Author: adrankone

Futures trading is emerging as an accessible way to speculate on the financial market with the potential for lucrative returns. It is increasingly open to non-specialist individual traders who may be able to access instant funding with a prop firm. Here’s a look at what futures trading is all about and how you can get started.

What is futures trading?

Futures trading involves trading, buying or selling futures contracts. It’s essentially an agreement between two parties to buy or sell an asset at a future date at a fixed price. This means that the buyer can purchase the asset even if prices rise, so there’s an opportunity for all parties to make profits.

The most common type of assets you will find in futures trading include commodities such as gold, wheat, oil, coffee, soybeans, corn, or livestock. It may also include bonds, individual stocks, cryptocurrencies, or exchange-traded funds (ETFs), which are converted into cash equivalents. 

Who takes part in futures trading?

Producers of commodities, such as farmers, mining companies or manufacturers, may use futures contracts as a way of locking in a price for their products, and therefore protect themselves from any volatility that might cause the value to fall. 

Commercial buyers also utilise futures trading to lock in a price for a commodity, in an attempt to hedge against any potential price rises. Typically, these buyers will be acting on behalf of a manufacturer who requires a commodity to make their products, such as a baked goods company that needs to buy large quantities of wheat. 

Speculators also take part in futures trading, not in order to acquire physical deliverable commodities, but to make a profit by speculating on future price movements. The speculators may be financial professionals working with hedge funds, but increasingly they are also solo traders who may be working independently, or through a prop firm. 

What are the benefits of futures trading?

Access to a wide range of markets

Futures trading is a way of speculating on a wide range of markets with relatively small amounts of upfront capital. This diversity allows traders to take advantage of a range of market conditions, giving more potential for profitable trades. 

For example, it’s possible to trade commodities such as agricultural produce, metals, and energy; currencies and cryptocurrencies; financial indices such as Dow Jones; and interest rates and bonds. This means that traders can also diversify their portfolios, which reduces risk by balancing investments across multiple markets. 

High leverage

It is possible to trade futures with a high degree of leverage. This means using borrowed funds (such as those supplied by a prop firm) to increase buying power and to amplify the potential for return on the investment. 

Typically, a trader will need to put in a margin of the contract value of about 10 per cent, allowing them to control much larger positions than they could otherwise afford. This maximizes the profit potential, but also significantly widens the scope for making losses, so stringent risk management strategies are required.

High liquidity

A very large volume of future contracts are traded every day, which is described as having ‘high liquidity’. This means that buyers and sellers are always readily available, so orders can be placed quickly and prices are more stable with minimised slippage. 

Furthermore, futures markets are often active above and beyond regular trading hours, allowing traders to respond quickly to any changes in market conditions. 

Fair and transparent trading

The futures market is a fair and transparent playing field, because no one can predict future price action with complete certainty, so they are protected from insider trading. The futures markets are also well-regulated by government authorities to ensure fair trading and pricing practices, so you can be confident that your trading strategies will not be undermined. 

Suited to speculators

Futures trading is particularly suited to speculators, because high leverage and high liquidity means that there are plenty of opportunities to take advantage of rising and falling prices to make quick profits. It usually does not involve physical ownership of the underlying asset, which reduces costs and administrative tasks, and often associated fees are lower. 

A wide range of trading styles

Futures contracts lend themselves to both long-term and short-term trading strategies, so there is more flexibility for an individual trader to find a trading style that suits them. 

What are the drawbacks of futures trading?

As with all types of trading, futures trading carries the potential to make losses as well as profits. Because of the high leverage involved, it is important to use stop losses and always stick to your risk management strategy when making trading decisions.

The futures markets can also be complex, so it is necessary to carry out some learning and research before entering the live markets to ensure that you are a confident and well-informed trader. 

How do you get started as a futures trader?

It’s possible to create your own portfolio to trade futures, or employ a futures and commodity advisor to manage a portfolio on your behalf. However, both these methods involve an investment of a reasonable amount of your own capital. If you do not have a large amount of capital to invest, then you may wish to explore trading via a prop firm.

