What is Prop Trading?
Prop trading is trading under a proprietary firm using their capital. Prop firms operate on a commission-based system where payouts to you, the trader, depends on how much money you make in a given amount of time.
The best part? You are not risking any of your own money – other than your sign-up fees, depending on which prop firm you choose. For a lot of traders, this is the ideal situation – especially if you do not want to risk your small account any longer. Prop firms play a vital role in traders’ careers: by trading their capital, you not only get to trade with an increased amount of capital, but they take on all the risks too! A win-win.
The best piece of advice for traders considering joining a prop firm is to do your own research: read Trustpilot reviews, check out the firm’s socials, and read independent analyses (like ours!) of their accounts. You want to make sure you’re making the best decision you can!
Is getting funded legit?
Yes, getting funded is 100% legit. That’s the short answer. Alongside ‘What is prop trading?’, this question of legitimacy is a popular one. Rightfully so – at the end of the day, you want to ensure that your investment into any prop firm will not disappear quicker than NFP can wipe out your small account on a Friday.
Getting funded is 100% real and traders from all over the world are starting to join the community of becoming funded traders.
5 Reasons to Get Funded
1. Practically no risk
The best reason to consider signing up for a fully funded forex account – like BluFX, or The 5%ers – is that there’s no risk involved in trading. Prop firms take all the risk – other than your chance of losing your initial sign-up fee. Should you hit your maximum daily drawdown, you are safe.
2. Funds to trade
When you trade with a fully funded account, you are not risking a cent of your own capital. All the capital is kept in a fund that you are free to trade with. This is ideal for those too anxious to deal with the stress that comes along with trading their own capital.
3. Trade whenever you like
When you trade with a fully funded account, you decide which hours to work, especially because the forex market is open all week. No more 9-5. This is perfect for you if you’re disciplined and can establish a rigid schedule to work from.
4. Trade where you like
Things have become remote these days. As we transition into a digital age, our lifestyles adjust accordingly. This is one of the many benefits of prop trading: you can trade your funded account wherever you like. Are you a traveler? Perhaps you would like to visit Cape Town, South Africa? Or perhaps you just want to work at home? Well, you can do so! Simply trade and withdraw.
5. Get paid every month
Trading a funded account allows you a better chance at getting a higher pay compared to trading your personal account. Remember, each time you make a withdrawal on your personal account, the profits are coming out of your initial overall investment. But with a funded account, that is different: it does not affect your overall investment. Also, since you are not trading with your own capital, you need not worry about how many wins or losses you have.
What is prop trading – and is it right for me?
If you’re excited about the idea of becoming a funded prop trader, here is some advice to decide whether or not it’s right for you.
- Ensure consistency: If you want to make it as a long-term profitable funded forex trader, you need to prove consistent results. You do not want to be winning two trades only to lose it all on one greedy mistake. Keep consistent with your trading and follow your system. The more success you have, the bigger your funding will be. The bigger your funding, the more money you make.
- Read and the risk management guidelines: Guidelines are there for a reason, and even though at times they may frustrate you, they are there for a reason: to protect you from blowing your own account! Prevention is better than cure. Why put your funds in jeopardy?
- Backup plan: Many traders pass their challenges and evaluations the first time no problem, but eventually, the majority make mistakes along the way – before they’ve had a chance to reap any reward. Ever heard of beginners’ luck? It is best to set up a retainer to fall back on and make sure you have enough of your own personal funds to try again after you fail. Doing this will also remove any fear of losing your initial investment. After all, you have budgeted and accepted the risks involved.
- Remove the “Go Big or Go Home” mentality: If you have never dealt with large numbers, large lot sizes, large wins, large losses, and even large withdrawals, then you are not ready to “Go Big”. If you have enough to sign up for a $100,000 account, don’t. Instead, start with a smaller funded account – $10,000-$15,000 would be preferable. Starting on a large account can be detrimental to your psychology, and, in turn, will impact your trading outcome at some point along your journey.