How to Become a Funded Forex Trader? Earn Passive Income by Trading Other’s Capital

FTMO, My Forex Fund and True Forex Fund, I know you already heard about these proprietary trading firms.

Everyone is talking about these funded companies across the internet these days.

Perhaps you could consider continuing your trading career with one of these forex funded firms.

If willing do so…

Is it worth becoming a funded trader?

How hard is it to become a fully funded forex trader?

And finally, Can we earn sustainable monthly income by being funded traders?

These are the questions we all ask ourselves before applying to one of those funded trading programs, right?

To be clear, a trading career as a funded trader is well worth it, and you can earn a steady income by becoming a funded trader, but the challenge is that becoming a funded trader is hard.

In this article, we’ll discuss how to become a funded forex trader and the challenges that come with being a funded forex trader.

If you stick to the end of this article, I will share some of the tips with you guys on how to generate passive income as a funded forex trader.

With that let’s dive in.

What is Funded Trading?

In a nutshell, funded trading means trading with a proprietary trading account on behalf of companies trading capital. As a funded trader, you will be paid a percentage of the profit you generated over a given trading period.

Different funding companies have their own risk management and money management standards, and as funded traders, we should adhere to those rules because the trading funds belong to the company and they have all rights to protect their capital by giving rules to whoever manage their funds.

Next, how does a funded trader be paid?

Assume that you have a $10,000 funded trading account and in a month period you made 5% of that $10K account, then you will get paid a percentage (70% to 80%) of that 5% profit you generated over that month. It’s simple as that.

And the best thing I like about funded trading is that you get paid based on your performance and that is really a motivation.

Now, what are the advantages of being a funded trader?

Advantage of Being a Funded Forex Trader.

1. Risk-Free Trading – You are not required to put your own money at risk. You are trading on behalf of the company and using the company’s funds.
2. Start With No Money – As a funded trader, you don’t have to be concerned about having limited trading capital because most firms provide you with a substantial amount of trading capital, to begin with.
3. Freedom – Almost all funded companies allow you to trade the way you want, based on your risk profiles, money management, and time management.
4. You Get Paid Based on the Performace – If you are good at managing your risk while maximizing the potential gains, the reward you get as a funded trader makes you a really motivational trader.

Next, How to get funded as a forex trader.

Best Places to Get Funded as a Forex Traders

Right now, we have a lot of choices, and some of them are legitimate trading firms, while the others are scammers. Therefore, you should be cautious when selecting a funded trader program.

Here are my suggestions…

1. FTMO

FTMO began operations in the year 2020 and has experienced tremendous progress since then. FTMO now has traders registered in over 180 countries. Every month, over 6 million trades are opened, and so far in 2021, $23 million has been paid out, with an average payout processing time of only 8 hours.

FTMO has been recognized in Forbes and has earned the Deloitte Technology Fast 50 award for three consecutive years. The FTMO Challenge and Verification are both parts of their evaluation procedure. Traders that pass the evaluation procedure are offered a position with the FTMO Proprietary Trading firm, where they can handle up to $400,000.

A comprehensive trading journal for account analysis, as well as good educational tools, round out the package and make it accessible to both novice and experienced traders.

Official FTMO website.

2. My Forex Fund

MyForexFunds is a very new player on the field, having been created just a year ago in July 2020. They had a small brand in 2021 and had already funded over 40,000 traders with FX trading accounts. Due to its strong reputation and very similar trading conditions, the firm is quickly becoming a direct competitor of some of the largest and most established firms. As I keep in touch with my forex fund every few weeks, it’s obvious that this is the fastest-growing trading firm in 2021!

Unlike many other firms that claim to fund forex traders, they have three various levels or structures based on your trading experience, ranging from totally new to full-time traders!

Official Myforexfund website.

3. True Forex Fund

True Forex Funds is a brand-new proprietary firm on the rise. They are a reputable prop company that offers a two-step evaluation challenge. Their challenge objectives include achieving a profit target of 8% in step one and 4% in step two, with no minimum trading day requirements. You just have to adhere to their 5% daily and 10% maximum loss limitations. After successfully completing the course, you will be eligible for bi-weekly profit splits of 80%.

Official Trueforexfund website.

Based on my research and experience with these three companies, I can recommend that you will have good trading circumstances and an environment with supportive customer care available 24 hours a day, seven days a week.

So, if you plan to use a prop-firm other than these, make sure to conduct your own study before blindly buying their funded programs.

Following that, selecting a suitable prop trading firm is not the whole story. You must first complete their two-step verification process, and then you must consistently trade every month in order to generate a solid income from the funded trading account.

Simply put, it is a lot of hard work and with that, let’s look at how you can become a funded forex trader and which funded program will fit you.

How to Become a Funded Forex Trader?