This means that you will have access to a world-leading trading platform and tools, and you will be able to join a ready-made online support network for advice and learning opportunities. If you pass the evaluation phase, you will be given access to a fully funded account with scaling leverage and profit share.

Research the prop firm carefully to ensure a good match for your aims and experience level. For example, you may prioritise the quality of educational resources; competitive fees; or access to particular markets or trading styles.  

If you have little or no experience, the best way to get a taste of live futures trading with zero personal financial risk is to look for a prop firm that offers a free trial. This will give you access to a simulated account with virtual funds to trade on a platform of your choice. 

It’s a chance to test out your strategy and familiarize yourself with the platform interface without the pressure of needing to hit profit targets. It’s a way to gain confidence and flex your trading muscles without being thrown in at the deep end. If all goes well, you can opt to pay a fee and undertake an evaluation test. 

If you are successful, you will have access to a fully funded traded account, and you will be able to keep a percentage of any profits you make. Usually, the entry level will be a 50:50 profit share between you and the prop firm. 

As you develop your skills and prove that you can operate within the firm’s risk management policy and consistently hit your targets, many firms will increase your profit share and account size.  

The importance of being well prepared

As we have seen, futures trading offers excellent potential for individual traders to make money. However, there is also the risk of making heavy losses, so it’s essential that you understand clearly how futures trading works, and what skills are involved. 

If you decide to trade with a prop firm, any losses that you make will be covered by the firm, but if you do not meet your profit targets then your account may be closed. Prop firms naturally want to work with competent traders who will not make risky trades and expose them to excessive losses. This is why you will need to pass an evaluation stage. 

How to prepare for futures trading

First of all, familiarize yourself with the basic concepts of futures trading, and the key terms such as margin, leverage, and contracts. Learn about the various futures markets, and consider which ones suit your aims and objectives the best, such as commodities, indices, or currencies. 

Make use of learning resources

Futures trading is increasingly popular with individuals, and you will find supportive online communities that offer advice, the chance to exchange ideas, or even mentorships. There are also online courses, podcasts, webinars, and print materials available. 

These resources will equip you with necessary knowledge such as technical analysis (the study of price charts, graphs and patterns) and fundamental analysis (the study of economic data, news and global events). Both these techniques will help you to predict price movements. 

When you have built up sufficient knowledge, put together a trading strategy and risk management plan, and test them out with a demo account. 

If you are willing to put in the time and effort to learn and cultivate your trading skills, then futures trading can be an exciting and rewarding way to supplement your income, or even be the stepping stone to a new career. 

Forex trading with a prop firm offers excellent opportunities for solo traders to boost their income or even take up a full time career, with low personal financial risk. However, you’ll need to prove that you’ve got what it takes to be given access to a funded account. 

Having said that, everyone has to start somewhere and inexperience isn’t necessarily a complete barrier to entry. Here’s a look at how to rocket your trading skills and maximise your chances of being successful.

Grasp the key principles 

Forex trading can be complicated, but it’s not too difficult to get a handle on the basics with some research and learning. There are plenty of resources available on and offline, including books, webinars, podcasts and forums. Understand the basic principles of foreign exchange and buying and selling currency pairs with the aim of making a profit. 

The bare bones of forex trading boil down to deciding whether to buy or sell the base currency (the first-named currency in a pair, such as USD/GBP). If you believe it will strengthen (rise in value), then you would buy. If you think it will weaken based on your research, then you would sell (known as short).

Familiarize yourself with the different categories of currency pairs and how they function in the global market. Spend some time learning about the key forex terminology, such as leverage, spread, pip, and lot. This will give you an insight into how the trading world works and you will be able to put together a well-informed trading strategy.

Study different trading strategies

There are various types of trading strategies, such as scalping, day trading, and swing trading. Scalping involves making very short term trades, sometimes in under a minute. Day trading involves making a trade within a window of a few hours, and swing trading is a more long term strategy where trades can be left open for days, weeks, or even months. 

The style of trading you adopt may depend on your personality type, the amount of time you have to devote to trading, and any rules or guidelines stipulated by the prop firm. 

Develop a trading plan

The next step is to put together your trading plan. This will help you to make consistent decisions to anticipate price movements, rather than reacting blindly to every fluctuation in the market. The forex markets can be volatile, and this can provoke inexperienced traders into making poor decisions. A solid trading plan will help to keep you on track.

