Day trading futures market is extremely high-risk for everyone, especially for the new trader—many promotional materials touting big gains, easy money, and a quick learning curve. The truth is – it takes a lot of screen time, patience, and money to develop your consistent successful approach in trading. Almost every successful trader has blown out at least one and probably multiple trading accounts. Most futures traders who have tried trading would have had more money to their name if they had never touched their trading software.
Trading is exciting, addicting, and offers unlimited potential. Online brokerage accounts can be created, funded, and slinging 100x leverage within hours. How can a new trader join the trading world without exposing self to enormous risks and participating in live markets with the potential of earning money:
Funded Trader Programs
In short – you pay a fee, get near-instant access to live trading data, software, and a trader exam where you can get funding if successful.
Funded trader programs cover the weakness in the old theory that a trader should start sim trading before risking their own money in the markets. The problem with sim trading is that absolutely nothing is on the line. Traders can click buttons all day. Success – warm and fuzzy feelings. If failure – pick a new balance to start with, no consequence. If a trader gains confidence in a simulated environment, the jump to the live account is steep, no matter how disciplined, prepared, and confident you are. Mistakes and adverse events in high leverage futures markets can be hard for many traders to handle. Things spiral fast. Brokerage accounts bleed out money, confidence shattered. Some are fortunate to have enough money to redeposit into a brokerage account and figure things out. The reality is most traders look back at their first trading years when they blew up an account or few and wish they had the lost money to start with the knowledge they had after a few years. This is where funded trader programs come in.
Trader funding programs allow traders to access education, software, data, and unlimited earning opportunity for a fee and stress much lower than jumping right into live trading in their brokerage account. If you are an absolute rock star trader, you will only miss out on the first few thousand in profit you would otherwise have. You will reach the funded level in any trading test and have access to massive leverage to unlock profit potential. Can take funded program earnings with you anywhere you choose to go. Many times deals on the funded trader programs are so good, even fully capitalized traders can take a chance to leverage a small trading exam into a big drawdown account ripe for aggressive risk-taking in the markets.
Despite what some trader forums and program discussions might suggest – trader funding companies can not just give away live trading accounts to everyone with an email. These companies are for-profit businesses. Some of the rules are there to maximize the failure rate of the programs to collect the fees. Yes, you want to learn trading futures. Yes, you want mistakes and violating trading rules to have consequences. Yes, sometimes you don’t want to lose 15 days of progress because you held a position during a news event that caused no market reaction. However, not all funding programs are created equal, not all rules fit every trading style, and not all present the same value for aspiring traders.
Here at Funded Trader Info, we will look closely at all parts of funded trader programs, evaluate their parameters and respond to the harshest criticism of some.
Trader Funding Review
We are going to look at all the aspects of funded trader programs. Explain how we will quantify the value of each parameter for a trader. Point out spots where rules are more than likely a trap to fail out of the program rather than one to benefit the trader. Some criticisms will be harsh, but the opportunities to jump-start a trading career in the space are amazing.
Most Funded Trader Programs have pretty high numbers for Virtual account balance/Starting Account balance for trader funding programs. We will exclude that number from quantifying any program. The number is not relevant. The virtual balance figure represents the approximate $ balance a trader needs to hold an overnight position. Most funded trader programs are for day trading only. Day trading margins in low and medium volatility environments are relatively small. You should be able to trade the maximum contract amount in the account of roughly 1/10th the size of the advertised balance. No problem, it’s a marketing tool. The whole industry is in on it.
Maximum Position Size
It is quantified in contracts. Usually, these are much higher than the risk-conscious approach would require, but since it’s a major selling point. We will evaluate it in available contracts per dollar terms. This will help programs rank high in high leverage leaderboards but be a rather small factor overall.
How funded program gets downgraded: if going over the maximum allowed position size is a rule violation
How program gets a small upgrade: if trying to enter more orders than maximum allowed results in risk manager error and
Pro-tip: if trader funding offers great value to participate but has no risk manager protection, there are tools with data feed providers and trading software where you can set parameters to prevent from going over maximum position size. Better luck next time, trap setters.
