Funded trading is a unique opportunity for traders seeking leverage to begin trading without risking their capital. Of course, while there is no such thing as a free lunch nor do the accounts come funded without a cost: traders need to prove their worth. For a small entry fee, contestants have the chance to demonstrate their skills. For those traders whose strategies are consistently profitable then they pass to the next stage: a funded account where the majority of the profits are for the trader but the broker assumes all the risk.
Discipline, a tried and tested strategy, and risk mitigation is key to passing the funded account challenge. There is another critical pillar to your success: your trading mindset. Psychology plays as big a part as a strategy when it comes to online trading. Charting software, price charts, and technical indicators may be more visible…but the ability to control your emotions is just as important. In this article, we will walk you through the basics of trading psychology, why it is so important to traders, and how to master your emotions and pass the funded account challenge.
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Have you ever seen someone smashing their face through planks of wood (most likely in a karate movie)? This is an example of “mind over matter.” People can walk over burning coals, feel physical improvements through imagined medicine in the placebo effect, and even slow down their heart rate voluntarily. Never underestimate the power of your mind – it is your best resource.
Traders who learn to practice personal discipline and self-awareness can begin to control two of the most influential emotions in trading: fear and greed. Any online investment will induce a certain degree of fear and greed. There should be some trepidation in risking your money online, and equally, there is a natural longing to make a profit. Fear and greed are healthy in the right doses and forms. It is when they begin to dictate – not inform – your trades that these become a problem for traders.
The mind of a successful trader has a range of important qualities. One should be quick-thinking, and able to make rational decisions under pressure. After all, some of the most profitable trades require a split-second decision. That is not to be confused with impulsiveness, traders should be careful not to jump into decisions without careful forethought of the long-term consequences. The discipline to stick with your trading strategy, yet the open-mindedness to know when to be flexible with your plan, are two seemingly contradictory attitudes that nonetheless must operate like a type of emotional yin-yang in your trading mindset. The ability to control your emotions, and not let fear, anxiety, or stress play your hand is all-important. This may be easier said than done, but over time even the most agitable of traders will learn emotional mastery in front of the charts.
The funded account challenge is exactly this: a challenge. As such, it is designed to test the trading abilities of contestants to separate those who have what it takes. Only the traders with a proven track record of profit-earning will be rewarded with funded accounts and the ability to trade without personal risk. To reach these desired shores traders will need not only to spot the winning trades, but also know when to cut their losses, and execute a well-planned trading strategy. They will also need to do the above with self-discipline and emotional control. Enter the funded account challenge with a winning mindset and this is what you will do. Fear will prevent you from the trades you need, and greed will eat away your profits. Remember the old Wall Street adage: “pigs get slaughtered.” In other words, the greedy traders will not come out on the other side. One of the easiest ways to curb unwanted feelings is by always returning to a well-researched strategy and clear trading plan. Moreover, there are ways to improve your mindset outside of the trading sphere. Exercise, walking in the fresh air, and daily meditation are proven ways to improve your trading mindset.
There may be seemingly contradictory advice in this article: practice self-discipline but remember to be flexible; don’t let your emotions control you but understand the value of fear and greed too; keep your profits but cut your losses when required. The truth is that successful online trading requires a delicate balancing of what can be conflicting and ostensibly incompatible advice. Risk-reward ratios, profit targets, and trading rules will adapt depending on the strategy in place, financial assets, and market dynamics. You must be open to readjusting your metrics accordingly. Keep fear and greed in check, don’t let your emotions control your trades, and remember: “mind over matter.”
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