Every funded trader aspires to win. They’ll no longer risk their capital for trading and can instead access a large amount of capital from prop firms. It’s an enticing opportunity offered by funded trading programs. But is it worth it? Let’s find out.
Funded accounts come with some risks and limitations. So, before deciding to pursue a Forex funded trading account, there are some pros and cons to consider.
What Are the Benefits of a Funded Trader Program?
Funded trading programs have gained significant popularity among aspiring traders in recent years. That’s because these programs offer an opportunity to trade with a funded account. The prop firm provides the capital, and traders share the profits generated from their trading activities.
This unique arrangement offers several benefits to traders, making funded trading programs an attractive option. Here are some of the key advantages:
Access to Capital
One of the primary benefits of funded trading programs is access to a large amount of capital. As an individual, you may not have enough funds to invest in trading. Also, it’s risky to put up your own money. A few bad trades, and you could lose it all. So, participating in the financial markets effectively is a huge challenge.
Funded trading programs bridge this gap by offering Forex traders the necessary capital to take advantage of market opportunities.
Profit Sharing
Funded trading programs typically operate on a profit-sharing basis. Funded traders get to keep a percentage of the profits they make with the funded accounts. The amount varies with each prop firm. It’s usually a 70/30 or 80/20 split, with the higher amount going to the traders. However, The Funded Trader’s split is up to 90/10—you get to keep 90% of the profit.
The profit-sharing model is a significant incentive because the arrangement benefits both parties. It’s also a great motivating factor as you strive for consistent profitability.
Coaching and Mentoring
What’s more, the best funded trading programs provide resources and guides to help you succeed. These programs provide a structured and supportive environment for traders to hone their skills, gain experience, and work toward achieving their trading goals. They also usually have a community of experienced traders and analysts who are always there to support you and discuss strategy.
Improved Trading Skills
Funded trading programs have strict risk parameters and position-sizing rules. This can help you develop disciplined trading habits, manage risk aggressively, and avoid emotions in your trades.
All in all, it can be an excellent learning opportunity for you. You’ll gain practical experience and refine your trading skills in a real-market environment without bearing the full financial risk.
What Are the Drawbacks to a Funded Trader Account?
While a funded account brings several benefits, it’s important to also consider the downside of funded trading programs. Here are a few to be aware of:
- Challenge Fees: Funded trading programs hold evaluations or challenges to weed out non-performers. You must pay the challenge fees to participate. The reality is that thousands of traders pay the fees to attempt challenges, but only a handful become funded traders. Many will even attempt the challenges repeatedly, paying a fee every time.
- Strict Trading Rules: Prop firms have very strict trading rules for both maximum overall drawdown and maximum daily drawdown. Drawdowns are the decline in the value of a trading account from a peak level to a subsequent low level. After all, losses are a part of trading. But managing drawdowns according to the prop firm’s rules can be tough.
- Risk of Losing the Account: Funded trading programs set stringent rules and restrictions for traders. This means limited trading strategies and specific risk management guidelines. While these rules are in place to manage risk, they can also restrict flexibility. What’s more, they may even hamper you from adapting to changing market conditions.
- Limited Control and Autonomy: You may have less control and autonomy over your trading decisions. For instance, the sponsoring firm can impose restrictions on anything from trading instruments to time frames or strategies. This lack of autonomy can be frustrating.
How To Choose the Right Funded Trader Program
The right funded trading program can give you valuable experience and help grow your trading career. There are plenty of prop firms you can choose from. However, make sure you consider these factors before making a decision:
How Much Capital and Leverage Do They Offer?
Leverage is a powerful tool in funded trading because it allows you to control a large position with a relatively smaller amount of capital. Prop firms offer leverage based on their risk appetite. It can range from conservative levels, such as 1:1 or 2:1, to more aggressive levels like 10:1.
Research different funded trading programs to understand how much capital and leverage they offer and whether it aligns with your trading goals.
What’s Their Profit Split and Payout Structure?
Understand the rules of each funded trading program you consider. Specifically, ask:
- What is their profit-sharing ratio?
- How smooth is their payout?
- Do they offer opportunities for funding progression based on performance?
In short, look for a prop firm that offers fair rewards for your hard work.
What’s the Trading Program’s Evaluation Process?
To become a funded trader, you’ll have to pass two or three rounds of challenges set by the prop firms. They aren’t easy! The prop firms bet a large amount of capital on their funded traders. As such, they set challenges to ensure that the traders who apply are serious about trading and have sufficient knowledge.
What’s more, these challenges are paid. However, you may be able to bypass challenge fees and win a free challenge.
Do They Provide Support and Education?
Look for firms that offer comprehensive risk management guidelines, mentoring, coaching, and educational resources. In addition, consider whether they have a community where traders can discuss tips and strategies.
Join the Funded Trader Program at TFT
So, are funded trading programs worth it? Absolutely! Joining a funded trading program can give you a lot of flexibility—you don’t have to risk your capital, and you can use higher leverages. With the right trading mindset, a solid strategy, and good risk management in place, you too can become a funded trader.
Ready to take your trading journey to the next level? Join us and become a funded trader.
