What is a Funded Trading Account?

A Funded Trading Account is a financial arrangement where a trader is provided with capital from a funding firm or a proprietary trading company to trade in the financial markets. In this setup, the trader does not use their own money but rather trades on behalf of the firm, following its risk management guidelines. In return, the profits generated are usually shared between the trader and the firm according to a predetermined split. The primary advantage of a funded trading account is that it allows traders to access substantial capital, which can potentially lead to larger profits without risking personal funds. However, the trader must typically pass a qualifying evaluation to demonstrate their trading skills and discipline before being granted access to the account. This model is popular among traders who have the expertise but may lack the financial resources to trade at a higher level on their own.