The financial world is a buzz with a new challenge revolutionizing the industry: funded accounts. Many brokers are launching contests rewarded with the chance to trade with up to a quarter of a million dollars – risk-free. If this sounds too good to be true, read on. The funded account challenge is a unique opportunity to demonstrate your trading abilities for some serious rewards. Traders who pass the contest can begin to trade with accounts funded with up to $200K. The broker assumes the risk, the trader takes home the majority of the profits.
The beauty of the funded account challenge is that the difficulty is tiered and the entry fees are balanced accordingly. Traders can choose between accounts of $10,000; $25,000; $50,000; $100,000; and $200,000. The entry fees vary according to the account size, starting at $99. Even the highest entry fee ($999) is fully refundable once you pass the challenge. Essentially, for less than a hundred dollars you can begin trading with thousands in your account. Moreover, successful traders are rewarded with a bonus of $1000 once they move to the second stage (verification). Alongside the funded accounts another boon to passing the challenge is that traders can analyze the results and optimize their strategies thanks to the tracking dashboard.
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Traders who perform well in the funded account challenge display the same qualities and metrics as those who succeed well in all trading conditions. That said, while consistent profits are the overall aim and the funded challenge is the long-term game, traders may want to adapt their strategies to suit the challenge in question. There will be a minimum profit target and maximum loss percentage over a predefined number of days. The FAC trading requirements stipulate a 10% profit in 30 days, with a minimum of 10 trading days, a maximum overall loss of 12%, and no more than 5% loss daily.
Some traders may discern a subtle difference in their approaches when placing their own money in the markets to that when they are trading with an account funded by a broker. Nonetheless, traders put up the initial seed money (entry fee) and it is undeniably in their interest to keep their strategy consistent and hit those profit targets. The key attributes to passing the FAC are essentially those with which traders should always arm themselves within the markets: emotional control, risk mitigation, observing market opportunities, profit accretion, and knowing when to get out.
Emotional control is one of the foundations of successful trading. Personal feelings and unchecked emotions can negatively impact your decision-making. Not to say that all “feelings” are bad – human beings are not robots after all and there are certain emotions that can sharpen your trading. Adrenalin can keep your senses alert and open to new market opportunities. Fear is often quoted as being best left out of the trading sphere but a healthy amount of fear helps your risk mitigation. Too much, however, will hold you back from taking the chances you need to succeed. In short, emotional control is not about leaving all feelings at the door. Think of it instead as a bouncer letting in certain emotions and leaving out others. Leave panic, stress, and impulsiveness at the threshold, but leave some space in your trading strategy for excitement, caution, and reflection.
No trading strategy is complete without an element of risk mitigation. Bear in mind that we all take risks every single day. Simply walking out of your front door carries an element of risk – you could get struck by a bolt of lightning on your doorstop or slip on a bar of soap in the shower. The extent to which you let risks alter your decision-making will vary from trader to trader. There is no single formula of risk control that will be a “one fits all.” Instead, you will need to formulate your risk strategy based on personal factors and the financial context.
Risk management is one of the pillars of successful trading. Traders wishing to pass the funded account challenge should ensure they have a stellar risk mitigation strategy in place, that accounts for the win-loss percentage and overall averages. Once you have worked out your risk/reward ratio, use tools such as automatic stop-loss and limit orders to prevent excessive losses.
Easier said than done! Nonetheless, spotting the winning trades will come with trial and error and traders will learn to sense when to get in (and out) of a position. There will be both buy signals, and indicators signaling when it would be prudent to exit a trade. Don’t let negative past experiences dictate your present course of action, for what happened before is not guaranteed to repeat itself. That said, history does inform the future and so analyzing what went wrong as well as appreciating what went right is the best way to move forward and pass the funded account challenge.
“Let your profits run” is an oft-quoted expression in the trading world. It refers to the tendency that some traders have to exit trades early – even positions that could continue to garner profits. The urge to sell is understandable, for there is a fine line between letting your profits run and cutting your losses – a profitable trade can very quickly turn into one spiraling into diminishing returns. The reasons that investors might sell a position they have held – or were planning to hold – over a long period are manifold: mistaken buy or change in price being two common reasons.
On the flipside, don’t be tempted to try and recuperate losses by holding onto a trade with diminishing returns. You may have to brace yourself for a loss hit that you hadn’t anticipated. Better that, however, than a spiralling descent into negative trades. Traders wishing to pass the funded account challenge should bear in mind that the signals to sell or hold a stock will differ in the short-term market. Understanding the market dynamics is critical if you want to hold onto what could be a regularly profitable trade.
So I have been reading through your comments people are asking what is needed to Succeed in the Funded Account Challenge. So today, we 've asked Rosen our channel trading expert to record a quick 2-minutes video for you. Here the full discussion in the video below:
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