Briefly, in order to become a funded forex trader, you must first enrol in an evaluation program or a training course and then pass a final exam that evaluates your skills and competencies. If you meet the requirements, you will be offered the opportunity to open a proprietary-funded trading account with the company.

From there onward you get your profit split monthly or bi-weekly depending on the funded company you choose.

However…

If you are not a profitable trader who didn’t have the skills to make consistent gains, you will never be able to earn money as a funded trader.

Therefore instead of wasting money on the funded programs, you should invest that money to learn about the market and then when you’re ready you can always come back and take the challenge.

Remember that, It Is Not The Trading Capital That Makes You a Profitable Trader, It Is Your Mindset, Thinking Process, Attitude and the Risk Management.

Now for the sake of this article, I assume that you’re a profitable trader.

We have lots of options available when it comes to choosing funded trading programs.

For example, FTMO offers only one funded trading program. That is the traditional two-step verification model.

Now based on the above table, you have options to choose from a $10,000 to $200,000 funded trading account and to get this account you have to face two steps which are the FTMO challenge and the Verification in order to receive your funded trading account.

When you received your funded trading account, you will receive 80% of the profit you made during a month and if you’re eligible for the scaling plan then you have a chance to receive 90% of the profit you made.

Next, in My Forex Fund, They have three options available for traders who are looking to get funded. Therefore no matter what level of experience you had in trading, they have three flexible plans for you – Rapid, Evaluation and Accelerated.

You can find out more details about these three plans on the My Forex Fund website.

Now we are mostly interested in the Evaluation and the Accelerated programme.

In the Evaluation program, you have to face and pass a two-step verification process in order to receive your funded trading account. Just like the FTMO, My Forex Fund is also ranging from $10K to $200K accounts. There is a slight difference in the Trading Rules and the Prices when compared with the FTMO.

Now according to my forex fund, you will get up to 85% of the profit you made in any particular time period.

The next funded program my forex fund offer is the Accelerated Program. If you are already a profitable trader and need quick funding, this is the program for you. The best thing about this program is that you don’t need to pass any challenges, in order to receive an Accelerated funded account.

Finally, according to my forex fund, you receive 50% of the profit you made during a particular trading period.

The final funded company is True Forex Fund and they are also one type of funding program. That is the two-step evaluation process and when you pass it you can receive up to a $200K funded trading account.

And just like the other funding firms, you will get paid 80% of the profit you made in a particular time period.

With that let me know in the comment section, which funding company you are going to choose and why.

Different funding companies have their own rules and engagements. Make sure to study those and choose the best prop firm for your trading style.

Next…

After finding the right prop firm and the funding program that suits you, the next task is to enrol in one of those funding programs.

This is where things get complex and hard.

Why?…

Because passing those evaluation and verification steps when considering the profit target and drawdowns is tough. They are developed to evaluate your adaptability, confidence, tranquillity, pressure managing ability, and risk management.

With that let’s see why it is hard to become a funded trader and if you are willing to become a one, why you should take it seriously.

Related: FTMO or My Forex Fund

Becoming a Funded Trader is Hard. Here is Why?

If you think that passing the FTMO challenge or any prop firm’s evaluation process will make you a profitable trader, you are mistaken.

Even after passing the evaluation stages, only about 4% of traders were able to reach the first payout, according to statistical data from several prop firms.

Furthermore, studies conducted by various brokers and regulatory agencies repeatedly show that 90% to 95% of traders struggle to make consistent gains over the long term, with the majority of them blowing their trading account within the first six months.

So, if you want to become a funded forex trader, focus on consistency in trading rather than trading capital, and then apply to one of those prop firms.

With that, here are a few reasons why becoming a funded trader is hard.

1. It is Too Hard to Reach the Profit Target

10% or 8% profit target (based on a few prop firms) is too unrealistic goal to achieve in 30 calendar days and we all know setting monthly goals in terms of gains is not a good idea in trading.

However, to become a funded trader, we should face that challenge and we should achieve that profit target in one way or another. This is tough but well worth it.

2. Probability of Breaching the Drawdown Limit

The drawdown limits of these prop firms are between 10% and 12%. This is OK to me because a drawdown of more than 10% or 12% is not good in general.

When considering the profit target of 10%, however, the likelihood of breaching those drawdown limits are substantially higher because to achieve 10% in a month we need to risk more on a single trade.

For me, It is like a choice between Profit Target and the Drawdown limit.

3. Time Limit

Think about making a 10% gain in just within 30 trading days.

Even most of the professional traders are suggesting that if you can make 2% to 4% per month you are good to go.

But when it comes to funding programs, this is just too unrealistic.

Although we have no other option here, the only option is to play with the risk and money management rules.

Only one thing is sure, You will suffer from a heck of stress and pressure. Get ready for these mind battles before applying to any of these funding programs.

