Over the last 2 years, the funded trading industry has exploded, with Lux Trading Firm alone funding thousands of traders around the world with accounts ranging from $25,000 to $10,000,000. The success of the industry is, in part, due to the huge number of benefits associated with funded trading.
Make Larger Profits as A Funded Trader
Traders with funded prop firm accounts typically earn much more in the markets than traders solely trading their own capital. Let’s take some of Lux Trading Firms Elite Traders as an example.
Retail traders will have on average £1000 - £10,000 in their trading accounts. Gaining 5% in a month on these small live accounts would earn you £50 - £500. This is substantially less than you would earn with a 9-5 job.
However, Lux Trading Firm funds traders with between $25,000 and $10,000,000 in trading capital. That same 5% gain would earn you $250 - $500,000 that month, depending on how much capital you had been funded.
Not only does an increase in capital lead to an increase in profits, it allows traders to reduce their risk appetite in the markets and eliminate the fear and greed that usually plagues traders on smaller accounts.
Capital Scaling Opportunities
When trading a small live retail account, it’s a long road to compound your profits to the point where you’re pulling in as much money per month as you would from doing a 9-5.
Once traders have obtained funded trading accounts, Lux Trading Firm offers traders a huge increase in trading capital for every 10% milestone. For example, if you return 10% profit on a $500,000 funded account, Lux Trading Firm will increase your capital under management to $1,000,000.
This means, in theory, that traders are able to scale their account balance to $10,000,000 in just 6 milestones - another huge benefit of trading funded prop firm accounts.
Risk Management Framework
Retail trading can be a lonely road and many traders lack accountability when it comes to risk management. Traders rarely have anyone to answer to, so they’re able to make impulsive decisions and mismanage their risk.
When trading on a funded prop firm account, you will have risk management parameters in place to keep your capital safe. For example, with Lux Trading Firm, Elite Traders have a drawdown limit of 5%.
Not only does a drawdown limit protect capital, it encourages traders to take their positions more seriously, manage risk and follow their trading plan - which often yields greater results.
Choosing The Right Prop Firm To Work With
Choosing the correct prop firm to work with is crucial as trading with the wrong funded accounts can cost you years of trading.
Firstly, analyse how the prop firm makes money. Many trading firms offer demo accounts to traders, meaning that they only earn revenue from traders failing their verification stages, rather than from retaining profitable traders.
In fact, Lux Trading Firm is the only prop firm offering real trading capital to traders, instead of demo accounts where withdrawals are paid from losers.
The business model of the prop firm you partner with will give you an idea of their intention in business. If prop firms only get paid you traders failing, which many do, it’s in their best interest to ensure you fail.
Lastly, look at the funding rate of traders within the prop firm. For example, 20% of Elite Traders with Lux Trading Firm obtain funded trading accounts, against an industry benchmark of just 4%.
The 16% increase with Lux traders is due to traders having access to a risk management desk, a live trading room, a 1-1 professional trading mentor and a range of other analytical tools to help build an edge within the markets.
Choosing a prop firm that gives you the tools you need to succeed is important and should not be overlooked.
The Bottom Line
Trading funded prop accounts is a great route for traders looking to increase trading profits, strengthen their risk management framework and grow their assets under management much faster than is traditionally possible.
The funded trading accounts offered by Lux Trading Firm make it an industry leading proprietary trading firm and currently the only prop firm offering real trading capital to traders.
