Starting out as a Funded trader can seem like a lot of work and too difficult. However, the experts at Howtotrade.com say that becoming a prop trader is now easier and cheaper than ever.
Before entering a trading firm, a prop trader should be aware of the following:
Opportunity to scale
After initial evaluation, funded trader will receive up to $50,000 in seed capital. There should be a system that allows traders to access more capital to expand their account size if they are consistently making profits.
It is rare to find a trading company that offers monthly income, but some do. The aim of the offer is to support the basic needs of the merchant while allowing him to focus on his business success.
If you want a basic salary, it’s a good idea to apply for big business companies. However, this may impact the profit agreement you have with the company and require you to work from a physical location rather than remotely.
Platform credibility and reputation
Take the time to find a trading company that has a good reputation with other traders. Check reviews on sites like Trustpilot and read the terms and conditions before applying.
Solo vs Funded Trading
There are several differences between solo and funded trading:
1. Freedom to Trade
Sole traders are completely self-sufficient. They are in charge of creating their strategy, doing their own research and managing their trading account as a whole. Sole traders are only required to comply with the company’s general trading rules and regulations.
Fund traders are required to account for the business they are trading for. Since they do not trade with their own money, they are required to follow a number of rules and regulations. Account payment policies, business practices and risk management procedures will be described in these rules. Terms may be changed from time to time at the discretion of the Company.
Even after you become a funded trader, it is best to familiarize yourself with the terms and conditions of the company regarding the funded account. If you are a new trader, reach out to other funded traders using the platform to learn what to expect from them. When considering a prop company, read the fine print to see if it fits your business strategy and profit goal.
2. Access to Funds
Sole traders usually only have access to their seed capital and may struggle to secure additional capital, especially in the beginning. Their trading strategy and the amount of profit they can make can be affected by their capital limit. However, sole traders can use the leverage of a broker to increase their position in the market as they gain experience and success.
Because they get all the capital they require, traders in funded trading do not have to worry about putting their own money at risk. You can experience exponential growth at a level you might not be able to achieve if you trade with your own account because you have the capital available. You will earn much more money and your experience will grow with it.
3. Easy application
The process of becoming a sole proprietor is relatively simple and quick. Before you can start trading, you will need to enter some personal information into your account. Nowadays, it is easy to become a professional trader thanks to numerous trading platforms that offer these services to traders. However, getting a funded account requires completing a number of steps.
To apply for a funded trading program, a trader must fill out a form. You will usually be asked about your education, business experience and background. In order to discuss your preferred market, skills and business strategy, some would ask you to attend an interview.
Traders will have to pass an assessment test and demonstrate their ability to earn money after an interview. A trader will work within a predetermined set of guidelines. For example, a trader may be required to make a 15% profit in 20 days.
The trader will get a funded account and will be able to start trading if the challenge is successfully completed. However, it is not possible to get there. If you have a funded account, you are not alone in this process as the company can provide training to help you create profitable trades.
4. Profits and Monthly Fee:
When trading solo, you don’t have to pay any profits to the trading firm, but you have to pay a commission for every trade you make. However, since traders use their capital, most property trading firms will charge a monthly fee for the service.
The monthly fee varies by company, and some may require a one-time fee of up to $1,000 to open a funded account. In addition, the trader and the trading platform will split the profits.
Although most traders look for a higher profit percentage before applying for a fund account, there are some cases where the company will offer a higher profit percentage to the trader. Usually the split is 50/50.
When you trade with your own money, you take all the risk in case of loss. Since many traders have lost their capital due to market volatility, it is essential that traders have some previous experience before trading full time.
If you want to increase your position in the market with a small account, becoming a fund trader may be the best option. Solo trading can be your most profitable option if you want to be in complete control of your profits and trading activities and have the self-discipline to learn on your own. It’s important to take your time when deciding which path is best for you, as it all depends on your goals and financial resources.