Are funded trader programs a scam or safe?
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Trading one's own capital comes with substantial risks, as all experienced traders understand well. However, for those seeking to hone their skills without risking personal funds, funded trading programs can provide an intriguing opportunity. Through such arrangements, prop firms offer capital to traders while taking a share of any profits generated. Unsurprisingly, uncertainties persist around the legitimacy and reliability of these programs. With claims of six-figure earnings circulating widely, discerning fact from fiction is difficult for prospective traders. This comprehensive analysis aims to separate reality from potential puffery. By examining the operational structures, conditions, and performance statistics of several prominent funded trading firms, readers can form a clear understanding of both upsides and downsides. Our assessment addresses pressing questions around the actual validity and viability of these programs.
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How much capital do funded programs provide?
Programs typically provide between $25,000 to $4 million in initial trading capital, growing as traders reach profit targets and scale up.
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Do funded programs provide training and education?
Many top programs offer extensive training resources like courses, webinars, risk management guidelines and mentoring to help traders improve.
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How long does funding last once approved?
Most programs don't place a time limit, allowing traders to keep funded accounts indefinitely by meeting ongoing performance requirements.
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How does scaling up to larger account sizes work?
After initial approval, meeting consistent monthly/quarterly profit targets allows the account size to be gradually increased as per the program's unique scaling tiers and rules.
What are funded trader programs?
Funded trader programs offer a unique opportunity for traders to engage in Forex trading using the capital provided by funded Forex companies, thereby eliminating the need to risk their own personal finances. In such arrangements, traders enter into a profit-sharing partnership with these companies, which are often referred to as "prop firms" (short for "proprietary trading firm"). While the specific terms of these partnerships may vary, traders can potentially retain up to 90% of the profits generated in their funded Forex trading accounts.
To secure a funded Forex account, traders must first demonstrate their proficiency in Forex trading. This entails undergoing an evaluation process according to criteria established by the prop firm. Upon successfully meeting the requirements, traders become eligible to receive funding from the firm's capital for their trading activities.
Are funded trading programs legit?
Funded trading programs have generated considerable interest and skepticism within the trading community. It is important to note that the funded trading business model itself is legitimate, and it is indeed possible for traders to receive significant amounts of capital to trade. Nevertheless, some companies operating in this space may prioritize generating revenue through customer fees rather than focusing on the success and development of their funded traders. As such, a careful evaluation of each funded trading program is essential in order to discern the truly beneficial opportunities from those that may not prioritize the best interests of the traders involved.
What is The Best Proprietary Trading Firm for a Funded Trader?Best funded trading program in 2024
Based on a careful evaluation of important factors, the experts have shortlisted the following funded trading program as the best in 2023:
Topstep
Topstep offers a two-step evaluation process, with a monthly non-refundable fee of $165 for a $50,000 initial balance. There is no time limit to reach the 6% profit target. The platform emphasizes risk management, as loss limits are low. With a Pro account, you keep the first $10,000 of profits, and afterward, you retain 80% of the earnings. However, Topstep only allows futures trading for assets listed on the Chicago Mercantile Exchange. The scaling plan is unique, as the daily balance determines the number of lots you can trade the next day. Topstep is known for excellent customer service and educational resources.
Earn2Trade
Earn2Trade is another trading platform that enables users to trade CME Futures Assets, such as Micro futures contracts. However, the platform does not allow for Forex and cryptocurrency futures trading. To become a funded trader, one must undergo the Trader Career Path evaluation, which costs a non-refundable monthly fee of $150 and offers a $25,000 demo account. If the trader meets the requirements, the subscription fee ends, and they retain 80% of the profits. Once the user becomes a funded trader, there is no minimum trading period. The scaling plan and Progression Ladder determine the quantities that can be traded simultaneously. Earn2Trade offers numerous resources, including webinar courses, mentorship programs, and responsive customer support via email, phone, or live chat 24/7.
The5%ers
The5%ers platform offers two plans - a low-risk and an aggressive plan to start with. If the user reaches the profit targets of 6% for low-risk or 12% for aggressive plans, their balances increase fourfold. The payout split is 50%, and the profit targets for scaling are set at 10% for low-risk and 25% for aggressive plans. This platform has a maximum funding limit of $4 million. Another option offered is the boot camp model, with a non-refundable €85 fee for the challenge and €215 for funding. The funded trading programs allow for the use of any algorithms, news event trading, and holding trades over the weekend or overnight.
