What is a Funded Trader

Many people dream of trading with substantial capital, but it often feels out of reach because they don’t personally have much capital to invest. That’s where funded trading comes in.

A funded trader trades with capital provided by a prop firm, instead of their personal funds. It’s like having a benefactor who believes in your trading skills and ability to hit profit targets.

Prop firms run funded trading programs, seeking the best traders to invest in and split the trading profits with. Profits are split based on pre-determined agreements, but traders usually keep the lion’s share. The standard split for the trader is 50% to 80%, while the prop firm keeps the remaining profit.

After the initial evaluation, prop firms still want to verify that your performance wasn’t a lucky event. You’ll be given another trading challenge, but within a shorter period and with relaxed rules than the initial evaluation stage. It’s the chance to prove that you’re an adept trader, not just a random lucky one.

Even when you have sufficient trading capital, funded trading lets you spread the risk instead of bearing it alone. Prop firms contribute capital to split the risks between you and them, and potentially make profits. This way, you won’t bear any trading losses entirely.

Prop firms unlock access to sophisticated trading tools that boost your trading effectiveness. You’ll have access to technical analysis tools that help you identify trends better. You can also work with the prop firm’s experts to help refine your trading strategies.

Funded trading platforms offer risk management features that help you trade responsibly and boost your chances of success. These features include daily loss thresholds, stop-loss limits, price alerts, and maximum position limits.

External capital puts traders under much pressure to meet profit targets. Hence, traders need to be emotionally mature to handle this pressure and avoid responding hastily to market swings. When markets act unpredictably, emotional reactions can affect decision-making and lead to even more losses.

Funded trading platforms have strict rules on assets and risk management, which is expected for a firm that gives you its capital to trade. These rules can limit your ability to pursue all your desired trading strategies, but it’s a tradeoff that comes with taking external capital.

Traders who don’t perform consistently usually have their accounts terminated by prop firms. The same applies to those who violate risk management rules. Account termination can be a disappointing experience for a professional trader.

Traders pay fees to begin the evaluation process and access capital. These fees can be forfeited if you don’t pass the trading test.

Your prop firm should have a positive reputation and track record amongst funded traders. Read reviews to see what other traders say about them. If reviews are overwhelmingly negative, it’s a signal to look at alternative trading platforms.

Confirm the prop firm’s payout structure and ensure you’re comfortable with it. For example, Hash Hedge gives traders 80% of profits and keeps the remaining 20%. This payout split is one of the best offered by a prop firm.

Consider which assets your prop trading platform supports. Prop trading platforms can support cryptocurrencies, forex, commodities, stocks, bonds, etc. Ensure your chosen platform supports the assets you’re most familiar with. For example, Hash Hedge supports over 200 cryptocurrency assets, ranging from mainstream coins like BTC to meme coins like DOGE.

Verify a prop firm’s rules and ensure you’re okay with them before proceeding. Failure to adhere to the firm’s rules can cause long-term problems, so you should be aware of these rules before taking their capital.

Consider the support resources made available by the prop firm. Ideally, the firm should have a dedicated customer support team you can contact with inquiries. Verify which resources and technologies they offer traders to boost their effectiveness.

Passing the evaluation starts with understanding the prop firm’s rules and expectations. Verify their risk management rules, profit targets, and other standards that traders are expected to adhere to. Prop trading platforms state these rules clearly before you begin the evaluation process.

Focus on making consistent profits instead of one-off wins. As a trader, not all your strategies will reap profits, but the idea is to achieve more wins than losses overall.

It’s better to deliver consistently than lose mostly and make one-off profits to offset these losses. Prop firms want traders to perform well in the long term, not just have short bursts of success.

You should have a clear trading strategy and avoid trading based on random intuition. You should be able to stick to your plan even when the markets behave negatively.

Overtrading tends to cause more losses in the long term, so avoid tweaking your trades each time the market becomes unfavourable. The market is naturally volatile– you should have the discipline and patience to ride through tough times, but also know when to abandon a strategy that isn’t yielding results.