Steps to becoming a funded trader
Learning is the first and most crucial step in the process. Your focus needs to be on learning various strategies and enhancing your trading skills. There are plenty of free resources on YouTube, to books you can read at the library, that teach you about markets, instruments and trading psychology.
Once you are ready to embark in your trading journey, you need to figure out; do I want to use my own capital or use someone else’s capital? Yes, there is a way to trade without risking your own capital and that involves going through a trading evaluation and getting funded.
There are companies out there like Apex Trader Funding, Leeloo Trading, OneUp Trader and others that will allow you to go through an evaluation process to prove to them that you are a consistent and profitable trader. Here’s a link to the aforementioned funding companies and please note, TruTrade is not associated with any of these companies.
Do you own due diligence and review of a funding company should include; number of years in the business, reviews, program features and fees. While these companies tend to offer similar programs, they are different and you should pick the best one that fits your trading style.
Once you have selected a company, you should determine the account size that you feel comfortable trading. For example, here’s a screenshot of a $50,000 trading account from Apex Trader Funding:
This particular account allows you to trade 10 contracts or 20 micros and requires a minimum of a $3,000 profit target. You should also pay attention to the Trailing Threshold and of course, you want to compare fees. In this case, you will be charged $167 per month until you meet the evaluation requirements. However, you are only required to trade for a minimum of 10 days. Theoretically, you could get funded in the first month and not have to pay for the monthly renewal fee.
So what happens after you get funded? You are then provided with a Performance Account. The funding company will retain ownership of the account, but you’ll be allowed to trade it. You’ll continue to follow rules like Trailing Threshold, but now you can earn monthly disbursements over time. Here’s a sample payout schedule from Apex Trader Funding:
The first month, you’ll be able to withdraw a minimum of $1,000 and maximum of $2,000. Same for the second and third month. On the fourth month, you can request any amount over $1,000 with no cap. The purpose of this payout schedule is to allow you to continue to build your account over a 4-month period, leaving you plenty of capital to withdraw funds but keep a decent cushion should you have some negative trading days. If your balance drops below $52,500, you will start the evaluation process all over again. So you can see why this payout schedule is important.
There is a cost to using other people’s capital. First, funding companies want a long-term relationship as they will make money from your trades. They can copy your trades on their own accounts and they also require a profit split, in this case Apex requires 10% of the profits that you make after the initial $10,000 made by the account. Second, you are required to pay a monthly fee for your Ninja Trader license and data feed each month. These costs are minimal in comparison to the upside potential you can have by being a successful trader.
TruTrade has the software automation tools that are fully compatible with Ninja Trader 8, making the evaluation process so much easier. We have clients that have done exactly that!