What is funded account?
A funded account is the trading account a prop firm allocates once the evaluation is passed. The trader operates under continuing risk rules and keeps a share of the profits, without ever holding the nominal capital.
Clearing the evaluation changes the nature of the exercise, though less than people tend to imagine.
What changes
The profit target disappears: nothing obliges you to reach a threshold within a given period any more. The account becomes a production tool rather than an exam to sit.
What does not
The loss limits stay, and are sometimes tightened. Maximum drawdown continues to apply, so does the daily limit where one exists, and some firms add rules absent from the evaluation phase — a ban on news trading, withdrawal caps, or a consistency rule that only surfaces at payout time.
Several firms also change how drawdown is calculated between the two phases: an end-of-day trailing during the evaluation can become an intraday trailing once funded. It is one of the traps traders report most often.
Simulated or live
Most funded accounts remain accounts in a simulated environment. This is generally not concealed: the terms and conditions say so. Your profits then come not from a market account identified in your name but from a contractual calculation the firm performs on its own price feed.
Some firms hedge the positions of their most consistent traders on the real market, which aligns their interests with yours. Others offer an explicit move to a live account after several payment cycles — often paired with a higher profit split.
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Related terms
- Challenge A challenge is the paid evaluation a prop firm sells. The trader must reach a profit target without crossing the imposed loss limits, on a simulated account. Passing it gives access to a funded account.
- Payout A payout is the actual transfer of a funded trader's gains. It follows a cycle specific to each firm, after a minimum period since the account was opened, and often above a floor amount.
- Profit split The profit split is the share of gains paid back to the trader on a funded account. It generally sits between 80 and 90 %, and can reach 100 % at some firms through a scaling plan or a promotional offer.
- Prop firm A prop firm is a company that gives access to a funded trading account after a paid evaluation. The trader deposits no capital: they pay evaluation fees, respect risk rules, and keep a share of the profits generated.
- Scaling plan A scaling plan is the mechanism by which a prop firm increases the capital allocated to a consistent trader. Progression triggers after a number of profitable cycles or successful withdrawals, and sometimes comes with a higher profit split.