Traders need capital to trade and are confronted with the choice of using own equity or, alternatively, considering a funded account provider. Especially in the very beginning it may be reasonable to go for a funded account since it decreases the initial capital requirement and risk of losing larger amounts. Funded trading accounts combine the positive of both account types – they provide the opportunity to trade and earn money without risking the own equity. The below article illustrates the concept of proprietary trading accounts and how to pass the qualification to get your funded account.
What is a Funded Trading Account?
A funded trading account is an account provided by a proprietary trading company that allows qualified traders trading on behalf of the company. There are several established proprietary trading companies available online such as TopStep, OneUp Trader, Earn2Trade or Leeloo for example. They offer access to a real trading account and, therewith, allow qualified individuals to trade under the corporate licence and in compliance with the jurisdiction’s regulatory requirements. That way, traders do not have to deal with administrative tasks like opening an account with a futures broker, organising a live data feed or potential licences. By qualifying for a funded account, traders can trade account sizes that are significantly larger than they usually would have available. Account sizes in that context vary from $25k to $250k. Consequently, if traders can proof a positive consistency in their daily trading, the lack of needed capital does not matter. Taking a look from the proprietary company’s perspective, they have a qualification program established to source the best traders and collaborate with the successful ones. The qualification program differs slightly among the available providers; however, they all have a subscription fee for the qualification phase and a profit share once a trader has qualified for an account. As a result, both parties benefit from that setup – the company sets a barrier to only a accept profitable traders in their network and the trader receives a comparably large trading account requiring very little initial capital.
How to get a Funded Trading Account?
1. Choose a Trading Account
There a various funded account providers available providing the required capital. However, their offer details differ and should be compared across the various providers to find the one that fits the personal requirements best. Generally, all account providers follow the same process requiring to choose the desired account type first. Most providers offer five different account types ranging from $25k to $250k. Some providers have all exchanges included, others require to choose the data provider separately. Make sure to cover the exchanges you plan to trade (e.g. CME, CBOT, NYMEX) in order to receive the right real-time market data.
Account Type Overview (OneUp)
2. Qualify for a Trading Account
Once a suitable account provider has been found and preferred account size has been determined, the trader has to sign up for an evaluation program, pay the respective fees and pass the qualification to proof the required competencies. Like with all challenging examinations, the key to pass such an evaluation is putting as much time into preparation as possible - success is dependent on effort! When entering a qualification it is key to have a functioning trading plan and already be a profitable trader. Existing trade reviews, proven playbooks and a comprehensive understanding of the market’s characteristics are prerequisite. The UCT futures trading course provides holistic support to pass the funded account qualification.
Qualification Overview (OneUp) If the qualification has been passed successfully, the trader receives an offer to trade a funded account.
3. Receive the Trading Account
In a second step, the trader gets access to a real trading account of the size that has been chosen in the course of previous registration process. The funded trader can now trade the funded account on the behalf of the company.
Qualification Overview (OneUp)
4. Stick to the Rules
All proprietary trading firms have their rules which need to be respected by the traders – these rules may be a restriction with regards to trading hours, a specific profit target or maximum allowed trailing drawdown for example. The rules rather illustrate a framework than limiting restrictions and are designed to maintain consistency as well as a proof the trader can handle a real money account. The trader is free in choosing the favourite markets, an own trading plan, and strategies. However, it essential to not break the rules which will lead to a termination of the account otherwise. Once an account has been terminated, the program has to be restarted. Make yourself familiar with the funded account provider’s rules. Stick to those guidelines and proof to be a disciplined trader.
Qualification Overview (OneUp)
Advantages of a Funded Trading Account
There are several advantages of a trading a funded account. Starting with the significantly lower risk of losing, a funded account allows not to risk your own capital but risking the capital providers instead. That way, the maximum amount a trader can lose is the initial payment for the qualification. Also, there is very little capital required to start trading with a funded account. Providers ask for a fee between $120 - $650 to enter the qualification and provide access to an account of $25k - $250k in return when qualified successfully. Moreover, the live data feed is included in the proprietary trading account and the trader does not to subscribe separately.
Associated Risks with a Funded Trading Account
There have been mentioned several advantages with regards to funded trading accounts. Looking at the potential risks associated with funded accounts there are no major risks, however, it would be wrong saying there no risks at all. In that context it needs to be highlighted there is a risk of failing to pass the qualification and, consequently, losing the amount paid for the enrollment. In that situation make yourself aware of your personal trading plan and rules. Consider it as cost of learning and do not calculate too tight. Rather be prepared for a few tries before passing the qualification and do not put yourself under pressure. UC Trading provides a day trading course with individual assistance ensuring best support to pass the funded account evaluation.
Are you Ready for Your Funded Trading Account?
There have been several information provided in the article. Make sure to have a good overview of the various capital providers, their accounts and related fees as well as terms and conditions to find the most suitable one for your needs.
| Leeloo | OneUp | Earn2Trade | TopStep |
Account Sizes | $25k-$300k | $25k-$250k | $25k-$150k | $50k-$150k |
Evaluation Fees | $150-$675 | $100-$500 | $150-$350 | $165-$375 |
Evaluation Steps | 1 | 1 | 1 | 2 |
Min. Trading Days | 10 | 15 | 10 | 15 |
Max. Lots | 3-30 | 3-25 | 3-15 | 5-15 |
Trailing Drawdown | $1.5k-$7.5k | $1.5k-$5.5k | $1.5k-$5.5k | $2k-$4.5k |
Profit Target | $1.5k-$20k | $1.5k-$15k | $1.75k-$9k | $3k-$9k |
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Also, make sure to be constantly profitable in a simulation account before entering a qualification challenge with a proprietary company. Have a sustainable trading plan and proper risk management in place.