Pros and cons of funded trader programs
Funded trader programs present a distinct set of advantages and disadvantages that are worth considering for individuals interested in pursuing this path. The following points outline some of the most significant aspects of these programs.
👍 Pros
•Abundant capital access: Funded trader programs provide traders with a considerable amount of capital, allowing them to take advantage of larger trading opportunities.
•Evaluation periods of varying duration: These programs offer short to intermediate-term assessment periods, accommodating traders with different experience levels and goals.
•Support for trader growth and consistency: Built-in risk management features in the programs assist traders in maintaining stability and fostering their development.
•No financial risk for the trader: The program bears the financial risks, ensuring that the trader is not exposed to potential losses.
👎 Cons
•Challenging profit targets and risk parameters: The programs may impose demanding objectives and limitations, which could be difficult for some traders to achieve or adhere to.
•Dependence on market conditions: Trading performance can be heavily influenced by market fluctuations, and slow periods may negatively impact results.
•Reduced profits compared to private accounts: The profit-sharing arrangement in funded trader programs can result in traders earning less than they would in their own private accounts.
How to find the best funding program for you?
When selecting a prop trading account, numerous factors must be weighed carefully. According to the experts at TU, the following key aspects should be considered to ensure the best possible fit for your trading needs:
Profit distribution: Examine the profit-sharing arrangement and the percentage of profits allocated to the trader. Opt for a firm that provides a higher profit split or a more advantageous profit-sharing structure.
Assessment procedure: Pay attention to the evaluation process that determines a trader's eligibility for funding from the prop firm. Select a firm that employs a transparent and equitable evaluation system.
Market options: Assess the range of markets that the firm provides access to. It is advisable to choose a firm that either specializes in the markets you are particularly interested in or presents a broad selection of markets.
Leverage availability: Investigate the level of leverage offered by the firm. It is essential to select a firm that provides a suitable degree of leverage in line with your trading preferences.
Quality of customer support: Effective customer support is indispensable for any trader. Opt for a firm that delivers prompt and reliable customer service to address any inquiries or concerns that may surface.
Dependable trading platform: A trustworthy trading platform is vital for executing trades efficiently. Choose a firm that furnishes a stable, user-friendly platform equipped with a diverse array of tools and features to enhance your trading experience.
What to expect when you start working with a funding program
When embarking on a journey with a funded trading program, there are several notable aspects to expect, which can set it apart from traditional trading methods. These points are outlined below:
Monthly earnings: With a fully funded trading account, traders are paid every month based on their market performance. Since they are not trading with their own capital, they can focus solely on making successful trades without worrying about personal financial losses.
Flexible trading hours: Funded trading programs offer the freedom to set one's own working hours. As the Forex market operates continuously, traders can choose a schedule that best suits their personal preferences and lifestyle.
Global trading opportunities: Funded trading programs, such as proprietary trading funds, allow traders to trade from any location worldwide, irrespective of local Forex trading regulations.
Access to trading capital: Funded trading programs eliminate the need to invest personal capital, providing traders with the funds necessary for trading. As profits are generated, traders can also benefit from a unique growth scheme, allowing them to scale up their managed capital more rapidly than with self-funded or client-funded accounts.
Prop Trading Accounts ComparedGlossary for novice traders
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Broker
A broker is a legal entity or individual that performs as an intermediary when making trades in the financial markets. Private investors cannot trade without a broker, since only brokers can execute trades on the exchanges.
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Trading
Trading involves the act of buying and selling financial assets like stocks, currencies, or commodities with the intention of profiting from market price fluctuations. Traders employ various strategies, analysis techniques, and risk management practices to make informed decisions and optimize their chances of success in the financial markets.
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Leverage
Forex leverage is a tool enabling traders to control larger positions with a relatively small amount of capital, amplifying potential profits and losses based on the chosen leverage ratio.
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Forex Trading
Forex trading, short for foreign exchange trading, is the practice of buying and selling currencies in the global foreign exchange market with the aim of profiting from fluctuations in exchange rates. Traders speculate on whether one currency will rise or fall in value relative to another currency and make trading decisions accordingly.
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Risk Management
Risk management is a risk management model that involves controlling potential losses while maximizing profits. The main risk management tools are stop loss, take profit, calculation of position volume taking into account leverage and pip value.
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Team that worked on the article
Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data. He is also an educator in the field of finance and technology.
As an author for Traders Union, he contributes his deep analytical insights on various topics, taking into account various aspects.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.