A Comprehensive Guide to Funded Account Trading in 2021
Forex traders may face several issues when they begin trading using a live trading account. Some of the common problems of forex trading include a low amount of initial capital, as well as high risks involved in trading. This can result in massive insecurity. This is where funded trading programs come into the picture.
A funded trading program provides you with the unique opportunity to trade as well as earn money without risking your capital amount. It is designed to meet your needs and schedule and provides you with the right amount of capital to succeed.
In this article, learn more about the funded trading account and the benefits of becoming a funded trader. Also, discover how to get a funded trading account.
What is a Funded Trading Account?
Before we proceed any further, it is crucial to understand what is a funded trading account is all about. In essence, a funded trading account functions as a proprietary trading account that enables an experienced and qualified person to trade forex on his/her company’s behalf. These accounts exist to offer individuals all the flexibility that they need, thus helping them to step into the world of trading. There are several benefits of a funded trading account,
To begin with, they provide users with access to real trading accounts on the company’s behalf and also helps them to make use of a corporate license while complying with the regulatory needs. This way, you can minimize all the paperwork and ensure that you have the minimum amount of funds required for acquiring trading licenses, as well certifications.
Apart from this, funded trading accounts allow you to start small. When you qualify for funded trading programs, you can begin trading with a trading portfolio that exceeds your capital amount. Hence, if you are good at trading, you won’t have to worry about the scarcity of capital amount.
On the flip side, trading companies can source the best-funded traders via a funded trading program, and later acquire subscription fee, as well as a small portion of the profit. Put simply, a funded trading account is beneficial for both the parties i.e., the person who trades the account and the company that funds the account. It is also important to note that there are multiple funded trading accounts available in the market. They vary in terms of size as well as the instruments traded. Based on the company, they can vary futures, stocks, options, and options.
What does a Funded Trader Do?
To become a funded trader, one must enroll with an evaluation funded trading program or any training course. They must pass the final examination, which showcases their competencies and skills. If the funded trader matches the requirements, he/she receives an offer for creating a proprietary trading account.
Next, they are allowed to access a funded trading account of a specific size. The trader can freely trade the funds available in his/her account. However, each company has its own rules, and the funded trader must comply with these rules to trade without any problems. For instance, some firms may require you to meet a specified profit target, while others may have rules concerning everyday loss limits, maximum drawdown rate, as well as maximum position size, etc.
How to Get a Funded Trading Account?
In case you are thinking about how to get a funded trading account, then you must know that there are several programs, which, after completion, allow you to open a funded trader account. However, not every program is created equal and fair. This is why, before you choose, you must consider several things.
Firstly, you need to check the profit split figure that they are offering. Also, find out if they charge additional fees and provide you with some special status concerning taxation. For example, some firms may provide you with competitive funded trading account rates. Apart from this, they may deduct charges for educational courses, trading platform licenses, data fees, etc. Additionally, look for a firm that offers a well-designed educational program. This will better equip and prepare you for navigating the markets.
Advantages of Becoming a Funded Trader
There are many benefits of being a funded account trader. Following are some of them:
Trading in a risk-free environment: Funded traders are not required to worry about risking their own money. They trade on the company’s behalf and operate with their capital.
Start Without Money: Based on the firm, you may require a significant amount of starting capital to trade profitably. However, when you choose to become a funded account trader, you get instant access to the capital amount and can trade freely at your discretion.
No Need to Deal with Licensing: Becoming a trader is not an easy process. Based on local rules & regulations, you may need to acquire a license, pass the certification program and comply with different rules & regulations. You will also require some amount of capital to initiate trading. However, if you become a funded trader, you won’t have to worry about any of this.
Trade from anywhere: When you trade on a full-time basis within a specific firm’s offices, the funded trading program allows you to trade freely from anywhere.
Apart from the above, there are several other benefits of becoming a funded trader. But, more importantly, they help you trade with someone else’s funds and retain a massive portion of the profit amount.
How do Funded Traders Make Money?
A funded trader makes money by placing profitable trades using their dedicated trading accounts. For instance, if you make a couple of winning trades, then you earn a profit amount of $1,000, and you keep a portion of the same for yourself. This is usually dependent on the firm you choose to join. Some may retain around 50 percent of the profits, which essentially reduces them to half.
