Beginner’s Guide To Funded Accounts in Prop Trading

Richard Herman


Suppose you’re new to investing or prop trading. In that case, you may be getting overwhelmed with all the possibilities at the tips of your fingers, especially since others in your position have been able to make a life-changing sum of money. If you want to join those ranks, you’ll need to head into your newly funded account with a lot of education and background information, slowly working up the ranks to get to the goal you’ve set for yourself.

1-    Finding the right firm

Most beginners who find out about prop firms often have the same question: How do funded trading accounts work? The only way to get a true answer to this question is to find out for yourself, and the first step is finding the right firm to partner with, which means you’ll have to do a lot of your own research. You should keep an eye out for firms that are accessible to new traders and offer them favorable terms, whether it’s increased leverage, capital, or a better split in terms of profit sharing – 80-20 in your favor is a good metric to shoot for. Once you’re able to find the right firm, you can use the rest of your time and attention to make your time with that firm as beneficial as possible.

2-    Passing the challenge

If you’ve done your research about the biggest and best prop firms out there, you’ll know their entire business model depends on how good the traders they’re partnered with are. Prop firms have a meticulous process to filter out the best and most experienced traders out there before they’re trusted with funds and more resources, and if you want to join those ranks, you’ll have to pass the challenge. This challenge consists of a trial run where you’ll have access to virtual funds that you can use to invest in certain stocks, and if you’re able to hit a certain threshold or get a good return on your money, you’ll be trusted with actual funds, and get a funded account.

3-    Learn the rules

The rules of the game are incredibly important if you’re planning on staying with a prop firm in the long run since you’ll be able to make a lot of money both for yourself and for the company. There are controversial investing strategies out there, including investing in futures or shorting stocks, and, due to their inherent risk, many prop firms ban them outright, which means, if you’re caught doing one of these activities, you may get your account shut down. In addition, you will likely have a monthly limit on the funds you can invest or the shares you can get in a set time, usually on a monthly basis, and you should be aware of that before you begin your investment strategy, as beginners often overindulge in stock only to find out they have no more resources left for the rest of the month to carry out their full investing strategy.

4-    Develop a trading plan

Every great trader has a trading plan, and this plan applies not only to your funds but the individual stocks you’ve invested in. You should have an entry point for the stock you’re interested in, which is the value a stock hits before you’re ready to fully commit to investing in it, and an exit strategy, which consists of the exact value of the stock’s potential future valuation before you start liquidating your money.

Sticking to your plan consistently may result in some missed gains, but, crucially, you’ll make far fewer blunders, and all of your investments will generally be far safer, which means you can continue on your investing journey, making thousands of dollars for years to come.


If you’re a beginner and have just gotten your first funded account as part of a prop firm, you may be eager to explore the possibilities in front of you. However, like all other areas of investing, the money you’ve been given needs to be handled carefully, which is why, if you use the information in this article, you’ll be able to apply the basics, ranging from figuring out how to make your first investments to reducing risk as much as possible.

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