Your trading plan should include a risk management strategy, such as setting stop-loss levels to prevent heavy losses, and limits on position size. The prop firm you work with is likely to have its own risk management rules that you must operate within, or your account may be at risk of being closed.  

Start with a demo account

One of the best ways to gain confidence and experience as a forex trader is to make use of a demo account. This will allow you to trade in simulated conditions without the pressure of trading the live market or risking any of your own money. 

Prop firms such as FTUK offer a 14-day free trial, so you can have access to a world-leading trading platform and road test your strategy. It’s a prime opportunity to get a taste of what live trading is really like, and find your way around the interface so that you are familiar with it and ready to take the next step.

You won’t be able to make payment requests on any profits you make, but if all goes well and you hit your profit targets, you can progress to the two-step evaluation program. In return for a fee, you’ll be given another 14-day trial during which you take two tests. If you pass the tests, you will then be eligible for a fully funded account with scaling profit share.  

Even if your free trial doesn’t go quite to plan, it’s still an invaluable learning opportunity. Review all the trades you made, and try to work out the reasons they didn’t (or did) go as well as you hoped. This will help you to refine your strategy and iron out any weak points. 

Remember that the prop firm needs the profits generated from its traders to stay afloat, and they also need to cover any losses made by traders. This model works well for skilled traders, but obviously they need to prove their abilities and show that they are not reckless or undisciplined operators. This is the reason for the evaluation program.

How to take your trading skills to the next level

So, you’ve got your feet wet with a free trial, and now you are keen to take on the two-step challenge. Here’s a look at how you can max out your chance of success.

Learn the psychological game

Effective forex trading requires more than just technical knowledge: your mindset is equally as important. Understanding the psychology of trading is a powerful tool that will underpin your strategy and risk management abilities.

The popular image of a financial trader might be a whizz kid who thrives on intuition and adrenaline, but the reality is quite different. Successful traders are highly disciplined and risk-averse, and every decision they make is objectively weighed and measured. 

This is not a skill most of us naturally possess, because we are all prone to emotion-led decisions and mental biasses. This can be especially true when money is at stake, because it’s so fundamental to our comfort and survival. Even in the most well-balanced of individuals, the prospect of making profits can soon turn to greed.

Greed is not good

Despite the well-known mantra, greed is not good in forex. The instinct is to push for more, and this can cause inexperienced traders to hang on to a profitable trade past its peak, only to see the value tumble. It requires mental discipline to stick to your trading strategy and exit the trade based on your research and market analysis, not untrustworthy ‘gut instinct.’

Fear is the enemy

The flip side of greed is fear of making losses. Nobody wants to be a loser, but losses are all part of the game in forex trading. Experienced traders learn to take them in their stride, much like business expenses, and don’t dwell on them as long as they are making consistent profits over the long term. Expect to make losses on around 50 per cent of your trades.

If you are overly afraid of losses, your approach to trading will be too cautious and you won’t make profitable decisions. As with greed, you need to develop the ability to put your emotions to one side, and make purely logical decisions that are evidence-based.

Steer clear of revenge trading

Another pitfall to be avoided is revenge trading. This is when you are provoked into trading to make up for a painful loss, because you feel cheated out of a reward, or because your pride is injured. However, you are unlikely to make well-researched trades and will probably just end up compounding your losses.

Forex traders need to learn resilience and accept that they cannot control the markets: you can only ever operate as an intelligent speculator. This means having the emotional maturity to accept your losses and step away, rather than trying to ‘fix’ the situation.

Track and review your performance

Don’t just rely on your trading account to record the dates and outcomes of your trades: from day one, keep an independent journal. This might seem like an unnecessary piece of admin, but it is not: it’s an essential tool that will allow you to analyse your trading decisions and outcomes.

Over time, you will be able to review your trading performance and identify the patterns in your least and most successful trades. This will help you pinpoint any weaknesses in your strategy and make improvements, and strengthen the areas where you are already doing well.

