A funded account is a trading account where a proprietary trading firm provides the capital — typically $25,000 to $200,000 — after a trader passes a structured evaluation. The trader risks none of their own money on live markets; instead, they pay an upfront evaluation fee and prove consistent profitability under strict risk rules before receiving access to firm capital and a share of the profits.
Key Takeaways
- The daily drawdown limit (usually 5%) is the single most dangerous rule — one bad morning can end your funded account even if your total equity is still above the max drawdown threshold.
- Evaluation fees range from $155 to $625 and are typically refunded on your first payout, but you must pass both Phase 1 and Phase 2 before receiving real capital.
- Funded accounts carry counterparty risk with no regulatory protection — the 2023 CFTC shutdown of MyForexFunds froze approximately $300M in trader assets.
How a Funded Account Works
Prop firms use a two-phase evaluation to filter for disciplined traders. Phase 1 requires hitting a profit target — usually 8% of account size — in a minimum number of trading days (typically 10) without breaching daily or total drawdown limits. Phase 2 repeats the process with a lower profit target, around 5%, to confirm the Phase 1 result wasn’t luck.
Pass both phases and the firm issues a funded account. Capital allocation runs from $25,000 entry-level accounts up to $200,000, with scaling plans that can push allocation to $2,000,000 for traders who hit consecutive monthly profit milestones.
The three rules that end most funded accounts:
- Maximum daily drawdown — typically 5% of the starting balance. A $100,000 account loses trading rights the moment intraday losses hit $5,000, regardless of where total equity sits.
- Maximum total drawdown — usually 8–10% of starting balance. On a $100,000 account with a $10,000 max drawdown, equity hitting $90,000 at any point terminates the account. Topstep uses a trailing drawdown that locks in as profits accumulate, making this limit shrink as you earn.
- Minimum trading days — firms require active trading on at least 10 days per phase to prevent traders from gambling on a single high-conviction day.
Most firms also prohibit holding positions through major news events (NFP, FOMC decisions), overnight or weekend holds on certain instruments, and restrict trading to specific assets — often forex and CFDs at FTMO, CME futures only at Apex Trader Funding.
Practical Example
A trader pays $325 for an FTMO $50,000 Phase 1 challenge. The targets: earn $4,000 (8%) across a minimum of 10 trading days without losing more than $2,500 in a single day (5% daily limit) or $5,000 total (10% max drawdown).
The trader works ES futures, risking $250 per trade — 0.5% of account size. By Day 7 they are up $3,200. Then an FOMC reaction triggers a $2,000 loss in 40 minutes, wiping the day’s trading allowance and forcing a hard stop for the session.
They adapt, journal the FOMC reaction, and avoid news windows for the remainder of the challenge. Phase 1 ends on Day 14 at +$4,100. Phase 2 (5% target, same risk rules) takes another 12 days. The $50,000 funded account arrives with an 80% profit split.
First funded month: $3,800 gross profit. Payout: $3,040 (80%). The original $325 evaluation fee is refunded in that first withdrawal.
A funded account gives retail traders access to prop firm capital — typically twenty-five thousand to two hundred thousand dollars — after passing a paid challenge. Traders keep seventy to ninety percent of profits but must follow strict daily loss and drawdown limits or lose the account.
Why Funded Accounts Are Hard to Keep
Passing the evaluation is the easier half. Industry data suggests roughly 80% of traders who receive funded accounts lose them within 90 days — and the mechanism is almost always the daily drawdown rule, not total drawdown.
Here is why: a trader up 6% on the month feels confident. They size up slightly on a high-conviction trade. A news spike moves against them — $4,800 loss in 20 minutes on a $100,000 account. The daily limit (5% = $5,000) was nearly hit. One more losing trade and the account is gone, even though total equity is still positive for the month.
The traders who stay funded share one documented habit: they review every session in a trading journal before the next open. Specifically, they track average daily loss, worst single-day drawdown, and how often emotional sizing coincides with losing streaks. That data makes the daily limit feel concrete rather than abstract.
Firm selection also matters. FTMO offers static drawdown (the floor never rises as you profit), which is more forgiving than Topstep’s trailing drawdown. Apex Trader Funding reported over 25,000 funded traders in 2023 — notable scale for a futures-only firm. No firm offers regulatory protection comparable to a brokerage; the 2023 CFTC shutdown of MyForexFunds, which froze roughly $300M in customer assets, is the clearest example of what counterparty risk looks like in practice.
How JournalPlus Tracks Funded Account Performance
JournalPlus lets funded traders set daily loss alerts and max drawdown thresholds that mirror their prop firm rules exactly. When a session’s cumulative P&L approaches the firm’s daily limit, the dashboard flags it in real time — the same information the firm’s risk desk is watching. Review your funded account trades alongside your evaluation trades to identify whether your risk-per-trade sizing stayed consistent across both phases.