This is exactly why you must search for a firm that offers proprietary trading, as it will provide you with a major portion of the profits. For instance, with some funded trading programs, you can keep 80 percent of the profit. This implies that only 20% of the amount you earn will go to the firm providing you with the funded trading account, as well as the capital that you trade.
Risks Associated with Funded Trading Accounts
As such, there aren’t any major risks involved in funded trading. Given the many benefits that a funded trading program offers, it has become much popular among beginner traders. However, if one was to look at the disadvantage of a funded trading program, then the downside is that there is a risk of not passing the evaluation and losing the enrollment money. Hence, these programs provide you with access to content that is highly valuable in addition to industry knowledge that you can use for streamlining your career.
Also, even if you fail to clear the program/examination on the first attempt, you can always analyze your mistakes and go through all the educational material, as well as spend time on the trading simulator. After mastering the trading strategy, and once you are confident enough, you can re-enroll for the funded trading program to pass the exam easily.
Thus, a funded trading program is the shortest route to a professional career in trading. If you take the financial markets seriously, then you must enroll in the program to take advantage of the world of opportunities that funded trading offers to traders.
What do you need to know before becoming a funded trader?
Funded trading makes an ideal option for individuals who participate in market analysis activities and keep switching between different funds. The risk that an investor takes determines the returns that they are capable of earning through funded trading. Those who intend to make high profits may look to trade funds that come with high-risks.
Based on the investor’s existing financial situation, the income earned through mutual funds can seriously impact the investor’s annual taxation liability. Returns acquired via fund trading, along with what one gets from his/her salary or any other source, can impact the taxes that they need to pay. Hence, one must pick funds carefully.
The primary thing is that to be a successful funded trader you must take the funds as if you were investing your own money. Since you get the external capital amount to trade and retain the maximum profit share, doesn’t imply that you can become more aggressive. It is important that you understand and implement appropriate risk management and control your emotions to trade profitably.
In addition to this, you must also conduct extensive research to pick the best-funded trading accounts. You need to find your ideal funded trading program and enroll in it to trade successfully. It is also advisable that you go through all the terms & conditions, and familiarize yourself with the prominent characteristics, such as trailing drawdowns, profit goals, maximum position sizes, etc., and finally the cost of the program. Some offerings can cost you around $10,000 or even higher. This is way higher than what you should pay.
Ready to Kick start Your Trading Career?
Are you wondering how to open a trading account and get started with funded trading? Well, one of the easiest ways to do that is to subscribe to a funded trading program such as the Gauntlet Mini program and commence your journey into the world of professional trading.
Once you have signed up with a funded trading program, they will first evaluate your trading ability and style. After you have paid for the signing up fee, you will be tested, and the moment you pass the initial test, the firm will continue to test for a couple of weeks more. Once you have passed those weeks or days, you will get your funded trader account.
After you have signed up for a funded trading account, you should continue to display your skills to climb higher and become a successful trader. If you showcase excellent performance while trading forex, you will get even more capital for trading.
Forex trading is an extremely challenging job simply because of the number of variables that need to be considered before executing any decision. The forex trading market is highly volatile, and there are limited alternatives available to traders for accumulating money for their trading accounts. However, if you get selected for the forex funded trading account, then you won’t have to bother about anything. This happens only when you exhibit exceptional skills and experience by earning profitable trades. You must also trade consistently to make the most of funded trading opportunities.
In essence, funded trading programs are for traders with adequate experience but not enough capital at their disposal. The funded trading companies earn money by acquiring a portion of the profits made by the trader. Their profit share varies depending upon the company they choose to trade with.
One of the advantages of funded trading is that it allows you to trade your style without the fear of compromising your style. From scalping to day trading and even long-term holding of a trade position, you can choose a style that best matches your trading skills and abilities. Additionally, many traders also adopt swing trading, technical analysis, and fundamental trading analysis as their trading strategy. The only thing that you need to remember is that you must deliver profitable results and trades using your chosen style of trading.
Also, after you have enrolled yourself in any funded trading program, you must pass it by dedicating yourself to training. You must put in a great deal of effort and prepare yourself well to pass the examination. This implies that you need to read the entire educational content included in the program. This includes explanatory videos containing market analysis and fundamentals and advanced concepts of trading. Also, don’t forget to experience what real-world trading is like by using the trading simulator. This will help you to apply your knowledge and understanding of the trading market to achieve profitable trades.