If you have ambitions of becoming a Forex trader but are just starting, the whole process can be somewhat daunting. That is why it can make so much sense to undertake the one-step evaluation, providing you with a ‘dry run’ that not only offers you the opportunity to show your potential funder what you can do, but also demonstrate it to yourself.
We may be a one-step evaluation prop firm, but that does not mean the evaluation is specific to a certain approach when you are actually trading. What we want to see is the skills, aptitude, awareness and capacity to make gains that mark you out as having what it takes to be a successful trader.
If you are experienced as a trader, you may have a different approach. In your case, this swift evaluation means you can show what you can do and prove your skills without undue delay, ensuring you move quickly to the point where you can begin trading for real.
Don’t Do This Alone
However, as Business Leader noted when assessing different funding sources for Forex traders, even experienced traders can benefit from the support, mentorship and training that prop funders offer. It also observed that newer traders can be particular beneficiaries of this.
That means you can develop your skills as a trader and improve at what you do from whatever your starting position, either through fine-tuning strategies (if you are experienced) or learning on the job at a rapid rate if you are new to it all.
All this leads us to the question of just what sort of funding package you might want to go for, based on your experience, skills and confidence, not to mention your financial goals.
Crucially, the kind of evaluation you do can be linked specifically to the size of the funding package you are aiming at. Some people want to start small and perhaps work their way up to something big later. Others prefer to aim high with the ambition and confidence that they can make a big profit.
Your Funding Options
Our different packages and assessments reflect this. The smallest and simplest involves going in at Level 1 with $25,000, but this level can also start at $50,000, $100,000 and $200,000. In each case, you can initially rise as high as Level 5, which represents a five-fold increase on your initial starting amount.
Beyond this, Level 6 is available as an add-on, which involves doubling the amount from Level 5. Each increase in level is based on you hitting your profit target, so the funding package and scaling are logical.
Because there is no time limit on how long it takes you to reach your ten per cent trading target, the assessment comes without pressure. But this can also help guide just what sort of funding package may be best for you.
This is about thinking practically; if you are an experienced trader, have hit the ground running and shown great aptitude, you can not only justify receiving a larger fund, but can do so with greater confidence that you will make the very best of it.
Small Fund or Big Fund?
A further key consideration is how these different funding packages will impact your strategy from the perspective of issues such as risk and spread.
For instance, with a small fund, there can be advantages in concentrating on a specific area. This may require a cautious approach with less leverage and aim at investment strategies with a relatively low potential yield. In risk-and-reward terms, the smaller funding package means you are being cautious both in fund size and strategy.
However, a real benefit of this is that you can concentrate your attention very clearly on a specific area, with a low risk of loss and the chance to use various trading devices to stop the trade if you find things start running against you. This can include having an option that you invoke your right not to fulfil, or a stop loss / stop order to prevent being hit by losses.
You might also engage in some hedging to limit risks, or use a trailing stop to ensure your profit is secured.
All of these are familiar concepts and demonstrate ways in which you can build caution into your trading. This approach can make a lot of sense when you have opted for a smaller funding package and are not in a desperate hurry to make the big bucks.
Moreover, by learning how to use devices to reduce risk, ringfence gains and limit losses, you can gain a stronger understanding of these if you are a new trader.
Working with a mentor, you can grow your knowledge not just for the sake of it, but because even if in the future you use riskier strategies, you will know how to switch to a safer approach if a change in market conditions warrants you making major changes to your strategy.
The key factor here is that all the time you are trading, you are gaining experience. Ultimately, this can give you the knowledge and confidence you need to try using larger funds and different strategies at a later date.
If you are a more experienced trader, a larger fund may be just the thing you need to perform a more diverse range of activities, with a broader spread potentially meaning more leverage and risk, but also coming with the opportunities for greater rewards.
To do this you will need to be confident and experienced, with a deep knowledge of the market and, just as importantly, sharp instincts that will enable you to respond swiftly when new opportunities arise, or to respond to sudden developments that might place your gains at risk.
Of course, the concept of spreading investments is easier to enact when you have a larger fund. That way, some of the fund can be devoted towards lower-risk activities that can tick over with modest but solid profits, which can act as a buttress while you use another part of it for higher-risk activities.
Making A Comeback?
Another factor you may consider is that even if you have had a lot of experience as a trader in the past, it may be you stopped that to do other things with your life for a time, perhaps to pursue a major career change or simply to try different forms of investment.
If so, you may come to us with a lot of background knowledge but sense the need to feel your way back in gradually with a smaller fund before moving back into something larger.
For a beginner, confidence will also play a factor. You may feel that your lack of knowledge and experience could count against you and while you will learn loads in the process of using a demo account, you will also make plenty of mistakes.
The key thing to note, of course, is that this is absolutely fine. Making errors is the norm in the process of learning to do anything in life and in some ways it works better if you make a large number to start with, provided you can learn quickly from them and avoid repeats.
Consequently, you should gain confidence by showing that you can learn fast and that the mistake you made the first time is not repeated on the next occasion. Even so, it may be prudent to start small with your funds.
In all of this, you must remember that you are not working alone, making assessments in isolation or guessing what the way forward is. Instead, you will be working in tandem with us, with mentoring and expertise on hand to help you develop your skills. That expertise can also help you to decide what kind of funding packages you should be looking at.
Apart from all these issues, you also need to decide just what role Forex trading is going to play in your working life. Do you want a good work-life balance, or are you a workaholic? Is this a full-time job or do you have other activities?
Knowing (or you soon will!) that Forex trading requires lots of concentration, it is important that your funding levels match the level of time and focus that you can give to it.
The world of Forex is one of a myriad of possibilities, with so many different kinds of investments, varied strategies involving different timescales and levels of risk, a wide array of currencies and a real world full of changing economic and geopolitical scenarios that can render today’s firm assumptions redundant by the middle of next week.
All this makes it an exciting but sometimes slightly scary arena in which to try to make money out of money. It also means there is no hard-and-fast, simple answer to the question of how much you should invest or even where the investment funds should come from.
However, with a prop fund providing the support and infrastructure not available with other kinds of finance, you can make your decisions over the funding package you enter the market with in confidence that you have far more tools at your disposal to give you the very best chance of making a success of your foray into the Forex market.