How to Get Prop Firm Funding as a Swing Trader

  • October 17, 2022

As online forex prop firms have taken the retail industry by storm, there seems to be a recurring theme. Many industry-leading prop firms are not catering to traders looking to take much longer and much larger positions within the markets. Due to this, many swing traders are either failing to obtain funding or, worse, not even trying to become funded. Luckily, there are prop firms catered to swing trading, and it’s still very much possible to obtain funding if you work with the right firm.

In this article, we’re going to look at everything you need to bear in mind when becoming a funded swing trader, alongside tips and tricks to maximize your success. Let’s get into it…

Becoming A Funded Swing Trader

Just because some of the largest online prop firms don’t offer environments for swing traders, doesn’t mean that there aren’t firms doing so! You’ve most likely seen the prop firms offering challenges that last 30 days, sometimes even less. These are obviously going to be completely unachievable for swing traders. Another blocker comes in the challenges that don’t allow weekend holding. You will struggle to find a profitable swing trader that doesn’t hold their trades over the weekend. Whether this is to make things purposely difficult or to limit their risk, this causes issues for swing traders looking to get funded.  It’s interesting to see that many prop firms don’t allow swing trading. This is most likely because, as discussed in this article, most prop firms only make money from traders losing. When trading against your clients, you want to encourage high-risk trading, not swing trading. Swing trading is traditionally much safer and more consistent than day trading, hence why these industry-leading funders won’t offer it!

The Benefits Of Becoming A Funded Swing Trader

If you haven’t yet got funding as a forex swing trader, it’s certainly something that you need to consider! Whilst swing trading is typically very consistent, the returns per month are also typically very low. This becomes an issue when traders are looking to make a living from their hobby and only have a few thousand in their trading account – it’s just not sustainable. By working with a prop firm that offers capital scaling, like Lux Trading Firm, you’re able to dramatically grow your trading capital to 6 or even 7 figures within months by using the same trading strategies as you were on your small trading capital. This, of course, opens the door to becoming a professional/full-time forex trader.

Choosing The Best Prop Firm For Swing Trading

 So, we’ve established that there are prop firms offering funded accounts to swing traders. However, we need to look at exactly what you need to succeed. We feel able to talk about this as many of our Lux Trading Club are funded swing traders, and we’ve offered swing traders funding for years now!

1. Overnight Holding

 Overnight holding is obviously a must-have for swing traders. A lot of bigger prop firms need you to be flat on positions by London Market Close at 10 pm. We offer complete overnight holding to our funded swing traders!

2. Weekend Holding

It goes without saying that swing traders need to hold their positions over the weekends. This is something we allow and encourage! We’d strongly recommend avoiding any prop firm that requires you to be flat by market close on Friday.

3. Hedging

Although very advanced, hedging can be extremely useful for traders looking to capitalize on the large swing movements of the markets. We allow hedging for all of our funding traders!

4. Holding Through High Impact News Events

If you’re holding trades for months, it would be impossible to exit for high-impact news events such as NFP or Bank Rates. For this reason, we don’t limit our traders and allow them to stay in positions during such events. With that being said, we have a risk desk to help traders manage their risk through these times.

5. No Time Duration

It’s impossible to say how long a swing trade will take to play out, sometimes it takes months! This is why we offer our swing traders no fixed time duration on challenges. It would be unintelligent to encourage higher risk in order to meet a time duration that doesn’t mean anything. We encourage our funded traders to take good quality trades.

6. No Aggressive Profit Targets

Setting fixed profit targets of “make 10% in 20 days” is ludicrous and certainly doesn’t encourage good trading. It’s impossible to swing traders to meet these kinds of goals and jump through these hoops. For this reason, we don’t have any kind of aggressive profit targets. Once you have made an 8% profit on your trading account, you reach the next milestone, however long that takes you!

Choosing Your Swing Trading Strategy

When looking at getting funding for your trading, it’s important to look at the strategy you’ll be using when obtaining this funding. This is a frequently overlooked step and makes traders waste a huge amount of time and money in the funding process.

Here are a few tips to consider…

1. The Use Of Correlated Pairs

In swing trading, it’s typically to end up taking multiple positions on correlated pairs. For instance, you may be selling EURUSD, GBPUSD, and NZDUSD at the same time. This is less relevant in day trading as there are many more opportunities to choose from. You need to consider the possibility that all of the correlated trades will lose. If this happens, you need to ensure that this doesn’t put you anywhere near the maximum loss limit. For instance, traders with Lux Trading Firm funded accounts have a 4% drawdown and maximum loss limit. If you were short on 4 USD backed pairs when a news release surfaced, at 1% loss on each pair, you may very well be over your maximum loss. This is where the use of hedging and risk management comes into play – 2 things you really need to consider when obtaining funding accounts.

2. Frequency Of Trades

Although swing trading is never going to be high frequency, you cannot expect to become a funded forex trader if you’re taking 1 trade per year. A prop firm is going to want to see much more volume than this to lock up a large amount of trading capital. It’s worth backtesting your trading strategies to understand the frequency per month and per year. If needed, you can always add in uncorrelated strategies into your toolbox that can help increase the volume of trades taken.

3. Ability To Add Trades

The ability to add ‘scale in’ positions into your swing trades is crucial. We discussed this theory in much more detail in this risk management article. Depending on the amount of leverage given by the prop firm, it can be a great idea to add positions onto your winning swing trades, when the time is right. This is a great way to increase your profits in the markets without taking on additional risk, as you move the stop loss to breakeven on the previous positions.

4. Fast Scaling From The Prop Firm

As we’ve already mentioned, you aren’t going to be taking a huge amount of trades as a swing trader. Therefore, to maximize your potential profits, you need to be working with a prop firm that will allow account scaling. In short, scaling is where you reach a certain profit goal, then the prop firm will give you a much larger amount of capital to trade with. For example, Lux Trading Firm has various different scaling models that traders work towards. If you reach your profit targets, (usually around 10% gain), you will be given more trading capital. This, in our case, scales all the way to £10,000,000 in trading capital. Without scaling, it’ll be hard to make a living from swing trading.

In Summary – Can You Get A Funded Forex Trading Account As A Swing Trader?

In conclusion, you can get a funded trading account as a swing trader, and it’s a great thing to do! Swing traders typically grow accounts very slowly, but very safely – this is a perfect fit for a real money prop firm like Lux Trading, looking for consistently profitable traders. Use a prop firm that caters to swing trading and has your best interest at heart, and you can’t go wrong!

Looking to get a funded trading account? Work with us now!