighing up the business model and revenue sources paints 5ers in a more favourable light.

FTMO vs 5ers Compared

Programs: 1
Trading Period: Unlimited
Profit Target: 10%
Real Account: No

Programs: 3
Trading Period: Unlimited
Profit Target: 5%/8%/10%
Real Account: Yes

Based on my research, 5ers appears to provide more benefits to successful traders by funding live trading accounts. However, both models do offer opportunities.

For additional details on FTMO and 5ers’ specific offerings, see our in-depth prop firm article comparing their programs.