What Is a Funded Account and How to Get One

A funded account has become one of the most talked-about concepts in modern trading—especially among retail traders looking to scale their capital without taking on significant personal financial risk. While the idea sounds almost too good to be true (“trade someone else’s money and keep the majority of the profits”), funded accounts are a legitimate and rapidly expanding segment of the proprietary trading (“prop”) industry.

This guide explains what a funded account is, how it works, the steps required to get one, the evaluation process, common pitfalls, realistic expectations, and practical tips for success. Whether you’re a day trader wanting to grow your capital or a beginner exploring the concept, this breakdown will help you understand the full picture.

What Is a Funded Trading Account?

A funded trading account is a trading account provided by a proprietary trading firm (prop firm), where the trader is allowed to trade the firm’s capital after passing an evaluation or proving consistent performance. The trader keeps a portion of the profits (often between 70–90%), while the firm takes the rest as compensation for the risk.

Unlike traditional brokers where you deposit your own funds a funded account lets you trade with company money.

Example:
If a prop firm gives you a $100,000 funded account with an 80% profit split, and you make $5,000 in profit that month, you keep $4,000, while the firm keeps $1,000.

How Funded Accounts Work

Funded accounts are built around performance evaluations. Before receiving real capital, traders typically complete a challenge (sometimes one or two phases) designed to test discipline, money management, and strategy consistency.

Here’s the general structure:

1. You Pay for an Evaluation

Most firms charge a one-time fee to enter an evaluation. This covers administrative costs and discourages reckless behavior.

2. You Trade a Demo Account

You trade virtual funds but follow all rules as if they were real. This step tests whether you can trade responsibly.

3. You Must Hit a Profit Target

For example, a 10% profit target on a $50,000 account means earning $5,000 during evaluation.

4. You Must Respect Trading Rules

This includes:

• Daily loss limits
• Maximum overall drawdown
• Forbidden trading behaviors
• Maximum position sizes
• Weekend or news restrictions (varies by firm)

Breaking rules = failing the challenge.

5. If You Pass, You Receive a Funded Account

This account may be real or still simulated, depending on the firm’s structure. You now earn a share of any profits.

6. You Get Paid

Firms typically pay traders weekly, biweekly, or monthly.

Why Traders Use Funded Accounts

Funded accounts are attractive because they:

1. Reduce Personal Financial Risk

Instead of risking $25k of your own money, you might spend $200–$600 for an evaluation.

2. Offer Much Larger Buying Power

A trader with $2,000 might only manage micro-lots. A funded account, however, might give you $50,000 to $200,000, unlocking more opportunity.

3. Provide a Professional Trading Environment

Rules mimic institutional risk management.

4. Allow for Faster Scaling

Some firms offer account scaling programs—doubling the account size for consistent profitability.

5. Remove Emotional Pressure

Trading someone else’s capital reduces fear and overattachment—though this varies by personality.

Types of Funded Accounts

Prop firms offer several models. The two most common are:

1. Evaluation Accounts

The standard model.

Features:

• One or two evaluation phases
• Profit target (usually 8–10%)
• Daily/overall drawdown limits
• Low initial cost
• Larger profit splits (up to 90%)

Best for: Traders confident in their system who want the cheapest entry.

2. Instant Funding Accounts

More expensive, but no evaluation phases.

Features:

• You start funded immediately
• Lower leverage
• Lower profit splits
• Higher cost and tougher risk rules

Best for: Experienced traders with strong discipline who prefer to skip challenges.

How to Get a Funded Account: Step-by-Step Guide

Let’s break down the exact path traders follow to earn a funded account.

Step 1: Choose a Reputable Prop Firm

Not all prop firms operate equally. Some are well-established, while others rely on challenge fees more than actual trading performance.

Look for:

• Clear and fair rules
• Verified trader payouts
• Strong community reputation
• Transparent scaling plans
• Healthy risk-management policies
• Reasonable drawdown structure

Examples of attributes of a credible firm:
They don’t promise guaranteed profits, avoid “too good to be true” offers, and maintain sustainable risk rules.

Step 2: Pick the Right Account Size

Common account sizes include:

• $10k
• $25k
• $50k
• $100k
• $200k
• $400k

New traders shouldn’t jump straight into a $200k challenge unless they have a proven track record. A $50k or $100k account tends to offer balance between cost and opportunity.

Step 3: Understand the Rules Clearly

This is where many traders fail. Each firm sets rules for:

• Profit target
• Maximum drawdown
• Daily loss limit
• Leverage limits
• News trading policy
• Weekend holding policy
• Consistency requirements

Take time to study them. Write them down. Set alerts.

A funded account is not about gambling—it’s about discipline.

Step 4: Complete the Evaluation

This is where you must demonstrate consistency.

Tips for Passing the Evaluation:

• Use lower risk than usual.
  Most traders fail because they try to rush.
• Treat the challenge like a marathon.
  You have no incentive to trade aggressively—unless the firm pressures you with time limits.
• Avoid overtrading.
  Stick to your plan. Passing requires discipline more than skill.
• Focus on survival first.
  Let profits accumulate naturally.
• Do not chase the profit target.
  A trader who hits 2% weekly will reach 10% in five weeks with low stress.

Step 5: Receive Your Funded Account

Once you pass, the firm assigns you a funded account with real or simulated capital. You now trade under live conditions but still must follow the rules.

Step 6: Earn Profits and Get Paid

Firms typically allow:

• Biweekly withdrawals
• Monthly withdrawals
• Profit splits of 70–90%

Some offer increases in profit splits as you build experience.

Example:
A trader earns $6,000. With an 80/20 split, the trader receives $4,800.

