A Forex funded account is an account that is funded by a specific company or a broker but not by a trader themselves. This type of service is offered to verified traders because a broker must be sure the funded capital will in fact increase. In the end, the profit that the trader gets is split between two parties.
Pros of a Forex funded account
A funded account is beneficial in many ways.
Access to large sums of money. If you don’t have the capital to trade with you don’t need to save money and wait for when you have enough. With the funded account, you get access to as much money as you need for trading.
Large profits. The more money you have the more profit you can earn in the end. Let’s say there is $10,000 in your account. If you get 10% profit you earn $1,000 from the initial sum. If you have $1,000,000 in your account you make $100,000 with a 10% profit.
Yes, you would need to share, for example, 50% of the profit, so to say $50,000, with the service provider. But still, you will have an additional $50,000 for yourself.
Low risks. With a funded account you don’t need to invest your own money. So in the end you are only risking the money of a funded account provider. Because of that you experience less stress and can make more rational decisions when trading.
Cons of a Forex funded account
There are also some disadvantages to having a funded account as well.
A need to share profit. When you’re using a Forex funded account you can’t take all the money you’ve earned. You would need to share it with the owner of the account. The split depends on a certain broker and can be 50/50, 75/25, 80/20, etc.
A need to show results. The broker providing you with a funded account expects you to share your result to make sure you’re doing good with their money. So you need to regularly reach certain goals in order not to lose the account and keep service provider updated.
Limitations to the withdrawal of money. With a personal account, you can withdraw money anytime you want. With the funded one, you can do it only when the brokers allow it. Usually, it happens 1—2 times a month.
How to begin using a funded account
In general, it is a good idea to use a Forex funded account as it is a low-risk and convenient tool to earn money.
To start using a Forex funded account you would be required to pay a subscription fee of around $20 to $99 per month.
When you choose a funded account provider and the amount of money you would like to start with you’re not allowed to trade right away. You need to pass a special challenge that ensures you’re ready to perform as a trader. It requires you to achieve a set profit target over a set period of time, with minimum losses (usually no more than 10% loss of your initial balance).
It can be rather difficult to pass a challenge, especially if you don’t have a lot of experience. This is why our clients choose to use our software to make the process easier and successfully pass challenges.
When you prove you’re eligible you get full access to the given money and can finally start trading.