Traders can have many difficulties when they decide to start trading with a live-funded account. The first is the low capital, and the second is the high risk involved. Most of the time, this will affect the way traders trade since it deals with their discipline and emotions. So how do you remove both, low capital and high risk?
One of the simplest ways is to join a funded trading program. Having a funded account brings together the best of both worlds, high capital, and low risk. They allow you to trade and generate income without putting your money at risk. This article will teach you all you need to know about how to get a funded trading account.
What is Funded Trading?
When you are trading using a proprietary trading account on behalf of a firm, that is referred to as funded trading. You are not risking your capital when you trade on behalf of a firm. You are also not liable for the losses. This can give you peace of mind when trading since this has less risk. As long as you are consistently profitable, the benefit of trading for a prop firm can be life-changing.
Advantages of Becoming a Funded Trader
You don’t have to risk your own money to trade since the firm will provide you with the capital. You are also not accountable for losses, so you may trade with confidence.
Capital is Provided
The firm provides you with trading capital. If you are confident in your trading ability, you can make bigger moves for bigger profits with more funds. As opposed to solo trader, you don’t have to wait as long to build up your capital to gain bigger profits since you already start with big capital. You are free to trade it any way you see fit in order to profit. If you are constantly profitable, you can scale up your account so you will be able to manage a bigger capital.
You get awarded on a monthly basis based on how well you performed in the market. Since you are not wagering your own money, you do not have to be concerned about whether or not you will come out ahead. You should just concentrate on how well the market is performing. The majority of prop trading firms will provide profit splits. Therefore, having a larger capital base will allow you to generate a larger profit.
The majority of funded traders do their trade from their homes. You are free to do trade wherever you happen to be in the world. You are in charge of your own operation and are responsible for your own trades, just like in solo trading. You simply need to keep in mind one thing, and that is the guidelines established by the prop trading firm. As long as you stick to the rules, neither the company nor you will be put in a risky situation as a result of your actions.
How to Pass a Funded Trader Program
Not all prop firm requires a challenge or evaluation before you get funding. You have to decide if you want a faster route, which is finding a prop firm without any challenges, or do the challenge and try to pass. The easiest way is obviously to not do the challenge. But if that is out of the question, then you would have to dedicate yourself and train extremely hard. There is no easy way to pass these challenges. A lot of prop firms make a lot of money from you failing them.
If you are unable to pass the challenge, it doesn’t matter how high of a profit split a prop firm offers you—it may be as high as 90 percent. The high-profit share is intended to persuade you to purchase entry to the challenge. Do not let yourself be misled into thinking that you will breeze through it.
You may always put your skills to the test by taking the free challenge. However, by the time you are proficient enough, it will be more beneficial for you to trade in real-time. And if you find that you want additional funding, all you have to do is submit your application to one of those instant funding prop firms. This will save you both time and money.
Real trading with real money is the best way to learn. This is where you put theory into practice. Just make sure you are following the rules set by the prop firm. This is critical since following the rules will help you become a more disciplined trader.
Risk of Funded Trading
Trading accounts that are already funded do not provide any substantial risks. It is not hard to comprehend why new traders gravitate toward funded trading programs given the many benefits that are included with participation in such programs. The only potential drawback is a failure to pass the challenge if that is a requirement of the prop firm. You will not receive a refund for the one-time cost. You can give it another go, but there is a chance that you will be unsuccessful once more.
Why would you want to put in the effort required to complete challenges if you already have a good understanding of how to trade? Wouldn’t it be easier to just pay that one-time fee to a prop firm that promises instant funding? That way, your chances of being approved will be higher, and you won’t have to pay the fee unless you do end up obtaining the funding. In this situation, once you’ve paid the required fee, funding will be guaranteed to you.
Joining a prop firm can be very profitable for you. Just make sure you are choosing the right prop firm for you and also suits your trading strategy. If you need more detailed information about choosing the right prop firm, you can read our post What You Need to Know Before Choosing a Prop Firm.