Step 7: Scale the Account (Optional)

If you remain consistent, some firms double your capital every few months.

Scaling benefits those who trade conservatively and don’t rely on high leverage.

Key Rules and Metrics of Funded Accounts

Funded accounts revolve around rules. Breaking them often cancels your account. Here are the most important metrics and what they mean practically.

1. Drawdown

Maximum drawdown is the total amount you can lose from your account’s peak balance before failing.

Example:
If your max drawdown is 10% on a $100k account, the maximum loss allowed is $10,000.

Relative vs. Static Drawdown

• Relative Drawdown: Moves with your equity. Harder but more realistic.
• Static Drawdown: Does not move. Allows more freedom after you lock in profit.

2. Daily Loss Limit

A common rule:
3–5% max loss per day.

This prevents reckless trading.

3. Profit Target

Most prop firms require 8–10% during evaluation. Some require less in a 2-step challenge.

These targets test your ability to generate profit without extreme risk.

4. Leverage

Forex-funded accounts often offer 1:50 to 1:100 leverage. Indices and crypto may vary.

Leverage allows opportunity but magnifies risk; traders must use it carefully.

5. Consistency Rules

Some firms require:

• Uniform lot sizing
• No single-day profit exceeding X% of total
• No oversized positions

These rules prevent traders from gambling to pass evaluations.

Common Reasons Traders Fail Funded Account Evaluations

Even good traders often fail evaluations due to avoidable mistakes.

1. Overtrading

The excitement of a challenge pushes traders to take more trades than necessary.

2. Oversized Positions

Trying to hit the target quickly leads to blown accounts.

3. Lack of Strategy

A challenge exposes whether you have a real edge. Random trading rarely works.

4. Emotional Decisions

Chasing losses, revenge trading, and impatience kill more accounts than bad strategies.

5. Ignoring the Rules

News restrictions, holding rules, and drawdown mismanagement often ruin promising challenges.

How Much Does It Cost to Get a Funded Account?

Costs vary depending on account size and firm reputation.

Approximate evaluation fees:

• $25,000 account: $150–$200
• $50,000 account: $250–$350
• $100,000 account: $450–$600
• $200,000 account: $900–$1,100

Instant funding options often cost 3–5× more.

While the upfront cost may seem high, it’s typically far less than funding a personal margin account.

Are Funded Trading Accounts Legit?

Yes—when you work with reputable firms. Established prop firms pay out profits regularly and operate sustainable business models.

However, the industry has seen:

• Short-lived firms
• Poorly structured risk models
• Bad actors who delay or deny payouts

Always conduct due diligence:

• Look for real trader reviews
• Verify company registration
• Read all rules clearly
• Avoid firms promising “guaranteed profits”
• Be cautious with firms offering unrealistic leverage

Advantages of Funded Accounts

1. Access to Large Capital

Trade $100k+ without risking personal funds.

2. Risk is Limited to the Fee

The evaluation fee is often the only risk.

3. Profit Potential

Earning $2k–$10k per month becomes possible even for traders with small personal budgets.

4. Professional Discipline

Rules force traders to develop better habits.

5. Scalable Career Path

Consistent traders can scale to six-figure accounts.

Disadvantages of Funded Accounts

1. Strict Rules

Some traders find the rules restrictive.

2. Drawdowns Can Be Unforgiving

Large leverage with a small drawdown buffer can be stressful.

3. Evaluation Pressure

Trading under challenge conditions is not the same as normal trading.

4. Payout Delays (Firm-dependent)

Not all prop firms process payouts quickly.

Is Getting a Funded Account Worth It?

For many traders, yes.

A funded account:

• Reduces personal financial exposure
• Gives access to institutional-level capital
• Offers a structured, disciplined trading environment

However, funded accounts are not magic. A trader without a strategy will fail just as quickly with a funded account as with a personal account.

Practical Tips for Passing a Prop Firm Evaluation

These tips come directly from successful prop traders:

1. Risk Small—Way Smaller Than You Think

Use 0.25–0.5% per trade. Slow and steady wins the evaluation.

2. Trade Only Your A-Setups

Passing is not about high frequency—it’s about high quality.

3. Use a Hard Daily Drawdown Alert

Set alerts through your platform or trading checklist.

4. Don’t Trade During Emotional Days

If you’re tired, angry, or rushed, skip the session.

5. Avoid High-Impact News

Unless the firm explicitly allows it, stay out of volatile events.

6. Don’t Rush to Hit the Target

Prop firms don’t reward speed—they reward discipline.

Key Takeaways

• A funded account lets you trade a prop firm’s capital and keep a share of profits.
• To get funded, you usually pass an evaluation requiring profit targets and strict risk rules.
• The main benefits are low personal risk, large capital, and professional structure.
• Success depends heavily on discipline, risk management, and strategy consistency.
• Choose reputable firms, understand all rules, and trade conservatively to increase your chances of passing.

A funded account is not an easy shortcut—but for disciplined traders, it’s one of the most accessible ways to build a trading career.

FAQ

1. Is a funded trading account real money?

Yes. While evaluations use demo accounts, funded accounts typically represent real or performance-based capital managed by the prop firm.

2. Can beginners get a funded account?

Yes, but it’s challenging. Beginners should master risk management and a consistent strategy before attempting a challenge.

3. How long does it take to get funded?

Depending on the firm and your progress, it may take anywhere from a few days to several weeks.

4. Are funded accounts profitable?

They can be very profitable if you trade with discipline. Profit splits can reach 80–90% for successful traders.

5. Can a funded account be taken away?

Yes. Breaking rules—especially hitting drawdown limits—can result in losing the account.