Maybe you’ve heard of “funded” trading accounts before. But what is a funded account, and how does a funded account work? Our team answers these questions and more below. 

What Is a Funded Trading Account?

A funded trading account allows traders to simulate trades with someone else’s capital. In other words, you’re not using your own capital or money to complete trades. The account is “funded” for you.  

Usually, this means trading with a “prop firm”. But what is a prop firm, exactly? 

Well, think of prop firms as partners. They provide the simulated funding, the tools, and the resources you need. In exchange, you learn the art of day trading, and you split any profits you make.   

How Does a Funded Account Work? 

Most simulated funded accounts work in a similar way:  

• Prop firms assume the financial risk for the trades. As such, they do have some entrance criteria before they’ll give someone simulated funding.   
• Typically, this means the trader must complete at least one “challenge”. The challenge is a chance to show you can execute successful trades consistently. In other words, you’re showing that you didn’t make a profit by luck!  
• The challenge period ends. If you’ve shown that you’re a promising trader, you can keep a share of the simulated profits generated.  
• The firm will continue to support you and offer in-built risk management to help you along the way.  

Funded trading really is that simple!  

How Do You Get a Simulated Funded Account? 

It’s relatively easy to get a simulated funded account.  

• Choose a prop firm to start trading with.  
• Read and understand their rules.  
• Complete (at least) one virtual challenge to show you have a basic level of trading knowledge. 
• Await account verification (this shouldn’t take long, usually up to 72 hours).  
• Get notification that your simulated funded account is ready. 

Once you’re verified, you’re good to go! 

Advantages of Funded Trading Accounts

Simulated, funded trading accounts can be beneficial. Here are the main benefits of choosing funded trading platforms.  

• It’s a low-risk way to trade. You’re not risking your own assets. Instead, you’re learning the skills you need to make profitable moves in the marketplace.  
• Prop firms have rules, but there’s not a huge amount of regulatory oversight. Traders may be subject to some rules and regulations. But day trading offers more freedom than other types of trading activities. 
• There’s usually an in-built risk management strategy. You will develop an instinct for assessing risk – a key skill for any trader.  
• It’s simple to get started if you have trading skills. All you need to do is pass a challenge to show you’re ready to learn the ropes.  

Drawbacks of Funded Trading Accounts 

Funded trading, like any trading strategy, has downsides. Aspiring traders should be aware of these possible drawbacks before opening an account.  

• Unless you choose instant funding, you’ll need to pass a challenge to open an account. Not everyone can pass the challenge, which could make it harder to get started.  
• Prop firms require prop firm traders to share profits. Profit sharing is undesirable for some traders, whereas others see the benefit in the trade-off.  
• Simulated funded accounts have maximum capital allocations. Although this can still mean a large account size, some traders may prefer more freedom.   

Choosing a Funded Account 

Ready to choose a simulated funded account? Here’s what to look for in a prop firm.  

• Support: Prop firms should offer funded traders the support they need to thrive. Look for a simulated funded account from a firm with the resources to help you grow as a trader.  
• Payout Structure: The payout structure should be simple and easy to follow. Look for a quick withdrawal process and clear payout rules. 
• Account Resets: Even experienced traders need second chances sometimes. Choose a simulated funded account you can easily reset.  
• Deposit Requirements: Look for a simulated funded trading account with low deposit rates. Prop firms with low deposit requirements value working with great traders – even if they don’t have huge capital.   
• Tradeable Assets: Does the firm offer you the chance to access the markets you’re interested in? Choose a platform that gives you access to a wide range of markets e.g. Forex and indices.

Is Being a Funded Trader Right for You?

We’ve covered how to choose a funded account, and what prop firms offer. But is funded trading right for you? Here are some points to consider.  

• Funded trading is a low-risk trading strategy. Whether you’re new to day trading, or working on new skills, simulated funding can help.  
• Prop trading firms give traders support and guidance to help them along their way. If you’re looking for nurturing and development, funded trading could be the right choice.  
• If you don’t have much capital, funded trading gives you access to markets you might not explore otherwise. This allows you to build your skills and grow as a prop trader.  

Funded trading does, of course, have its pros and cons. However, for the right individual, it can be a highly enjoyable way to start day trading.  

Trade Without Risk | Simulated Funded Accounts at Maven Trading 

Want to start trading with simulated funding? Try our challenges and get funded. As a respected prop firm, Maven Trading offers traders the chance to hone their skills and unlock their potential.   

You’ll receive support, guidance, and access to the latest trading tools. And the best part is you don’t need any experience to start. We work with talented traders at every stage of their career! 

Try our challenges today – start your journey towards profitable day trading. Make your choice or contact us to learn more!