When it comes to trading with a funded trading account, there are two types of challenges that you can have: the one-step challenge and the two-step challenge. These are two different types of challenges that you can choose to embark on your funded trading journey. Read on to find out more about the potential risks and benefits of getting a funded trading account.
Risks and Benefits of the One-Step and Two-Step Challenge
In case you are new and wondering about how do funded trading accounts work, let us tell you about the one-step and two-step challenges.
The one-step challenge means that you pass once, doing a ten percent profit target, with a four percent maximum daily drawdown, and overall a six percent trading drawdown. A two-step challenge basically means that you have a first step, which is to make an eight percent profit with a maximum of eight percent drawdown and a five percent daily drawdown. In phase two, you have a five percent profit target with the same risk parameters of five percent daily drawdown and eight percent overall drawdown.
Once you have passed phase two, you can get access to a live account, and whatever profits you have made on that account, you can keep eighty percent of that profit. Also, on your first payout, you will get a refund of the initial investment that you paid for that challenge.
Benefits of Having A Live Account
Once you have passed the challenges and you have access to a live account, you keep that account, which means that there is no time limit on your trading. This also means that you don’t have to open a trade every single day and that you don’t have to actually trade every month. There is no inactivity as well. So, once you have the live account, you can take one trade and pause for a bit.
Then you can come back and wait for you to be in a better emotional state. The point is that you can come back and trade whenever it suits you because, ultimately, this is how real trading works. You get the point: there is no trading time and no minimum trading dates.
Getting Paid – An Overview
Here is the thing: Whenever the account is in profit, you get to keep up to eighty percent of your profit split. Depending on the prop trading firm account, you can even have up to ninety or ninety-five percent profits. Trading firms want to reward consistent, profitable traders because they have proved themselves and essentially proved that they have the skills and that their success isn’t based on luck. The whole point is a win-win situation for everyone.
Conclusion
When it comes to the risks and rewards of funded trading, you might be wondering about what happens when you lose the account or lose the trade. The answer is that nothing happens. The only thing that happens is that you fail the challenge and lose the initial investment that you actually invested into the funded account, such as $500. Nonetheless, from there, you decide whether you want to buy another challenge and try again or take a break.
