Becoming a prop firm funded trader is a very exciting goal for most traders with low capital. The idea of being able to trade upwards of £100,000 in trading capital and make thousands of pounds per month sounds great, right?
However, it can take a long time to achieve this goal – even with the fast paced nature of prop firm trading.
It typically takes around 4-5 months to become a prop firm funded trader, if you’re a consistently profitable trader. Some traders can achieve this much faster by using increased risk. However, the likelihood of failing the trading challenges would be increased.
In this article, we’ll be looking at the steps involved with becoming a funded trader, how long this process typically takes traders and how you can get there faster. So, let’s get into it…
Becoming A Prop Firm Funded Trader – How Long Does It Take?
There’s no doubt that becoming a prop firm trader is a much faster way to pull larger profits out of the markets, than if you were just to trade your own funds.
Most traders come into the markets with just a few thousand dollars, which isn’t enough capital to make considerable profits or trade for a living. Therefore, prop firm funding can be incredibly appealing.
Most prop firms make traders undergo a trading challenge, to prove their profitability in the markets and weed out the unprofitable traders. Although these could be passed in just a few days, they rarely are – and nor should they be!
Often, traders that obtain their funded accounts very fast are the traders that lose their accounts very fast too. As it is with trading personal funds, longevity is the name of the game in forex.
So, let’s break down the steps to becoming a prop firm funded trader…
Step 1 – Becoming A Profitable Trader
The groundwork in becoming a funded trader is obviously to become a profitable trader. If you are not consistently profitable on your small trading capital, having £100,000 in funded capital isn’t going to make you suddenly profitable overnight.
Therefore, the precursor should be trying to become profitable. Not profitable for a week or two, but profitable over the course of months. Once you’re at this stage, passing a trading challenge should just be ‘business as usual’ for you.
Becoming profitable isn’t something that happens overnight. In fact, it normally takes traders around 12 months to become profitable.
This is due to the complex nature of the markets, risk management and psychology. Having a subjective (not rule based) trading strategy also increases the learning curve, meaning it takes much longer to learn to trade if you do not have an objective system to use.
Step 2 – Trading Challenge
Once you’re a profitable trader, the next step would be to undertake a trading challenge with your prop firm of choice.
Trading challenges are very simple in nature. In essence, you’ll need to make a return of X%, without violating the maximum loss rules. There will most likely be a daily loss limit and a total loss limit.
Once you hit the profit target, providing the loss rules were not violated, you will become a funded trader.
Different prop firms have different rules, of course. Some prop firms have two trading challenges, whereas some offer accounts with just one challenge.
How long this challenge takes to pass depends on so many factors. This includes your trading strategy, your risk management, risk per trade, market sentiment and much more.
It would be naive to assume that you can pass these challenges overnight. The reality is, for most profitable traders, this will still take between 4-5 months of trading.
Step 3 – Funding
Once you’ve passed the trading challenge, you’ll be funded! This isn’t the end of the road though – you need to keep your trading account and not violate any of the rules if you’re hoping to receive payouts.
At this point, going slowly and steadily is crucial. Most traders actually look to decrease their risk at this point.
You really don’t want to be in a situation where you’ve spent 6 months obtaining £200,000 in trading capital to just lose it within 2 weeks with some bad trades.
It’s smart to also look to trade with multiple prop firms at this point, to increase your profits per month and hedge your risk exposure to individual firms.
How To Become A Prop Firm Trader Faster
You cannot completely shortcut the process to becoming a funded trader but you can speed up your progress ever so slightly.
The bulk of the time taken in becoming funded is in the first stage, where you’re actually learning to become profitable.
Our main advice would be to build out a rule based trading system. You should be repeating the same setups in the markets (if you’re a technical analysis trader) over and over again. You should strive to be almost robotic in your approach.
You can massively decrease the learning time by backtesting and journaling your trades. Backtesting, when done properly, means you can take thousands of trades in the markets without needing to sit through the next few years. You can speed up the bars and take trades faster using past data. This ensures you have a good idea as to whether or not your trading system is profitable.
Past data is no indication of future returns but it can be incredibly useful to help traders learn and refine their edge.
Once you’re actually taking a challenge, it’s hard to increase the speed at which the challenge is completed without simply increasing the risk per trade. Increasing the risk per trade is a bad idea. You’re much more likely to violate your maximum loss thresholds and be plagued with emotion – leading to you likely losing the challenge and having to pay to reset your trading account.
In Summary – How Long Does It Take To Become A Funded Trader?
In conclusion, it can take around 4-5 months to pass a prop firm trading challenge and become a funded trader. However, it can take much longer than that to become a profitable trader beforehand – which is a necessity.
If you’re looking to become a funded trader, work with Lux Trading Firm today!
