Proprietary trading companies hire or train professional and experienced traders and then invest money in trading assets through these professionals. Depending on the company’s offers, you can get funded from between $500 to millions of dollars and apply your expertise and professional trading tools to trade profitably and earn commissions or profit splits.
How Many Forex Traders Get Prop Firm Funded Accounts?
It’s hard to be entirely sure of how many traders are failing prop firm challenges across the industry, but we have a pretty good idea! We estimate that around 5% of forex traders are actually obtaining funded accounts. Out of that 5%, only 1% of traders that started the challenge will be trading on the funded capital for the long term.
This is fairly eye-opening to most traders, as prop firms are often thought of as a way to bypass the years of learning to trade properly and just get started on a huge amount of assets under management.
By contrast, around 85% of traders fail within the forex markets, regardless of a trading challenge or not.
Thus proving that it’s actually harder to obtain a funded trading account than it is just to be profitable on your own capital. However, this is actually by design, as many prop firms don’t have the trader’s best interest at heart…
Risk Management During Trading Challenges
Risk management is one area that causes the majority of forex traders to stumble. It’s not easy. In fact, managing risk is the one component that can completely change the success a trader has in this fast-paced industry. Although risk management will always be important for traders, it’s even more important when you’re trading for a funded account. You need to ensure that you abide by the drawdown, exposure, and maximum loss rules that the firm has in place.
When surveying the industry, many prop firms don’t offer any kind of support, at all, when it comes to risk management. In fact, some firms are even offering 1:200 leverage to newbie traders, ensuring that they will fail within hours.
One of the main drivers of our 20% successful funding rate in the Elite Club is our risk management support. Beyond the training, our funded traders have a risk management desk that oversees all the trades taken and advises on ways to mitigate the risk exposure. Alongside the risk desk, advanced analytics are constantly provided on the virtual trading floor to ensure that traders have the tools necessary to actually manage risk proactively, rather than reactively.
Is It Possible To Pass Prop Firm Challenges?
In summary, it’s possible to pass prop firm challenges and start trading on funded accounts, but this depends on the conditions you’re given, as a trader. Historically, retail prop firm challenges have been designed to set traders up to fail. They’re given harsh targets, limited time, no support, and huge leverage – a perfect storm! It’s not surprising that 95% of traders fail their challenges!
I developed my trading strategy with over 13 Years of Live trading experiences. I already passed a lot of funding challenges and it’s ongoing.