Reasoning: markets are fast, DOMS is fast, hands are shaky, misclicks happen. Position sizing is very important for traders of all levels. Still, if a trader happens to commit a misclick, that shouldn’t be an account terminating mistake, especially ridiculous if it’s done in a profitable account or profitable position. A trader will learn quickly from taking on too much leverage and fail out of the funding program anyway. No misclick traps, please.
Position Sizing or Scaling Plan
Several very popular trading exams have position sizing requirements. Meaning traders can not use the maximum leverage allowed by the program until some profits are made.
Example: max six contract account
Scale: 0-1.5K 2 contracts, 1501 – 2000 4 contracts, 2001+ 6 contracts
It is very important to learn risk management for new traders. Sizing up is also very important. But perhaps it is a stretch, so say that an extra 500$ in profit gets extra four contacts of leverage.
How to get downvoted: much like the Maximum Position Size section, if a scaling plan violation results in termination of an account, it will downgrade an account. We are learning to position size together, buzz with the risk manager to remind of the importance of scaling, and do not terminate the account. It would be considered a trap.
Up-vote: small upvote due to the trader freedom, especially appreciated by experienced traders looking to push when in sync with the market.
Pro-tip: Scaling plans reset based on end-of-day balance. Allowed contract size does not change during the day. If you are afraid of being trapped out by pushing close to max leverage – figure out a way to set a local risk manager to prevent you from going over the limit.
Trading During the News Events
Trader funding and education programs can have rules that restrict the placement of trades around the news release time. News event reactions can be volatile during FOMC, NFP, or particular commodity-specific news.
Downvote: If a funded trader program has news rules, it will get downgraded. Let the trader suffer the demise of funded account potential from violent news price action.
Upgrade: Programs that do not have news rules will get more favorable rankings than the same drawdown/cost value.
Reasoning: there are valuable lessons to learn from trading the news, especially when an unprepared trader is hit by surprise. Wiping out trader funding opportunity because an account 40days in and 99% to a profit target had a tiny position on during news – does not please fundedtrader.info. Trading the news will teach traders to react quickly to unexpected market moves and operate their software in a fast-moving environment, especially when things go wrong. Learn and dial in operating your trading software, whether you are trading via dom, chart trader, or typing in manual orders. Having wrong stop market order can cause the market to jump over the stop and keep the position and stop order active. This is because they have stops stored on a local computer that might not submit the bracket fast enough to the data feed server. Having incredible news experience will teach traders much more about trading themselves and trading software than punishing them by taking away their funded dreams.
Pro-tip: look at the important news for the day/week ahead of time and trade accordingly, the heart is in the right place here for traders to learn about news trading, but the punishment does not fit the crime and takes away a funding opportunity.
Drawdown rules in Funded Trader Programs
Drawdown is THE defining parameter for all the trader funding programs. Drawdown/program cost ratio is a top factor in selecting the best available trader exam programs. The close second factor is the type of drawdown. There is sometimes a unicorn drawdown parameter: non-trailing. Currently, there are two prevalent types:
Live Trailing Drawdown: Drawdown trails up anytime balance, including open positions, reaches a new high.
Live trailing drawdown scenarios:
- Trader Max drawdown is $95,000. When a trader opens a position, P&L reaches +$100, live trailing drawdown trails up to $95,100.
- Trader Max drawdown is $95,000. Trader open position reaches P&L of +$1,500, trailing minimum account balance moves up $96,500. The position turns back down and stops the trader out at break even. Despite the trader ending the day at breakeven, because the balance high reached +$1,500, the trader has lost 1,500 in available drawdown.
EOD Trailing Drawdown: Account drawdown is only updated at the end of the trading day. The account remains in compliance and active as long as the open + closed P&L does not fall below the maximum allowed drawdown, no matter how much the intraday profit changes. For example, if intraday profit goes up 800 and down to break even, the drawdown does not trail since no new End Of Day level has been notched.
Unquestionably EOD drawdown is much more favorable to the trader than the live trailing drawdown. We have not even seen a funded trader program attempt to explain the benefits of a live trailing program as a positive or trader education tool. It is without a doubt detrimental to any trader achieving funding and a successful trading career.
