A financed account or funded account is a trading account in which a company gives you its money so that the trader can operate, complying with the rules imposed, in exchange for a percentage of the profits.
The companies in charge of financing traders usually carry out a funding test in which, if you meet the requirements they demand, under a series of rules, you will be able to obtain the financing the company offers you.
Depending on the funding company and the test you choose (25k, 50k, 75k, etc.) you will have to meet a series of conditions. But in general, they are all structured in the same way.
Example: If I want to get an account financed with a purchasing power of 50k in the Earn2trade company, I will have to meet the following requirements:
The dynamic DD is the movement you generate in an open operation (with your profits, since if you go negative it does not drag) from the account’s maximum loss. That is, if your maximum DD for the account is $ 48,000, and when you enter an operation you’re earning $ 500, but then you close the operation at $ 300, your DD drags those $ 500 (DD = 48,500) and not the 300 you have at closing.
The static DD or EOD refers to the fact that your DD will move once you have closed your trade in the positive by the same amount that you have won. For example, if you have an initial DD of $48,000, and your operation takes it to $ 500 and finally you close it at $300, your DD will only move that $300 (DD = 48,300).
It is the maximum number of contracts that you can have open depending on the amount of profit that you are obtaining in the account. Example: from 0-1500, maximum 2 open contracts; from 1501 to 3000, maximum 4 contracts; +3000, maximum 6 contracts.
The answer is NO. Companies have a monthly account until you manage to pass the funding test, and that does not mean that you have to get it within a month, but rather that you can stay for 2, 4 or more months without any problem.
The answer is NO. Companies have a monthly account until you manage to pass the funding test, and that does not mean that you have to get it within a month, but rather that you can stay for 2, 4 or more months without any problem
The funding companies give a margin of days in which you have to operate AT MINIMUM to be able to pass the funding test. But that does not mean that you should pass the test within this time period. If you do not, you can continue the test period for as long as you need to do so.
The consistency rule dictates that, in the evaluation process, no operating day can count for more than the percentage that the funding company estimates of its total P&L. That is, if in the funding company X, the percentage of its consistency rule is at 30%, it means that in its funding test you will not be able to obtain more than 30% of the profit target in the same day in order to pass the test. For example: 50k account, profit target 3000 dollars. You cannot get more than 900 dollars in the same day of operation.
If you fail a funding test for breaking any of the rules, the company offers you several alternatives. One is to perform a reboot or reset of the account; and two, cancel the subscription.
A reset or restart of the account is to return all the parameters of the evaluation account to the initial state. That is, you start from scratch with a new account. This does not mean that the cost of the subscription is charged the month after the restart. The subscription fee is independent from the reset. That fee will be charged the month following the account day of purchase.
Canceling the subscription means that you cancel your relationship with the funding company, and they will stop charging you the monthly fee. When you cancel your subscription, you cancel the evaluation test with this company and you will stop opting to be financed.
Depending on what day of the test you are on, one option might be better than the other. If you are in the first week of the evaluation and the trial subscription is higher than the reset, then the best option for you would be to reset the account. But if the cost of the evaluation is cheaper than the reset, it would be best to cancel the trial and buy a new subscription.
Now, if we find ourselves in the situation in which we have been testing for more than a week (always in the event that you want to pass the evaluation in less than a clear month) and the minimum operating days margin to pass the test is low, it is best to cancel the evaluation and start a new one.
Once you achieve all the objectives set for you by the funding company, you would normally notify the company that you have already passed the test so that they can check that this is the case. And once they review everything, they will congratulate you and proceed to process all the necessary documentation to open your LIVE account.
Depending on the funding company you have chosen, there may be administrative costs (for future money transfers, data cost, maintenance of the trading platform, etc.), although there are some companies, such as Earn2trade, which have no initial cost.
Depending on the company which finances you, they may or may not require payment for the data. Although you can also obtain your own data by contracting it from third parties and connect it to the platform to operate with that live account.
Some funding companies give the trader the opportunity to restart the financed account once the account has been bankrupt or because the trader wants to restart it for whatever reason he or she sees fit.
NO. The funding company is responsible for all losses incurred by traders, so the trader does not have any responsibility for losses.
NO. The trader can earn everything he can and wants to earn.
Depending on the funding company, they usually offer you an initial amount of 100% of what you withdraw and once you reach that amount, depending on the company, you will take between 70-90% of the earnings you withdraw and the rest will go to the company that finances you.
The safety net is the amount of profits that the funding company asks you for (although not all have this system) to make withdrawals with the percentages they offer, that is, if you make withdrawals below the safety net, the percentage of the profits you take will oscillate between 40 or 50% instead of 100%, if you still have margin of the amount that they offer you at 100%, or the 70-90% they are offering you for the withdrawal. Although not all of them allow withdrawals under the safety net.
YES. Many companies, if not most, offer the possibility of financing you more than once with their funding company.
NO. There are traders who put the name of the account in the name of a close relative or their own company. Of course, the evaluation must be done in your own name also to avoid problems.
There are companies that do give you the opportunity to make withdrawals once you finance yourself (Earn2trade, uprofit (although with a percentage of your profits)), but the rest usually have more difficulties when making withdrawals. With companies like Leeloo and GoAll, you must reach a profit objective once financed (a safety net) to be able to make withdrawals above that objective. And it also depends on the financed month in which you want to make the withdrawal. That is, depending on the month, you can only withdraw a certain maximum allowed.
In most cases, NO. Of course, there are exceptions, as is the case with Earn2trade, where once you reach $5,000 in profit, you must pay for the platform and for the data.
Most companies suggest you work with Ninjatrader since they give you the option of doing so for free, but it is true that you can use whatever platforms you want (ATAS, Sierra chart, quantower, etc).