Comparing Evaluation and Instant Accounts in Prop Trading
When it comes to financial trading, time is money. The faster you execute your trades, the quicker you spot a price trend, it is often the split-second decisions that keep your finger on the pulse of profit. From the first bell of the market’s opening to the final tick of the closing second, the velocity of decision-making can make or break an entire session. Time is the heartbeat of financial opportunity and the need for speed in trading is non-negotiable.
Therefore, when it comes to selecting the prop firm that suits you the most choosing between Instant Funding versus Evaluation the choice should be glaringly obvious – surely the sooner the better. Instant Funding is an emerging option whose popularity is growing at an exponential rate as ambitious traders keen to accelerate their growth can pay for accounts loaded with company capital. Not everyone may be suited to this fast-track route, however. In this article, we will spring open the backdoors on Instant Funding and Evaluation Funding and compare these alternative avenues to financing.
Prop Funding Recap
Before we can shine the spotlight on the pros and cons of each respective funding approach let us do an overview of the industry in general. What exactly is prop trading and why are these funding challenges exploding in popularity? Proprietary trading, often referred to as “prop trading” is a relatively new interchange between traders and brokerage platforms. The prop trading firm fronts funded accounts to undercapitalized traders in exchange for a cut of the profits.
Attractive Source of Revenue
Prop trading is regarded as an excellent source of funding for traders who have impressive track records and a keen eye for spotting price trends but lack the starting capital. Some traders have successfully leveraged proprietary trading as a career path, taking advantage of the networking opportunities and professional development resources often embedded within firms.
The profit share is nearly always in the traders' favor, with the industry average being 80/20. Best of all, any losses accrued in a funded account are borne by the prop firm who also invest in their traders with competitive resources and powerful trading tools to heighten their chances of success. After all, it’s a mutually beneficial agreement: the better the trader the greater the cut of profits for the firm!
Prove It Before You Can Take It
Traditionally, not any trader could solicit a funded account: only traders who could demonstrate their profit potential and risk responsibility before prop firms would allocate the use of company capital. Proprietary platforms would assess applicants using an internal trading test or series of standards in which traders must meet profit targets within certain parameters (minimum and maximum daily and overall drawdown, for example).
Only the promising traders who “pass” the evaluation will progress from challenge accounts (often demo using virtual funds) to becoming funded traders with real money in a live account. The penny likely dropped sentences ago and you have guessed it: we are talking about Evaluation Funding.
Where Does Instant Funding Enter?
A more recent development in prop trading (a relatively young industry in itself) is Instant Funding or No Evaluation trading accounts. It is fairly self-explanatory: traders get funded immediately with live accounts loaded with company capital. What is the catch? There will very possibly be a higher entry fee and potentially more stringent trading conditions. On the plus side, of course, the share of real profits and those sought-after payouts could come a lot sooner.
So now we have covered the basics, let us burrow into a more detailed comparison of the two options.
Evaluation Funding Overview
The more traditional avenue to financing traders must demonstrate their prowess and ability to mitigate risk by passing an internal test or series of evaluations (hence the name!). Evaluation funding will still require an entry fee for traders to access the challenge. Both sign-up fees and starting account sizes tend to be lower in evaluation funding. Here is a snapshot of prop firms' Evaluations:
- Process: Traders will be required to pass a phase evaluation process before they can go on to access a funded account. As we have seen in our previous article there are different evaluation types with the one-step evaluation and two-step evaluation model being the most popular ones.
- Starting Capital: Traders are initially set up with a virtual account from which they trade with the firm's capital during a demo evaluation.
- Profit Split: Profits are distributed between trader and firm according to a predefined ratio that will vary from firm to firm.
- Learning Opportunity: Evaluation funding can be perceived as an educational opportunity for rookie traders who can try new strategies or put budding skills to the test before risking personal funds.
- Goal-Oriented: Traders must demonstrate qualities of consistent profit generation, risk management, and effective strategic implementation to pass the evaluation.
- Ideal Traders: Evaluation funding suits traders looking to highlight their abilities and test strategies in a prop firm scenario before progressing to funded accounts.