However, live trailing drawdown programs almost always have more favorable rules, leverage, and especially cost. A higher failure rate allows programs to price these products at a very low price. We welcome the challenge of sorting out best values between differently priced programs with different drawdown types.
Downgrade: Programs with live drawdown AND high cost will rank very low as that would be the worst of both worlds.
Upgraded: EOD programs, priced better or about the price of live drawdown account, will rank very high without any other downgrades. During big SALES EOD, trading systems will be on top of the leaderboards.
Pro-Tip: Scalpers are benefitted the most in live trailing drawdown scenarios. Small quick gains minimize the chances of being punished with trailing up drawdown by letting position work more in the favor, but ultimately not working out.
Steps and Levels
Some programs require traders to complete multiple trading exams for Combines to qualify for funding. However, it doesn’t take dedicated prop trading space analysts to conclude that fewer steps are better than one.
Upvote: single evaluation stage for a trader to receive funding
Downvote: multiple evaluation stages to receive funding. The total profit goal will play a heavy role here. If multiple steps combine for-profit goals in line with single steps of the competition, it will not result in downvoting of the program.
All programs have a balance or profit level goal. Traders need to reach a certain level to advance to a funded trader stage. Besides the drawdown, this is one of the key metrics. The profit target/fee ratio will be heavy in the ranking weighting. Programs with a $4,000 target for $150 will be much less valuable than exams with a $3000 target for $120, assuming a similar drawdown type.
Days / Minimum Duration
Almost all trader exam funding operations have a minimum time requirement. Only days when at least one trade has been placed are counted toward evaluation. Competition and innovation in space have caused much lower times to achieve funding. We will, of course, offer sortable data by the quickest path to funding. Most programs do not have a maximum duration requirement, but you will likely have to pay a monthly fee to continue the program.
Upvote: quickest available path to funding
Downvote: having significantly more days to funding than accounts with the same cost and drawdown parameters
Learning trading takes time, and we welcome the ability to continue learning trading after receiving funding, especially in scenarios where a trader is just “counting days” to pass the time with profit goal achieved. The goal is to have something on the line every day while the trader development journey continues – whether it is a chance to get funded if profitable or the ability to make money.
Consistency in trader funding programs usually refers to traders spreading their profits where the biggest day is under a % of their total gains. For instance, if you are in a program with a $10k profit goal and 40% “consistency rule,” you are asked not to have the biggest winning day be more than $4000.
Uprating: no consistency rule
Down rating: consistency rule
It is important to reiterate that funded trader programs are amazing trader career kick-start platforms. It is also important to reiterate that these programs are for-profit businesses. Despite them trying to educate and allow traders the opportunity to receive funding, their core business is charging fees for a trading exam. More fees are generated from trading exams if a trader fails and pays either a reset fee or signs up for a trader program all over again. Funded trader programs also have to ensure they don’t give live trading accounts to traders who got pressed some buttons and qualified for funding. Consistency rule is one of the rules to safeguard the companies from handing overfunded accounts to traders who got lucky with a single trade. Pros:
- It is important to preserve profits. Being up a lot and giving back the gains is a very negative psychological experience for traders.
- Limiting profits. Educating traders on the importance of preserving profits are fantastic. Limiting the profit upside of a trader, is not it.
- It is very uncommon to have uniform daily gains. One good day can make a week or a month. In day trading, it is less rare, but one good trade can also make a year. You are asked to stop trading in funded trader programs when things are not going well. Daily and weekly drawdowns are a staple in funding programs. Markets do not always cooperate with the system. They often don’t, especially for very picky traders waiting for many conditions to align. When favorable market conditions come, it is time to trade and make money. Having educators punish you for making too much money is just not it. Sometimes ES futures have a 7 point range during RTH when opportunities are hard to fund. Sometimes there are news or volatility events when it makes sense to trade Sunday 6 pm through close to try to make months’ worth of profits in one session. Limiting the upside of the traders when they are aligned with the market is a terrible rule. We understand why you have to implement it. Still, we would appreciate more straightforward wording than telling a trader it’s for their benefit.
