A trading account that executes trades against a simulated version of the real market, using live market data but without placing actual orders on the exchange. Most prop firm evaluation and funded accounts are simulated accounts, even though traders earn real payouts from their profits.
Why It Matters
- 1Understanding that most prop firm accounts are simulated is crucial for setting realistic expectations.
- 2Simulated accounts may show different fill prices, faster execution, and less slippage than real markets, a difference that can be small for swing traders but meaningful for scalpers and high-frequency strategies.
- 3This means your evaluation results might be marginally better than what you'd experience on a live exchange.
- 4However, reputable firms use high-quality simulations that closely mirror real market conditions.
- 5The simulated model allows firms to offer funded accounts at scale without needing to manage live market risk for each individual trader.
Example
- 1You place a market order to buy 5 NQ contracts on your simulated funded account.
- 2On the simulation, you get filled at 15,000.00 instantly.
- 3On a real exchange, the same order might fill at an average of 15,000.50 due to order book depth, costing you an extra $50 in slippage.
- 4Over hundreds of trades, this difference can add up to several hundred dollars.
Common Mistakes
- ✖Assuming simulated means fake — simulated accounts use real market data and generate real payouts
- ✖Expecting identical execution between simulated and live accounts
- ✖Not considering that some strategies work better in simulation than in live markets due to slippage