What a funded trading account is and how it differs from your own money
A funded trading account is a brokerage account where a company deposits money for you to trade with, rather than you depositing your own capital. You do not own the money in the account. You trade it according to rules set by the funding company, and if you make a profit, you split it with them. If you lose money, the company absorbs the loss up to a limit — usually called a "drawdown" — and then stops letting you trade until the next reset period.
The funding company is betting that you will be profitable enough to make their cut of your gains worth the risk of your losses. They are not lending you money. They are not giving you money. They are renting you access to capital in exchange for a percentage of what you make.
This is different from a margin account, where a broker lends you money against collateral you own. It is also different from a prop trading firm, where you are an employee with a salary and benefits. A funded account sits in between: you are independent, you keep a portion of profits, but you trade under someone else's rules and with someone else's money.
Key Takeaways
- Funded accounts require you to pass a trading test or evaluation, not a credit check, and the company keeps the account in their name.
- You typically split profits 50/50 to 80/20 with the funding company, depending on the program and your performance tier.
- Most programs impose a maximum daily loss limit (drawdown) — often 5 to 10 percent of the account size — and close your account if you hit it.
- The account is reset monthly or quarterly, meaning losses do not carry forward, but neither do profits unless you meet specific thresholds.
- Funded accounts are not regulated the same way as retail brokerage accounts, and the company can change rules or close your account with notice.
The evaluation process: what companies actually test
Before a company funds an account for you, they run you through an evaluation. This is not a background check or credit check. It is a trading simulation designed to see whether you can follow their rules and stay within their loss limits.
Most evaluations last 30 days. You trade a simulated account with the same rules you would face with real funded capital — the same drawdown limit, the same daily loss cap, the same position size restrictions. You do not need to be profitable to pass. You need to not blow past the drawdown limit. Some companies require you to hit a small profit target (often 5 to 10 percent of the account size) to advance to the next stage, but many do not.
The evaluation itself costs money. Prices range from $50 to $300 depending on the account size you are testing for and the company. Some companies charge a single fee; others charge monthly until you pass. If you fail the evaluation, you lose the fee. If you pass, some companies credit it toward your first month's fees, and some do not.
The evaluation tests whether you can follow rules, not whether you are a good trader. You can be unprofitable and still pass as long as you do not exceed the maximum loss allowed. This is why some people pass multiple times before getting funded — they are learning the rules, not learning to trade.
How profit splits and account resets work
Once you are funded, your profit split depends on the company and the account tier. A common split is 80/20, meaning you keep 80 percent of profits and the company keeps 20 percent. Some companies offer 70/30 or 50/50 splits, usually based on how much capital they are giving you or how long you have been with them.
Profits are not paid out when ready. Most companies hold your earnings and pay them out monthly or quarterly. Some require you to reach a minimum profit threshold before any payout happens — for example, you might need to make $500 before the company will send you anything. Others pay out everything above a small minimum.
The account resets on a schedule — usually monthly or quarterly. When it resets, your losses disappear. Your account balance goes back to the starting amount. This is the main appeal of funded accounts: you do not carry losses forward into the next period. But your profits also do not carry forward unless you have met a specific threshold or the company has a "scaling" program that lets you grow the account size.
Some companies offer scaling: if you are consistently profitable, they increase the account size you can trade. This is not automatic. You usually have to request it or hit a specific profit target, and the company approves or denies it based on your track record.
The rules you have to follow and what happens when you break them
Every funded account comes with a rulebook. The rules vary by company, but they all exist to limit the company's risk. Common rules include a maximum daily loss (drawdown) of 5 to 10 percent of the account, a maximum loss per trade, restrictions on holding positions overnight, and sometimes restrictions on which markets or instruments you can trade.
If you hit the daily loss limit, your account is locked for the rest of the day. You cannot trade. If you hit the maximum loss for the period (usually 10 to 20 percent of the account), your account is closed and you are out. You do not get another chance in that cycle. You have to pay for another evaluation and start over.
Some companies are strict about the rules. Others enforce them loosely. Before you pay for an evaluation, read the actual rule document — not the marketing page, but the terms of service or trader agreement. Look for what happens if you break a rule, how quickly the company enforces it, and whether there is any appeal process.
The company can also change the rules. Most will give you notice — sometimes 30 days, sometimes less — but they can tighten drawdown limits, add new restrictions, or change the profit split. This is in the fine print of most agreements.