Stay up to date with global economic events

Currency values are influenced by macroeconomic factors such as interest rates, inflation, employment rates, consumer price indexes, and so on. Follow data releases that are relevant to your currency pairs to inform your trading strategy. There are online economic calendars available that you can customise to highlight the most relevant data.

Geopolitical events such as elections, wars, natural disasters, and pandemics also affect currency values, so keep up to date by following reliable news outlets. Social media can be a useful way of picking up early information to help you stay ahead of the game. However, be careful who you follow and check the authenticity of their credentials. 

So, there you have it: inexperience is not an insurmountable barrier to accessing a funded trading account, particularly if you take advantage of a free trial with no personal financial risk. Build on the opportunity by developing your trading mindset, staying ahead of current affairs, and regularly reviewing your performance. 

Following what has been a fascinating 2024 for both new and old markets, a lot of people are making plans to get into trading and investing starting in the new year.

It is such a common phenomenon that it coined the term ‘January Effect’, which is the tendency for the markets to be more active and for stocks to rise in the first month of the new year.

Whilst it is difficult to quantify the degree of increase, it is definitely the case that there are a lot of traders looking for a new challenge and often with some money gifted to them over the Christmas period who want to give trading a go for the very first time.

Of course, it can sometimes be very overwhelming when you get started as a trader, with a lot of terminology, technology and concepts to learn in one go, especially if you intend to apply for an instant funding prop firm to start making serious investments.

With that in mind, here are ten top trading tips to help get an absolute beginner started, from core concepts you need to know to common pitfalls to be avoided.

Learn Before You Put Money In

In nearly every walk of life, attempting to run before you can walk leads to you falling flat on your face. You need to get to grips with the markets you intend to enter, and which factors tend to affect the market or markets you choose to enter.

The factors that will affect share trading in the biotechnology sector, for example, will be far different to those that will affect currency pairs in the foreign exchange (forex) market, which will themselves be different from investing in the commodities market.

There are a lot of valuable tools available, including plenty of guides on the substantial new lexicon used by financial traders, what certain movements mean and how to interpret various data sets.

Theory, Observation, Practice

There are three main ways to learn, regardless of the subject, and those three stages involve reading and studying theory, observing how others do it, and then practising it in the safest possible environment that is also representative of the skill you are learning.

These are the three stages of learning, largely in this order, that beginner traders need to adopt in order to succeed with a live account. They need to learn what they can, look at how other people trade, either through conversions or by reading trading journals (more on that later), and get a practice account before going live.

A lot of the best prop firms are more than aware of this, providing a lot of resources to help people who are getting started to learn the ropes, network with other traders and practice using their platform.

Most Of Your Decision Making Is Away From The Market

Setting up a trading plan is the first and most important step to becoming a successful trader, and one of the big reasons why traders swear by this approach is that it front-loads most of your decision-making and analysis, creating an analytical approach that will help you to succeed.

By establishing your trading plan this way, and testing it in a demo account to ensure that it is fit for purpose before going live, you can put yourself on the road to success, and focus your mental energy on times when your approach might possibly need to change.

Set up a trading plan, a risk management strategy and a set of short and long-term goals ahead of time, and make decisions based on the goals you already have established.

Give your trading plan at least ten trades before you decide to make significant changes.

Avoid Emotional Trading

One of the biggest vices a lot of beginner traders suffer from is emotional trading, which is when a trader makes a financial decision based purely on a powerful emotion at the time.

There is a saying that the only two emotions on the market that matter are fear and greed, but using them as your inspiration to trade is a recipe for disaster, as it typically leads to making the wrong trades at the wrong time for the wrong reasons.

Interestingly, both fear and greed can lead to the same mistakes for opposite reasons; greed could stop a trader from exiting a position once they hit their agreed-upon target price thinking that it could go higher.

Conversely, the fear of missing out could cause a trader to try and catch a rocket on the ascent, minimising potential gains at best.

What is worse than both of these, however, is trading out of anger, sadness or hurt feelings, something that can be extremely consequential and has wiped out many portfolios in the past.

Never Trade Impatiently Or Vengefully

A connected idea to this is the concept of revenge trading. This goes beyond emotions overriding rational, objective decision-making and often enters the realm of costly impulsiveness.

