What is a funded account?
How Prop Firms Let You Trade Big Capital Without Using Your Own
Imagine walking into a casino where you don’t bring chips… but you still get to sit at the high-stakes table.
That’s the basic idea behind a funded trading account.
Except this isn’t gambling. It’s structured, rule-based trading through a proprietary firm that provides capital if you prove you can manage risk.
Let’s break it down clearly.
What Is a Funded Account?
A funded account is capital provided by a proprietary trading firm, often called a prop firm, that allows traders to trade with the firm’s money instead of their own.
You don’t deposit $50,000.
You pass an evaluation process.
Once you meet the firm’s criteria, you receive access to a simulated or live funded account where you can trade and keep a percentage of the profits.
One of the most well-known firms in this space is Apex Trader Funding, which offers evaluation accounts based on futures trading rules.
How It Works Step by Step
1. You Purchase an Evaluation
You pay a monthly fee for an evaluation account. This gives you access to a simulated trading environment with strict rules.
Example:
• $50,000 account size
• $3,000 profit target
• $2,500 trailing drawdown
• Daily loss limits
Your job is to hit the profit target without violating the rules.
2. You Trade Within Defined Risk Rules
You must follow:
• Profit target requirements
• Trailing drawdown thresholds
• Daily loss limits
• Position size caps
• Minimum trading days
This is not free-form trading. It is structured.
Most traders fail here not because of strategy, but because of poor risk management.
3. You Pass the Evaluation
If you reach the profit target while respecting the rules, you move into a funded phase.
This is often called a Performance Account or PA account.
Now you’re eligible to request payouts.
4. You Earn a Profit Split
Prop firms typically pay traders a percentage of profits, often between 80% and 90%.
Example:
If you make $5,000 in net profit and your split is 90%, you keep $4,500. The firm keeps $500.
The firm benefits because:
• Most traders fail evaluations
• Consistent traders generate revenue
• Evaluation fees cover operational risk
It’s a structured business model.
Why Do Prop Firms Offer This?
Prop firms make money from:
• Evaluation fees
• Reset fees
• Profit splits
• Trader volume
They are not charities. They are structured trading businesses.
Their goal is to identify disciplined traders who can generate steady returns within defined risk boundaries.
They are not looking for one big lucky trade.
They are looking for repeatable process.
The Key Rules That Matter Most
Funded accounts are less about prediction and more about protection.
Trailing Drawdown
This is the most misunderstood rule.
As your account balance increases, your maximum allowed loss threshold rises too. That means your cushion shrinks after big winning days.
Many traders fail after a large win because they increase size and give back too much.
Daily Loss Limits
You can only lose a certain amount per day.
This prevents emotional spirals.
It also forces position discipline.
Consistency Requirements
Some firms require:
• Minimum trading days
• No single oversized trade
• Balanced risk exposure
They want smooth equity curves, not lottery spikes.
Advantages of Funded Accounts
• Trade large capital without personal risk
• Limited personal downside to monthly fees
• Structured risk guardrails
• Scalable across multiple accounts
• High profit splits
For disciplined traders, this can be a powerful capital multiplier.
Risks and Realities
Let’s be honest.
Most traders fail evaluations.
Why?
• Over leveraging
• Revenge trading
• Inconsistent sizing
• Ignoring drawdown math
• Emotional decision making
Funded accounts magnify poor discipline just as fast as they magnify good systems.
They are a mirror.
Who Are Funded Accounts Best For?
Funded accounts are ideal for traders who:
• Have a defined strategy
• Understand risk management
• Can follow rules without emotion
• Prefer structure over freedom
• Want to scale without risking personal capital
They are not ideal for traders looking for instant income or “push button profits.”
The rules will expose that quickly.
Final Perspective
A funded account is not free money.
It is structured opportunity.
You trade someone else’s capital under strict risk constraints. If you perform within those constraints, you earn a share of the profits.
If you violate the rules, the account is closed.
Simple framework. High discipline required.
In funded trading, edge is important.
But survival inside the rules is everything.