What it costs to get and keep a funded account
The evaluation fee is the first cost. This ranges from $50 for a small account ($5,000 to $10,000) to $300 for a large one ($50,000 or more). Some companies charge monthly fees to keep an account open, even if you are not trading. These are usually $10 to $50 per month.
Once you are funded, you pay commissions on trades just like you would at any broker. The company takes a cut of your profits, as discussed above. Some companies also charge a "management fee" or "platform fee" — a small percentage of your account balance each month, usually 0.5 to 2 percent.
If you want to withdraw profits, some companies charge a withdrawal fee. This is usually $10 to $50 per withdrawal. Some companies require a minimum withdrawal amount — for example, you cannot withdraw less than $100.
Add it up: a $100 evaluation fee, a $20 monthly platform fee, 20 percent of your profits going to the company, and a $25 withdrawal fee. On a $10,000 account, if you make $500 in a month, you keep $400 after the company's cut, then pay $25 to withdraw it, leaving you $375. The evaluation fee is still sitting there unpaid. This is why many people find funded accounts expensive relative to the profits they actually make.
The difference between prop firms, funded accounts, and your own brokerage account
| Feature | Funded Account | Prop Trading Firm | Your Own Brokerage |
|---|---|---|---|
| Who owns the money | The funding company | The firm | You |
| How you get paid | Percentage of profits | Salary plus bonus | You keep all profits |
| Who absorbs losses | The company (up to drawdown limit) | The firm | You |
| Upfront cost | $50 to $300 evaluation fee | Usually none | Varies by broker |
| Rules and restrictions | Strict, set by company | Strict, set by firm | Broker rules only |
| Account in whose name | Company's name | Firm's name | Your name |
A prop trading firm is a company that hires traders as employees or contractors. You work there, follow their rules, and they pay you a salary or a draw against future profits. You do not pay to join. The firm absorbs all losses. But you are an employee, which means taxes, potential non-competes, and a formal employment relationship.
A funded account is a rental arrangement. You pay to be tested, you trade under their rules, you split profits, and you can walk away whenever you want. But the account is in their name, not yours, and they can close it or change the rules.
Your own brokerage account costs you money upfront (your deposit) and you keep all profits and losses. You have no restrictions except what the broker requires for all customers. You own the account and the money in it.
Red flags and what to watch for
Some funded account companies are legitimate. Others are designed to extract evaluation fees from traders who will never be funded. Watch for these warning signs.
A company that guarantees you will be funded, or that promises you will make money, is lying. No one can may provide either. A company that charges you money just to explore or to be considered is taking your money with no obligation to fund you. A company that does not publish its actual rules or terms of service before you pay is hiding something.
A company that requires you to use their proprietary trading platform, rather than a standard broker, makes it harder for you to move your money or verify what is happening in your account. A company that does not let you withdraw your profits for months, or that requires you to keep trading to withdraw, is using your money as a float.
Check whether the company is registered with the SEC or FINRA if they are claiming to be a broker or investment firm. Most funded account companies are not brokers — they are just companies that rent you capital — so they may not be registered. But if they claim to be a broker and are not registered, that is a serious problem.
Talk to people who have actually traded with the company. Not testimonials on their website, but real traders on forums or Discord. Ask whether they got paid, how long it took, and whether the company changed the rules after they started trading.
Frequently Asked Questions
Do I need trading experience to get a funded account?
No formal experience is required, but you need to pass the evaluation, which means following the company's rules and staying within the drawdown limit. Many people with no trading background pass evaluations. The evaluation tests rule-following, not trading skill.
What happens to my profits if I fail the evaluation?
You do not make any profits during the evaluation because you are trading simulated money, not real money. You lose the evaluation fee you paid. If you pass and then get funded, your real profits start accumulating from that point.
Can I trade multiple funded accounts at the same time?
Yes, many traders do. You can be funded by multiple companies and trade all the accounts. Each account has its own rules and reset schedule, so you manage them separately. Some traders use one account for day trading and another for swing trading.
What if the company goes out of business?
The money in the account is the company's money, not yours, so you have no claim on it if they fail. Your profits that have been paid out to you are yours. Profits that have not been paid out are at risk. This is why some traders withdraw profits as soon as they can, rather than letting them accumulate.
Is a funded account the same as a prop trading job?
No. A prop job is employment with a salary and benefits. A funded account is a rental arrangement where you pay fees and split profits. Prop jobs are harder to get but offer more stability. Funded accounts are easier to start but more expensive and less stable.