Besides these three primary reasons, Lack of Risk and Money Management skills, not having a trading strategy with a positive expectancy and inability to control your emotional ups and downs will also add up.

When all of these things are coming together, you have to trade under lots of stress and pressure, and of course, you also have a deadline.

Now tell me, Are you ready for this? Let me know in the comment section.

Furthermore, based on the statistical data from my forex fund, the failure rate is much higher and only a small percentage of traders are able to get their first payout.

Have a look at the below statistical data from my forex fund regarding October 2021.

According to the aforementioned data from My Forex Fund, 3544 real accounts were opened in October 2021, with only 18% of traders able to pass phase 1, and among these traders who passed phase 1 only 31% of traders were able to pass phase 2, and just 4% of traders who passed phase 2 were able to reach their first profit split.

It is shocking, right?  What’s more shocking is that this failure rate occurs on a regular basis.

Have a look at the same kind of stats but this time it is regarding November 2021.

Now, according to the above data from My Forex Fund, 5718 real accounts were opened in November 2021, with only 10% of traders able to pass phase 1, and among these traders who passed phase 1 only 24% of traders were able to pass phase 2, and just 3% of traders who passed phase 2 were able to reach their first profit split.

In November, there are more accounts were opened than in October. In relation to that, the failure rate is also got increased.

So the point is, Even if you pass phase 1 and phase 2, you will have a hard time generating consistent income as a funded trader if you do not have the skills required to generate consistent profits.

Let me remind you again; It Is Not The Trading Capital That Makes You a Profitable Trader, It Is Your Mindset, Thinking Process, Attitude and Risk Management.

Now according to this statistical report from My Forex Fund, here are some key points…

1. Over 60% of traders in their database do not use a stop loss and have a high risk of ruin.
2. The traders who have made it to their 4th pay cycle all have a risk management strategy of below 3% risk on any given day.
3. There are 5 traders who are on their 8th payout on evaluation live accounts.
4. All of them trade conservatively and make sure they get paid. None of them risks more than 2% per trading day and they stop when they have reached 4-8% in profit until the pay cycle has ended.

Now according to the above key points, it is obviously clear that only traders who have risk management skills were able to gain sustainable income as funded forex traders.

That is why, when trading, I think like a risk manager, and you should too.

And also make sure that you prioritize the Risk before the Reward.

Now, I hope you realize why I stated that if you want to become a funded trader, you should take it seriously. It’s hard to become a funded trader, and it’s even more difficult to continuously generate money from a funded trading account.

BUT…

Keep in mind that Becoming a Funded Trader is Well Worth It and It is 100% Possible.

Therefore Never Give up on your goal and stay humble.

With that let’s move forward and talk about how to generate passive income by trading other’s funds.

How to Earn Passive Income by Trading Other People’s Capital 

If you are a skilled trader, generating a passive income through funded trading is 100% possible for you. 

Although It will take between 6 to 12 months, it is better than slowly growing our personal trading account which takes around 4 to 5 years.

What’s even better about trading other people’s money is that as a funded trader, you can grow your trading account without touching its money while still earning a steady income from the funded trading account.

Sound great, right?

Okay with that let’s see how to do this.

We are doing this by using the three funded trading firms we talked about earlier.

All of these funded companies allocate a $400K funded trading capital per trader and also one trader can keep up to 4 or more live accounts.

Now, first, we are going to focus on one prop firm and we will try to get up to a maximum of $400k from that particular trading firm. 

Then we will go for the second prop firm and finally to the third prop firm to get a $400K funded trading accounts from each of these funding companies.

Of course, I know that it is lots of hard work and you will face lots of failures and setbacks along the way, But if you do not give up, in the end, you will be able to get a $1.2M funded from these companies.

After that, if you can average around 2% per month (which is highly possible), you will earn around $288k annual gain from the comfort of your home while risking other people’s money.

Isn’t that great?

Now if can’t afford a $200K funded trading account, It is okay. Start small and try to get a $10K account and then a $50K account.

Keep things small until you get that a $200K account, then you go for another prop firm and then focus on that.

Use the below road map for your reference.

I think got a clear understanding of how to generate a passive income from trading by risking other people’s money.

So far we talked about how the basics of funded trading and how to become a funded forex trader as well as shocking statistics of the constant failure rate of funded traders.

So, if you are willing to become a funded trader, I hope that you found some valuable information and tips from this article.

Or maybe you are already a funded trader, if so, let us know about your experience as a funded trader in the comment section. It will be a help for most of the traders and it will also be a motivation for traders who are planning to enrol in a funded program.

Finally, if you like this article, show some love by sharing this with your friends.

Related reading: Is Forex Worth It – How to Make a Living Out of Forex Trading