When it comes to forging a lucrative career for yourself, forex trading is where it’s at and, thanks to the advent of the internet, it’s now available as an option to anyone, no matter where they are in the world… no doubt a huge part of its growing appeal.
Forex (or ‘foreign exchange’) is simply the process of changing one currency into another one, usually for tourism, commerce or trading purposes. It’s one of the biggest and most liquid asset markets out there because of the global reach of finance, commerce and trade, with currencies trading against each other as exchange rate pairs.
These currencies are traded on the foreign exchange market, allowing us to buy goods and services across international borders. What makes forex particularly attractive as an option for traders is the fact that there is no central marketplace for foreign exchange, with all trading carried out over the counter using computer networks that connect traders across all four corners of the globe.
This means that the market is open 24 hours a day, for five and a half days a week, and currencies are traded across lots of different time zones in all the major financial hotspots, from London, New York and Paris to Hong Kong, Tokyo and Zurich. As such, the opportunities for traders are basically endless… as long as you know what you’re doing.
Before the internet came along, trading currency pairs was particularly tricky for small-time investors, with the majority of those playing this market in the past either hedge funds, huge multinational corporations or high net worth individuals because a lot of capital and financial backing is required to trade.
However, thanks to Tim Berners-Lee, anyone who’s anyone can give forex trading a go these days and an online retail market has emerged over the years specifically aimed at individual traders, with funding provided either through the banks themselves or via online brokers… brokers who offer very high leverages to traders who demonstrate the ability to control large trades with small account balances.
For newcomers to the wonderful world of forex trading, the very first step to take is to gain a certain level of knowledge.
Forex trading can be complex and specialist skills are required, as well as a deeper understanding of what makes the market tick and what the main drivers for currency price movement are. Getting the foundations under your belt before you start to trade will stand you in excellent stead and help ensure that you enjoy it from the outset.
Once you have an idea of what you’re doing and what goes into becoming a successful trader, you can then start thinking about setting up your own brokerage account.
You’ll need this to get started – and, for absolute novices, it’s generally advisable to set yourself up with a micro trading account that has low capital requirements, or even setting up a demo account so you can practise without risking anything.
Bear in mind, however, that risk management is an essential forex trading skill and if you never move away from your demo account and step into the real world, you’ll never really progress as a trader since you’ll never have any real stakes on the line.
To help get you started with your forex ambitions, here are some of the most frequently asked questions about forex funding. And, of course, if you’ve got any burning questions of your own that aren’t answered here, you can always drop us a line and we’ll be more than happy to help out.
Q: What Is A Forex Funding Programme?
A: Funded trading involves forming a profit-sharing partnership with a company (like us!) that provides funded accounts. This means you’re able to trade using the capital we provide without having to put any of your own money at risk. These companies are known as prop firms (shorthand for proprietary trading firms).
Q: How Do Funding Programmes Work?
A: Different prop firms will offer different packages and different trading programmes, but you’ll find that you’re able to keep up to 90 per cent of the profits you earn in your trading account when you trade with us.
In order to get your account set up, you’ll need to prove your ability as a trader by going through our one-step evaluation programme. As soon as you hit the ten per cent target, you’re ready to rock and roll!
Q: What Are The Benefits Of Forex Funding?
A: The most obvious benefit of forex funding is that you can trade without having to provide your own capital. Because we can provide you with all the funding you need to get going, it means you’re able to trade with a lot more backing behind you than you’d be able to do on your own. Trading with more money means that you have the potential to earn bigger profits.
From your perspective, you’ll also give your trading reputation a serious boost, since only trusted traders are able to get their own funded accounts.
Q: How Much Money Can I Make As A Funded Trader?
A: How much money you’re able to take home in trading profits will depend on your prop firm’s rules, as well as your skills as a trader. No matter what the profit split is, however, you do stand to earn a substantial amount of money if you work hard and develop your trading prowess.
Q: What Should I Look For In A Prop Firm?
A: As with any industry, there are rogue operators in the forex funding world so take your time, do your research and make sure you find the right fit for you. As a general rule of thumb, always do due diligence and check that the firm you’re interested in is legitimate and operating legally.
Look out for programmes that offer more than 70 per cent of profits and never go for anything that has a profit share ratio of less than 50 per cent. Don’t forget to check what other resources are on offer, including the likes of webinars and other training opportunities.
Q: Are Forex Funding Programmes Safe?
A: It’s a legitimate concern for novice traders but rest assured that it’s perfectly safe to sign up with a prop firm and to be given a funded trading account.
Always read the fine print before you sign on the dotted line, however, and always check that your chosen firm is regulated by the relevant authorities. You can also check out reviews online if you’re worried, another excellent way of finding the right firm for you.
Q: What Is Drawdown?
A: Drawdown is the lowest equity stop-out level permitted for any given account. Once the equity value falls below this level, the fund will close all running trades, disabling trading and access. Here at Trading Funds, you’ll find that there is no daily drawdown in place, which means you’re able to trade without this added pressure.
Q: Is It Possible To Hold Positions Overnight & Over The Weekend?
A: Forex trading is 24/7 (by and large), which is why it’s important for us to ensure that our traders are able to hold their positions both overnight and over the weekend, as well. However, bear in mind that it’s down to you to be wise to the implications of volatility, liquidity, rollover swap conditions and spreads.
Q: Will I Pay Tax On Earnings?
A: Funded traders are considered independent contractors. You will receive a contractor service agreement and invoices can be sent to us. It is your responsibility to report any and all earnings to HMRC if you’re a UK citizen.
For US citizens, you will also receive a contractor service agreement and it will be on you to report your earnings to the relevant US authorities. This remains true for European/worldwide traders
Q: How Many Accounts Can I Have?
A: You can set up any number of evaluation accounts, but you will only be able to manage two live funded accounts at any given time. These live accounts can be merged as long as they’re both untraded. You are unable to trade the same markets at the same time on more than one account.
Q: How Do I Prove I Have Good Risk Management Skills?
A: Once you reach the profit target in your evaluation, your trades will be reviewed by our risk management team prior to approval for a funded trading account.