Understanding the funded trading programs concept

When we think about funded trading programs, for a trader, we have two concepts we should take into consideration, those 2 concepts are different from each other, but they are both great solutions for 2 of the significant situations that can face any independent trader.

What is a funded trading account?

A proprietary trading firm offers a funded trading account to a qualified individual who has successfully passed a trading test (also called Evaluation or challenge).

This allows prop firms to find multiple talented traders in the world that can manage their funds with good benefits, but most importantly, it will enable good traders to manage a good amount of money that they cannot have access to in the real world; we are talking about up to 200000 $ and more.

The company provides login details of a Real account or a Simulated trading account linked to a real account (to prevent significant losses). The trader must manage those funds under some conditions to achieve targeted benefits. (Example: Steps to create an account on Leeloo Trading)

Some proprietary trading firms, like The5ers and City Traders Imperium, offer direct funding, which means you don’t need to pass a test to get the funded trading account. Still, the participation fees are higher than in other programs.

in the table below, you will find the most popular funded trading programs that attract traders around the world, either Forex traders or Futures traders, with a link to a full review about each platform:

Futures ProgramsForex Programs
Earn2TradeFTMO
Leeloo TradingTopstep Forex
Topstep FuturesThe5%ers
Apex Trader FundingCity Traders Imperium

Funded Trading Programs: 2 Concepts

1st concept: Source of Capital

In any kind of business, anyone can face this painful situation where you have the knowledge, skills, and winning strategies, but you still need capital to start your business. You need a bank or a company that can trust you according to your skills and knowledge. Forex, stocks, or futures traders also have this same problem. In the last few years, finding a funder has become much easier since the concept of funded trading programs is precisely the solution for this situation. Funded trading programs offer an opportunity for talented traders to trade with a high capital for a meager investment. When the trader has passed a challenge successfully, the proprietary trading firm allows him to trade with a big account and gives him a share of up to 90% of the benefits.

2nd concept: Trading Training

Trading forex, stocks, or futures, is one of the domains that cannot be learned only from books and videos. The Trading domain needs actual practice in the real world. Many people think opening a virtual account is an actual trading practice, but it is not true. One of the most critical factors affecting our trading results is how we can control emotions and manage stress, fear, greed, excitement, frustration, and more. Be 100% sure you cannot learn about everything from a virtual account. With Funded trading accounts, you can experience all those emotions and experiment with your strategies. Also, the beauty of funded trading programs (but some traders may see this as a negative option) is the risk management strategy. Funded trading programs don’t allow you to lose a certain amount of money in a day, a week, or a month and determine a target profit needed for the month; in other words, they force traders to follow their risk management strategy. This is a powerful risk management lesson for any beginner trader who wants to learn more about managing wins and losses.

What are the pros and cons of a funded account for the trader?

Those trading programs have continuously evolved in the last few years since they helped traders, and sometimes non-experienced individuals, learn the best strategies and manage and earn money with minimum investment. Still, these programs also have some disadvantages that should be considered before you start.

Pros of funded trading programs for traders

  • Trade a real account with no money: After you pass the paid test or challenge, you will have access to a real account, the value of the account starts from 10000$ to 200000$, and this does not need any investment on your part, but only the participation fees. (example: Check here Leeloo Trading offers for futures traders)
  • Trade with no risk of losing your own money: When you manage a funded trading account, you will be sure that you will not lose any of your own money; it is a risk-free trading program. When you lose a trade, it’s not your money; you earn real money when you gain a trade.
  • Learn how to trade in the real world: When you open a virtual account in any Forex or Futures trading platform, you do not feel that you are trading in the real market. You can open multiple buys and sells positions without even thinking about it. Therefore many people lose their money immediately when they move to a real account. But with the funded trading programs, even if you are not trading with your own money, but you have the feeling that you are a risk of losing your own money since your goal is to earn, this will help you interact psychologically and cognitively with the market, and test your strategies in the real world, not in a virtual world.
  • Get paid a good share of the earnings monthly: at the end of every month, the platform will send you a payment depending on your results. Most of the programs pay between 50% and 90% of your benefits during the trading period, and this allows you to feel that you are not only working for another person but are a natural partner in this win-win contract. Here is a table that shows the split share of every company:
CompanyTrader Share
Topstep Futures100% of the first $5000,
then 80%
Earn2Trade80%
Leeloo Trading100% of the first $8000,
then 80%
FTMO80% to 90%
Apex Trader Funding100% of the first $10000,
then 90%
The5%ers50%
City Traders Imperium50% to 70%
  • Enhance your risk management strategy: The trading journey is a consistent learning journey, so when you choose to go ahead and enter a funded trading program, you must never forget that the most important thing is to enhance your skills and learn more about different trading strategies and risk management options. Most funded trading programs require you to follow some conditions, including the maximum losses per day, week, or month, a trailing drawdown, a profit target, and maximum contracts (in futures) or leverage (in forex). All this will undoubtedly improve your risk management strategy for good.
  • Get certifications and licenses like a professional trader: If you are still practicing in the trading field, getting the certificates and licenses necessary to trade as a professional will be hard. However, funded trading programs help you get the certifications needed as a professional trader, so it will be much easier, even if you want to trade on your own or be a funds manager.
  • Work anywhere and anytime: You can open positions in your funded account anytime and anywhere as a funded trader.

Cons of funded trading programs for traders

  • You have to pass a paid test or challenge: before you start trading on a real account with real money in it, you must first prove that you are following a winning strategy because proprietary trading firms want to be sure that they are not giving real money in the first contact to an amateur, they have to be sure that you are a good trader and that your strategy is consistent and profitable, this is why all prop firms ask you to pass a trading challenge where you have to respect some rules including max loses and target profit, so when you finally reach your target profit by respecting all regulations, you are ready to start trading on a real account.
  • You must respect the rules: Even if you have access to those found, you must respect some rules the program gives. The proprietary firm wants to be sure you are not making them lose a significant amount of money for nothing. Therefore they set some conditions to respect before and during the trading times; this includes max losses, max position size, trailing max drawdown, avoiding trading during news and holidays, and some programs even require keeping consistency. (Example: Check here Earn2Trade rules)
  • You must keep trying if you are new: if you are a practice and are still learning about good strategies to trade, it’s very typical if you lose your first challenge. Of course, any good trader was there, but in the funded trading programs, this includes the reset fees for the account. The reset fees start from 70$; this depends on the challenge you choose the first time.
  • The prop firm will take part of the profits: for a solo trader, splitting the profits with anyone else is not fair since he does the hard work, but the company provides the trader capital to start, so, typically, they ask for a part of the benefits, some companies ask for up to 50% of profits, but most of them want only 20% of the profits.

Conclusion

Funded trading programs are an innovative solution to some of the major problems that any trader or new trader can face; first is lack of capital, and second is to learn without losing money.

Any trader with a minimum of dollars can access the trading world where people make significant profits. But do not forget that in any field, scammers want to take advantage of people who do not understand what this is all about.

Don’t worry. You will find on our website all information needed to start as a funded trader, so take your seat and enjoy this learning journey with us.

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