After a bad trade, the temptation can sometimes be to immediately get back onto the floor and make a quick trade. One or two quick day trades will surely make back the drawdown amount, right?

In gambling circles, this is known as chasing losses and is typically the psychological phenomenon that turns a bad beat or bad luck into something that can devastate an individual.

Investing is not gambling, of course, but the psychological concept of wanting to reenter the market and avenge an unfortunate turn still remains.

Most firms are designed to give you the space to just turn off the terminal for the day and come back to your portfolio with a different approach.

Know When To Hold And When To Fold

On the subject of gamblers, the legendary Kenny Rogers once sang that you have to know when to hold and when you should fold and back away.

In the context of trading, this simply means that you need to know the best times to hold on to stocks that appear to be struggling and when to walk away from a trade, most of the criteria for which should be in a trading plan.

Sometimes the best action you can take is inaction, although it takes some experience to understand how to effectively wait for the right moment. It is possible to make the right choice at the wrong time, and the wrong choice at the right time.

A good example of both comes courtesy of one of the greatest forex traders ever, who despite this managed to break this and several other beginner rules, costing himself billions in the process.

Stanley Druckenmiller was the mastermind behind the greatest forex trade in history, a gigantic short play on the Great British pound that broke the Bank of England, arguably changed the geopolitical history of the United Kingdom and made the Quantum Fund billions.

Unfortunately, after several currency crises in the late 1990s, Mr Druckenmiller pivoted into the technology sector during the dot-com boom. He made several mistakes when navigating a very unfamiliar market.

He was correct that the dot-com bubble was set to burst, but lost a lot of money with bad timing. He made that money back and got rid of his technology investments before buying into the market an hour after the NASDAQ peaked, losing $6bn in a matter of months.

Set Up A Trading Journal

In the field of mental health, journalling is an extremely common practice that helps improve emotional well-being through putting stressful, traumatic and difficult moments into words.

A trading journal can help in a very similar way by allowing traders to see, at a glance, what has historically worked and what has not in the past, as well as any relevant thoughts regarding the reasons why a particular trade was entered into.

Judge Performance By Discipline Rather Than Revenue

It is easy to think of the market purely through the lens of wins and losses, but doing so can actually lead to remarkably poor trading performance, especially if an outlier result leads to the wrong lessons being learned.

As the lottery proves, anyone can win the jackpot once, and it is true that someone can end up in the right place at the right time to end up with a massive gain despite the prognosis and analysis from the market.

Conversely, it is possible to do everything right and end up losing money, particularly if the market itself has hit a slump. 

This makes judging trades based purely on profit and loss relative to initial price a limiting approach that can solidify unhelpful trading practices.

Instead, using your trading journal, explore your trades by how consistently they match your trading strategy, as that is a better sign of long-term success.

Never Risk What You Cannot Afford To Lose

Risk management is key to any long-term success in trading, and many prop firms have quite strict guidelines when it comes to making trades to ensure that you are diversified and protected enough from the potential harm of the market.

Ultimately, do not risk more than you can afford to lose and avoid markets and trading strategies which inevitably require high-risk approaches.

Trillions of dollars are exchanged each day on the forex market, and with the right skillset, it is possible to make substantial profits from trading. The process works by buying one currency while selling another, with the goal of profiting from the difference in values. The skill lies in being able to identify the peak time to buy and sell.

The advantages of using a prop firm

Thanks to the rise of online prop firms such as FTUK, there are exciting opportunities for non-professional traders to enter the world of forex without risking any personal capital. These prop firms can give you access to a fully funded account with generous leverage potential in exchange for a share in any profits that you generate. 

However, in order to be given access to a funded account, you’ll have to prove that you’ve got the necessary skills. This is because the business model of prop firms relies on working with traders who are able to generate consistent profits without taking unnecessary risks. 

You don’t need to have years of experience and a degree in economics to be a good forex trader, but it is necessary to understand how the market works and have a solid trading strategy in place. 

What is the best way to learn forex trading?

Even with plenty of research and learning, the thought of jumping right into the fast-paced and volatile forex markets without any prior experience of live trading can be rather daunting. Making objective decisions when under pressure is not a skill most people are born with, but acquire with practice. 

