Trader understanding funded trading account rules
Funded Trading

Funded trading rules

Trading is an attractive career where you can make great sums of money.  There are many futures markets characterized by  easy access, fungibility, sufficient liquidity and continuous trading. Whichever financial journey you choose will depend on your profit targets and loss limit.

In this article, we followed a table of contents with the most important trading information about profits, options for funded traders, and the basic rules you should follow when trying this kind of account.

The financial world offers numerous opportunities for anyone who would like to maximize their gains by trading or investing assets. However, you have probably heard that trading requires big amounts of money and that it also involves high risk. So if you lose your funds because you didn’t invest quite right, you have to respond all by yourself using your personal account balance. 

Whoever said this to you is not mistaken. However, not all is lost. This is where funded trading and funded accounts come to save the day. In this article, we will explain what a funded trader is along with funded trading programs, and more general recommendations and information. 

Funded trading accounts – The future of trading

Funded trading accounts are the future of trading because your account balance will only increase. Here’s why: a funded trader uses a proprietary trading account. This means that he or she will use a company’s funds and trade on behalf of the company. 

So, your starting balance will be provided by the firm, as a trading partner, and the initial amount will depend on the funded accounts they offer and the one you sign up for. 

Registering for a funded account will make you part of the company’s team since both of you aim to increase the account balance and reach the final profit target.

Discover how funded trading accounts work!

How to get a funded trading account in just one step

If you want a funded trading account, it only takes one step and a few clicks to complete the subscription.  We will take you through the process. There might be many trading accounts available. In this case, you can choose the one that fits you best. They might offer different assets, loss limit, account balance, fees, and more. 

Please note you will have to fill in personal information such as your name, phone number, email, and payment method. It is possible that the platform will want to verify your information for which you’ll have to wait. 

Once that first step is taken let’s go to step 2. Before your live account is open you will have to go through an examination process, and trade for the company.  The company has its rights reserved to ask you to go through trading programs. Here you will have to trade on an examination platform that grants you access to real time quotes, but with paper money. This way, the company can see your results as a trader during a certain period of time.

It is only a one-time examination. After your evaluation process, you can access your products and start trading.

Teaming with your trading partners – Data provider, investor, and trading platform

When your account subscription has been verified you will be welcomed to the team as a trader. You will be connected to a data provider which will give you quotes from the financial markets. You will be able to access your assets through the trading platform. 

A trading platform can give you tools, risk management, and customizable interfaces to keep your weekly loss limit at bay, and maximize your gains. Some of the platforms can be used on your desktop or you can download them directly to your phone, tablet, or computer. It will depend on the traders’ preference.

As a trader, you will be able to speculate the market’s directions to open and close positions in hope of scoring with positive results. The idea is that you and the company benefit from your trading skills. 

Most platforms will also provide real time information about every trading rule you should comply with to maintain your funded account opened. 

The dashboard will keep your trading performance, show your results, how much profits have you achieved, and some other general information regarding the status of your account.

Read: Who can become a funded trader

Choose your account type

If you have more than one trading account type to choose from, it is important to look at the differences each of these has. Each account can have its own profit target that you must reach in a certain period of time. 

There will also be rules to follow like a weekly loss limit, a maximum position size, if you can or cannot hold positions, maximum loss, max drawdown, stop loss, and more. In short, you must follow rules to have a good overall performance at the end of the month. Another very important detail is the fees and commissions you must pay. There might be fixed commissions for managing your account, and there will always be a percentage taken from what you earn. However, you should try to find an account that takes a small number of your total trading earnings.

Tradable instruments

As a trader, you surely have certain strategies that work best for you along with tradable instruments you manage better. Because of this, it is essential to know which markets and securities you will have access to. This way, you can keep your weekly loss limit or daily loss under control to reach, and hopefully surpass, your profit target and trades. 

There are many investment products like CFDs, bonds, futures, cryptocurrencies, and more out there. Maybe you like Futures trading or you want to access commodities. It will all depend on your trading style. Choosing the right assets will help your overall performance.  

Managing your account balance

As a funded trader, you will be able to trade using someone else’s money accessing almost any asset like futures and other products. It is a great way to start your trading journey and explore your trading style. Whether you are forex trading or aiming for futures, it is important to manage your account balance. 

A funded account will expect your account balance and equity to increase. The account balance is made of your closed trades, while the equity is the balance plus-minus the still open trades. 

Please note that the expected growth amount will depend on the account size you started with. You might want to complement your strategy with trading and risk management tools like using stop loss orders. 

You can even use a scaling plan to maximize your performance, profiting from run-ups in the balance curve and limiting losses during a drawdown.

Do not reach your daily and weekly loss limit

A basic rule for a trader is to respect its weekly loss limit in the account

Your trading account is subject to a series of rules that protects the company from losing too many funds. If your funded account decreases too much, it is possible that they will just close it. 

The company will take into account the individuals’ daily loss limit which is how much your funded account can decline. The calculations include fees and commissions of any trade. 

The weekly loss limit is also taken into account and it is equivalent to the daily loss limit, but the performance of your trades is usually calculated in seven days.

Basic funded trading account rules

Each funded trading account has rules depending on the account size, and the knowledge the funded trader has. When your live account is verified it will be necessary to read the general information provided by the company. 

Rules are made to help you achieve the performance that is expected from your funded account. Some of these are that you might not be able to hold positions overnight. There will also be loss limits like daily loss limit, maximum loss, and weekly loss limit.

As a funded trader, if you do not comply with these rules or have a good performance, your live account may be closed. However, if the traders follow these rules it will help you with your profit target, and eventually when you get to draw out your profit withdrawal. 

Commissions, fees and profit sharing

It is important to read the rules about commissions and fees since they will have a direct effect on your final profit withdrawal. A funded account is available thanks to a proprietary trading firm that allows you to open a trading account and use their money. 

Another great thing about funded accounts is that not all funded traders have to pay for conversion fees. Many companies cover these which makes your final profit even bigger. 

Remember that checking every detail is key because there are some funding partners that do not have hidden fees. One of these is One Up Trader.

Knowledge is your best friend

The proprietary trading firm offers trading programs and a trading account, but under their rules since you will be using their money. This is why you have limits and a certain amount of maximum loss. You must also go through an evaluation process to see if you have any problems or you follow their content.

As a recommendation, knowledge will help you stick to the funded trading requirements, reach your profit target, and stay away from daily loss. You are expected to have a steady performance so that both you and the company can benefit from your results.

When you have the right trading information you can open positions that will allow you to stay away from risk and reach your profit target.

Many people like this idea of a profit share where you can lose nothing by trading with low risk and trade fully funded as many times as you want.

References and bibliography used in this article