Trader Program Consistency
Introducing structure, especially for new traders, is a great feature of funded trader programs. One of the only cons of the funding industry is that sometimes it restricts traders from executing their strategy to fit within the rules. Participating in funded trader programs is worth sacrificing and modifying some execution strategy because leveraging a hundred bucks into a trading career is all too lucrative. For trading program review and ranking sake, trader freedom will be considered very important.
Now that we both agree that structure and rules are important, we must place a very high value on funded trader programs that encourage the same structure. So again, yes, traders will leverage the opportunity to enter the trading world for a small. But if a program preaches trader discipline and consistency while having new rules for all stages of funding exam and live account, it will be a major downgrade.
Features that result in a higher rating for funded trader programs:
- Rules and parameters are not likely to restrict traders.
- Fewer rules. While many rules are useful in learning about day trading markets, trader freedom is prioritized here.
Cons during Funded trader program review process for consistency:
- Rules that benefit the funded trader program under the guise of teaching something
- Different rules for different steps. Are we learning a consistent approach to trading, or are we not?
Transparency in trading exams and live trading
We have a team of traders who have had hundreds of funded trader accounts across the industry, have interacted with support, got funded, and made many withdrawals. Their feedback is essential in exposing some undesirable practices. This is how we learned about the cons and surprises of some of the less transparent programs.
Programs that receive higher ratings:
- Rules are clearly stated
- Funded / Live money account transparency. Live trading account parameters are listed on the site.
- Fees for all steps are listed on the funded trader site.
Funded trader program ratings will be downgraded for the following:
- Surprise fees – if a program charge fees not listed on the site.
- Live account surprises – no live account rules are listed on the site, and they are drastically different from the trading exam rules. We favor programs that continue building on the discipline built during the trader exam stage.
Trading company transparency
We will avoid promoting unknown companies without any business registration or contact information. While there have not been any major companies that have hurt traders, several scam operations have been around, costing traders some fees and disappearing without funding.
Verifying company-provided information and paying out trader live accounts profits fast will be key to receiving top ratings.
Unique trading exam industry features
Thanks to the competition, the traditional funding space has taken off recently and has greatly improved in favor of traders. Many programs are very similar, even exact copies in some cases. Some unique features and innovations around the industry that might benefit the ranking of a program:
- Refund – certain programs offer exam fee refunds upon reaching a certain milestone. Frequently that milestone is achieving a live trading stage. Very impressive for some programs to offer the opportunity to learn and get funded for no cost
- Diversity in products – some programs offer more products than others. There aren’t many ways to get funding for trading the coins during the crypto craze. So if a program offers such an opportunity, a higher rating will be assigned.
- Further opportunity – some funding exam programs are operating everything on their own. Some have funding partners, some are partnered or are trading firms. Prop trading firms may offer traders further career opportunities. It will be a huge benefit for trading company rating if they
- Ability to reset live accounts. There are several programs where if you fail in the real money trading environment, you can restart by paying a fee and getting another right away – which can result in massive time savings vs. programs that do not have such features.
A funded trader program company that offers educational material will get a favorable rating boost. In addition, a new trader will benefit from an educational material bundle, structured lessons, and funding opportunities.
Funded trader programs have great partnerships across the software industry. They give software companies exposure and potential future live trading account customers in exchange for pricing deals. Frequently software and data included along with a funding opportunity cost less than buying software and data from vendors. If you are looking to try out some software, why not do it while also having a chance to receive funding. Programs that offer great bundles will get a rating boost.
One of the greatest things about trading as a career is that very few moving pieces and interactions are needed to start and operate. However, it can also be very lonely. Interacting with like-minded people about trading is a great feature of some of the funded trader programs. We have lists of companies that are more social. Having trader chats, forums and boards will result in higher ratings.
We will monitor the trader funding industry to update you on best value programs. Trader funding is an amazing opportunity to kick start a professional trading career for a small fee and with much lower risk than funding your online brokerage account. Even better when done with the program that fits your trading style.