But how do you learn on the job without taking risks with your own money or the prop firm’s funds? One of the best ways to do so is by taking advantage of a free trial with a prop firm such as FTUK. This will give you access to a 14-day test account to trade in simulated market conditions. 

With a free demo account, you can get a taste of live trading without the pressure of risking your own money. You’ll be able to choose between two platforms such as Match Trader or DX Trade, giving you the opportunity to familiarize yourself with industry-leading tools. 

How does the free trial work?

You’ll be working with a 10 per cent static drawdown and 10 per cent profit target, with a leverage of 30:1. You won’t be able to request a payout on any profits that you make or scale up to higher funds or leverage, and the account will automatically close after 14 days.

However, it’s a golden opportunity to roadtest your trading strategy and skills, and also help you develop your ‘trading mindset.’ This means the confidence and psychological resilience that is necessary for successfully navigating the sometimes volatile markets. It’s a stepping stone to becoming a funded trader, where you can keep a share of your profits. 

How to make the most of your free trial

You may just want to jump into the free trial straight away, because you’ve got nothing to lose and everything to gain. If you are successful, you can choose to take FTUK’s two-step evaluation program. 

This involves paying a fee for access to similar trading conditions, but this time you’ll also take two tests during the 14 days. If you pass both tests, you will be eligible for a fully funded trading account with a profit share and a scaling plan. 

To get the most out of your free trial or the two-step program, make sure that you understand the basics of forex trading. Here’s a guide to what you need to know.

The basic principles

Forex is a portmanteau of foreign exchange, and on the global forex markets you can trade currencies. The exchange rate is the relative price of two currencies from two different countries, and prices are constantly in a state of flux. 

You’ve probably experienced this first hand if you’ve travelled abroad and needed to exchange the currency of your country to that of your destination country. In all likelihood, there wasn’t an exact match in the value of the two currencies: for example, the Great British pound (GBP) is currently worth around 1.2 or 1.3 US dollars (USD). 

However, international travel and trade are only small players in the global forex market: the real action is generated by banks, financial institutions, hedge funds, and individual traders. The currencies are bought and sold in pairs purely with the intention of making a profit on the difference in price. 

For example, if indicators are showing that the GBP is strengthening against the USD, you might buy GBP/USD. When you anticipate the value of the GBP against the USD has peaked, you can sell the GBP at a profit. 

There are about 180 world currencies, but as a new trader it’s best to stick to the ‘majors.’ This means the currencies of major economies such as the USA, Great Britain, the European Union, and Japan. These currencies have high ‘liquidity’, meaning that there are always plenty of  buyers and sellers to be found. 

Key forex terminology

Familiarise yourself with the forex terminology so that you can gain a better understanding of how the process works, and will be quicker and more confident in your decision making. Here’s a guide to some of the most common terms you will encounter.

Pip: Pip (short for price in point) is the base unit (or smallest price) in the price of a currency pair. It represents 0.0001 of the quoted price in the vast majority of currencies. 

Spread: Spread is the difference between the purchase (or bid) price and the sale (or ask) price of a currency pair. In order for a forex trade to be possible, the value of the currency pair must be higher than the spread. 

Lot: Lot is a standardised trading size, which will typically be 100,000 units of the base currency. It’s also possible to trade with mini or micro lots. 

Leverage: Leverage is the capital provided to traders by a prop firm to enable them to trade larger positions. This increases the potential for making larger profits, but also the potential for losses, so it should be used with caution. 

Learn market analysis techniques

Forex market strategies broadly have two approaches: fundamental analysis and technical analysis. Both methods are used to predict future price movements and identify good opportunities to enter the market, but they have different approaches. 

Most of the time, you will probably use a combination of both to inform your trading decisions, but it is important to be aware of the differences.

The fundamental model

Fundamental analysis involves evaluating economic data such as inflation and interest rates, and geopolitical events such as elections and trade agreements to assess the health of a country’s economy. This can be indicative of whether the currency of that country will be likely to increase or fall in value.