Prop firms with Evaluation Model
| Prop Firm | Prop trading firms evaluation Models |
|---|---|
| Alpha Capital Group | 2-steps Evaluation |
| Alphachain | 1-step Evaluation, Direct Funding program |
| Alpine Funded | 1-step Evaluation, 2-steps Evaluation |
| Audacity Capital | 2-steps Evaluation |
| Bespoke Funding | 2-steps Evaluation |
| Blue Guardian | 2-steps Evaluation |
| BluFX | Instant Funding |
| BuoyTrade | 3-steps Evaluation |
| City Traders Imperium | 1-step Evaluation, Direct Funding program |
| E8 Markets | 2-steps Evaluation |
| Earn2Trade | 1-step Evaluation |
| Finotive Funding | 2-steps Evaluation |
| FTMO | 2-steps Evaluation |
| FTUK | 1-step Evaluation, Direct Funding program |
| Funded Academy | 2-steps Evaluation |
| Funded Trading Plus | 2-steps Evaluation |
| FundedNext | 1-step Evaluation, 2-steps Evaluation |
| FunderPro | 2-steps Evaluation |
| Funding Pips | 2-steps Evaluation |
| Goat Funded Trader | 2-steps Evaluation |
| Leveled Up Society | 1-step Evaluation, 2-steps Evaluation |
| Lux Trading Firm | 1-step Evaluation, Direct Funding program |
| Ment Funding | 1-step Evaluation |
| Nations Trading | 2-steps Evaluation |
| OspreyFX | 2-steps Evaluation |
| SabioTrade | 1-step Evaluation |
| Super Funded | 2-steps Evaluation |
| The Trading Pit | 2-steps Evaluation, Direct Funding program |
| the5ers | 2-steps Evaluation, Direct Funding program |
| Topstep | 2-steps Evaluation |
| Toptier Trader | 2-steps Evaluation |
| UltraCap Trading | 2-steps Evaluation |
Instant Funding Overview
Instant is as instant does: traders plumping for this option will be granted immediate access to funded accounts. Live trading begins from the moment traders sign up – there is no interim evaluation phase and traders are not assessed on their abilities before being granted company capital. Traders do have to pay steeper entry fees for this privilege, however.
- Process: Traders instantly launch into a funded account – skipping the evaluation phase.
- Initial Capital: Traders kick off with a live account funded with real money from the outset: trading with the prop firm's capital immediately upon registering.
- Profit Split: Profits will be shared according to the ratio decided in advance by the prop firm in question.
- efficiency: Instant Funding is compatible with experienced traders who are confident in bypassing the evaluation and launching straight into the real deal.
- Ideal Traders: Befitting more experienced traders optimistic in their profit-earning abilities and prepared for immediate access into the funded journey.
Evaluation Funding Benefits and Drawbacks
Pros:
- Traders can illustrate their profit potential and trading skills without upfront capital.
- Opportunity to tweak strategies and refine risk management.
- Invaluable trading experience for beginners ready to test their abilities.
Cons:
- More time-consuming process due to the evaluation phases.
- Initial trading will be carried out in demo accounts with virtual funds.
- Traders must pass specific evaluation criteria.
Ups and Downs of Instant Funding
Pros:
- Fast-track access to funded accounts.
- Experienced traders need to waste no time on the evaluation phase.
- Accelerated access to profit generation.
Cons:
- Fewer opportunities to showcase skills before live trading.
- Potentially higher risks of failure due to skipping the foundational evaluation.
- Limited learning curve compared to the educational opportunities in evaluation funding.
Best Prop firms offering Instant funding trading accounts
If you want to skip the trading challenges, see below a list of today's best prop firms with instant funding!
Prop firms offering Instant funding. A complete list of Prop firms offering No evaluation prop trading. This list is updated; however, sometimes there are changes. Always confirm rules with your prop firm. Prop Firm Prop firms offering Instant funding Alphachain BluFX BuoyTrade City Traders Imperium Finotive Funding FTUK Funded Trading Plus the5ers As with all things in trading – and much of life itself – the choice between these options is highly personal. Traders must conduct a thorough investigation not only of the prop firm they are considering but also turn the spotlight on themselves. How much risk could be comfortably tolerated, or how high an entry fee will be justified by the end goal will be completely varied for the individual trader.
One could confidently argue that Evaluation Funding is better suited for novice traders, or those with experience but wary of the prop firm industry and wishing first to dip a toe in the prospective waters. The route to actual earnings will of course be longer, but the initial investment will be smaller as the entry fees are lower for Evaluation Accounts versus Instant Funding. Moreover, weaning into greater risk and larger position sizes could be a beneficial learning curve for inexperienced traders climbing up the ranks.
Following this train of thought the logical conclusion is therefore that Instant Funding is targeted at knowledgeable traders with tried and tested strategies and a seasoned attitude to the industry. Of course, the shortcut to a cut of any profits will come at a higher price and the increased risk will therefore be a factor that might attract more battle-hardened traders with a better understanding of the intricacies of the market dynamics facing them.
That said, there is no hard and fast rule and an ambitious trader confident in their strategic thinking might decide to skip the Evaluation and head straight into Instant Funding and reap the rewards. Knowledge is key: inform yourself on both approaches and make sure you do due diligence on any prop firm before making an investment.
