Why We Use Funded Trading accounts(Prop Firms Account)
Funded accounts are typically provided by proprietary trading firms (prop firms), where traders can trade with the firm’s capital after passing an evaluation. Some well-known prop firms include FTMO, Funded trader markets, and Topstep.
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Why We Use Funded Trading accounts
Funded trading accounts are used for several reasons, especially by traders who want to access larger capital without risking their own money. Here are some key reasons why traders use them:
1. Access to Larger Capital
- Many traders have the skills but lack the capital to trade big positions. Funded accounts give them access to significant amounts of money, often ranging from $5000 to $1,000,000.
2. Lower Personal Risk
- Instead of risking their own savings, traders use a prop firm’s capital. If they lose, they only lose their initial evaluation fee, not their own trading funds.
3. Profit Sharing
- Traders typically receive a profit split (e.g., 70-90%) from the profits they generate using the firm’s funds, making it a lucrative opportunity.
4. Structured Trading Environment
- Most prop firms have rules like daily loss limits and maximum drawdowns. These rules help traders stay disciplined and improve their trading psychology.
5. No Need for Personal Leverage
- Some traders might take loans or use high leverage in personal accounts to grow their capital. With a funded account, they don’t have to take such financial risks.
6. Opportunities for Growth
- Some firms increase account size or profit splits for consistently profitable traders, allowing them to scale their earnings.
