2-step process
- Evaluation: You go through a simulated trading challenge to prove that you can trade with consistency and proper risk control.
- Funded stage: Once passed, you get a funded account. It is also simulated but you can withdraw your winnings to your bank account.
How can prop firms afford to pay rewards for simulated trading?
- Profitable traders will be allowed to take a few payouts but then prop firms will move them to a live trading environment to earn a real profit split from their trading.
- Unprofitable traders will keep paying for challenges and resets, and frankly, the largest part of prop firms' profits comes from that.
For the whole concept of simulated funding to exist it's necessary for prop firms to stay profitable, that's why they will keep tweaking prices and rules.
Benefits for the trader
- You get big leverage with minimal risk and can scale beyond your wildest dreams.
- You operate in an inexpensive learning environment with real risk and real reward.
But
- You have to follow strict rules that don't exist in the live market. Daily drawdown limits, max loss thresholds, minimum trading days, etc.
- Fees add up: Each evaluation has a cost. Fail multiple times, and you run up a tidy sum, especially if you lose track.
- You need to watch your development, as cheap leverage creates bad habits.
Simulated funding attracts both novice and veteran traders for a very good reason. Stick to even the most conservative strategy, and you can achieve a 20x return on investment. Opt for a $50K funding account (the most popular choice) for around $100 and aim for a $2,000 payout.
Are you ready?