A Forex trader has to go through a rigorous process to pass their evaluation test for prop firm trading funding. After all, they have to prove they have the skills and knowledge to navigate the market and earn a profit for the company, as well as themselves.
Once they have gone through the test, they will be able to receive money to go ahead with their trading plans. However, there are several pricing options to choose from.
First, it is important to understand how prop firm funding works.
What is prop firm funding?
When either a beginner or experienced trader wants to progress in the Forex market, they often find they need more money to be able to do so.
In order to make the big wins, they need to trade with large sums, after all. Without substantial finance, they will find their profits will be significantly limited, and it could take years of hard work before they are able to achieve substantial profits.
Prop firms, however, provide up to $200,000 (£164,572) for traders to use on the markets, in return for a proportion of the win.
They also charge a small registration fee to be able to access the money, which enables the business to keep supplying finance for other traders.
Proprietary firms essentially hire the traders to trade on their behalf, and to ensure they are up to the task, they might offer training and support, particularly during the evaluation process.
They want the traders to succeed, as this will boost their chances of making profit on the investment, so it is in their interest to equip them with as much knowledge and experience as possible.
Without this, they will either fail the evaluation process or not earn any or as much profit with the funding they do receive.
What is a prop firm scaling plan?
To borrow the largest sum of money from a prop firm, traders have to follow their scaling plan.
The idea behind this is that funded traders have to prove they can follow the firm’s specific set of trading rules before being allowed access to larger sums of money. They also need to show they are achieving consistent profits, so the company knows it can rely on them and they are not too much of a risk.
It is not just being able to access more finance, but also longer lengths of time, giving them a greater opportunity to earn a profit.
Scaling up plans work by allowing traders to get to different levels by successfully completing the one they are on.
The prop firm determines if they have achieved well, based on whether they have met the profit target, not undertaken substantial risk, and are able to handle the responsibilities of a bigger account.
Although many traders favour a rapid scaling plan, which would enable them to achieve bigger returns more quickly by gaining access to larger sums of money, it could be beneficial to choose a prop firm with a more considered approach.
This ensures they are really ready to trade with hundreds of thousands of pounds, allowing them to continue having a good track record of trading. Otherwise, they could damage their reputation by taking unnecessary risks with huge sums of money, even if they are not personally liable for the losses.
By being completely ready, they are more likely to be successful, meaning they would be looked upon favourably by others in the Forex trading market, including alternative prop firms should they decide to move on in the future.
What are TradingFunds’ scaling up plans?
Each prop firm has a different scaling up procedure, so it is important for funded traders to do their research before signing up to a specific company. Even if their evaluation procedure looks easier to complete, they could find the scaling up plan is less beneficial to them in the long run.
Here at Trading Funds, we provide four levels of funding, starting with $25,000.
On the first level of funding of $25,000, traders have a ten per cent target of $2,500.
It costs just $199 for the refundable registration fee, and they have no minimum or maximum number of trading days to achieve their profit target. There are also no daily drawdowns and the maximum drawdown is six per cent.
Leverage is up to 1:100, which means the maximum scaling they could achieve is $250,000.
The next level is for $50,000, providing a ten per cent target of $5,000. Again, there are no minimum or maximum trading days, no daily drawdown and a maximum drawdown of six per cent.
Leverage is also up to 1:100, with a maximum scaling of $500,000.
To take advantage of this option, traders have to pay a small fee of $349.
The target for the third level of funding of $100,000 is $10,000, which again is ten per cent.
There is also a leverage option of up to 1:100, which means the maximum scaling is $1,000,000.
There are no maximum or minimum trading days, nor is there a daily drawdown. The maximum drawdown is still six per cent.
Traders have to pay $649 to take advantage of this level of funding.
The highest level of finance at Trading Funds is $250,000. As the funding is so high, the ten per cent target is as much as $20,000.
However, there are no maximum or minimum number of trading days needed to achieve this, and there is no daily drawdown.
Leverage, again, is up to 1:100, so maximum scaling is $2,000,000. The refundable registration fee is $1,199, but for the amount of money traders could earn with this level of funding, the small charge is almost negligible.
Leverage helps traders, as they can increase their buying power the more leverage they have.
For instance, if they have a 1:100 leverage, for every $1 in their account, they can open up to 100 lots on one trade. Essentially, they can control $100 with the $1 they started off with.
Traders will be able to take advantage of higher leverage once they prove their experience and skills, as it enables them to increase profitability.
With Trading Funds, there are six types of leverage within each different level of finance.
After passing the evaluation process, funded traders begin with a small leverage of 1:10. Once they prove their experience, this can increase through the levels.
At level one, the leverage remains at 1:10; at level two, it goes up to 1:20; at level three, it stays at 1:20; at level four, it increases to 1:50 and remains the same until level six, when it soars to 1:100.
For indices, leverage stays at 1:5 for all the levels and different sized accounts, while it stays at 1:2 for all cryptocurrency finance options.
Before scaling up, traders need to go through all the leverage levels in their account category first. For instance, they start on $25,000 at 1:10 before working their way up to 1:100.
They then start on $50,000 in level two on a leverage of 1:10, scaling up to 1:100, before being able to access $100,000 in level three with a leverage of 1:10 and so on.
The highest they can get to is level 6 leverage of 1:100 with a funding of $200,000. At this rate, the maximum scaling is $2,000,000, which is an amount most people would never be able to achieve on their own.
How to get started?
Although many traders would want to go straight to earning this amount of money, there are many steps they have to go through first to prove they can handle the responsibility of trading with $200,000 at a leverage of 1:100.
The first is the evaluation process, which determines if the trader has the ability to earn a profit at all. What’s more, it looks at their risk management skills, ascertaining whether they have the balance of taking risks when called for and play it safe in tricky situations.
They also need to prove they have experience, understanding and knowledge of trading patterns, so they can play the market to earn as much money as possible out of it.
Once they have passed the evaluation process, the world is their oyster. They simply have to continue demonstrating their skills throughout each level to show they are capable of handling a rapid scaling up plan.
For this, they can earn as much as 90 per cent of their gains, receive bi-weekly payouts, and be given the freedom to employ their own trading styles, as well as working the hours that suit them best.