The technical model

Technical analysis centres around identifying historic patterns and trends to predict future price movements. The tools most used in technical analysis include mathematical models, chart patterns, and candlestick patterns. These methods can help traders to identify the best times to enter and exit the market, and to manage risk effectively.

Develop a trading strategy

It is important to have a trading strategy in place to help you make the most of your free trial or be successful during the evaluation process. However, this doesn’t need to be complicated: in fact simple strategies are often the most effective, so don’t be daunted by the prospect. 

The prop firm you choose to work with may have rules or guidelines about which trading strategies are permitted, so check this out before working on your plan. The prop firm is also likely to have risk management rules that you will need to operate within, otherwise your account may be closed. 

Common trading strategies

Some common trading strategies include scalping, day trading, and swing trading. The approach that suits you may depend on the time you have available for trading; your level of skill and experience; and your temperament.

Scalping involves buying and selling currency pairs within a very short period of time, sometimes just 30 seconds. The aim is to make a high volume of trades with small profits that will accumulate throughout the day. Intraday trading focuses on making trades within one or four hour windows during the peak market hours.  

Swing trading involves keeping trades open for a few days or even weeks, and is less time-intensive than scalping or intraday trading. It’s often the path taken by beginners, because it can be more easily combined with a full-time job. 

So, there you have it: forex trading is much more accessible and low-risk than you might think. By taking advantage of a free 14-day trial, you will have access to professional trading tools and experience of managing an account with no financial risk to yourself.

If you take some time to learn the basics and explore trading strategies, you can soon learn to navigate the forex markets with confidence and progress to a fully funded trading account. 

Successful Forex traders can make great use of prop funding, taking the initial capital and using it to make a range of different trades to produce profits, which will benefit both them and the prop firm.

However, prop firms will not give money to anyone; traders need to show they are good at what they do and a safe operator to whom they can provide funds.

For an experienced trader, this should be no problem as they will have a track record that shows what they can do, while those learning the trade can use demo accounts to show in simulations what they are capable of and hone their craft.

There are some very specific skills that a trader needs to be able to make a success of Forex trading, which learners using demo accounts can work on, but which require some basic core skills of good judgment, a commitment to a clear strategy and a willingness to make adjustments when needed.

1 – Understanding The Basics

Learning the basic skills is the first requirement of Forex traders. You need to understand how the markets work, what kinds of trades can be made, what kind of situations constitute risks or offer opportunities, as well as how to use modern trading software and respond to the data it provides.

This learning process can be aided by using demo accounts, with these also offering the opportunity for you to demonstrate that you have mastered the basics.

2 – Establishing And Maintaining A Clear Strategy

Having a clear strategy is the next thing you must do. To begin with, you may be looking at a short, medium or long-term approach. A short-term strategy can involve ‘scalping’, in which you make a myriad of very short-term trades, using small fluctuations in value to buy or sell at tiny profits, but doing this on such a scale that they all gradually add up.

A medium-term strategy will aim to hold a position for days to take advantage of a situation, before cashing in ahead of any situation that could change.

This can often be driven by relatively short-term situations, such as the impact of uncertainty on a country’s currency during a close general election campaign, a situation that may change once the votes are counted.

A longer-term strategy may be about holding a position for months or even years based on how you expect two currencies to perform relative to each other over a longer period, linked to assumptions about the effects of economic fortunes and policy.

3 – Understanding The Significance Of Events And Responding Accordingly

Whatever your approach, you need to stay on top of events that can be significant game-changers. The values of currencies can be altered by economic data (especially unexpected statistics that markets had not ‘priced in’), monetary policy decisions by central banks, political developments (particularly unexpected ones), as well as wars and natural disasters.

These events can all pose threats but also create opportunities, so you need to know how to respond swiftly and decisively to ensure you can make the best of situations.

4 – Knowing When To Change Strategy

This brings us to the next essential skill – knowing when to change strategy. This is not about making minor tweaks here and there, which is a crucial part of everyday transactions, but when you might change a strategy completely, either by abandoning it because it is not working so you can avoid a loss, or switching focus to exploit a new opportunity.

5 – Managing Risk

Finally, the biggest issue is about managing risk. All the situations above are dynamic and subject to change, be they economic situations, unexpected political, military, or (in the case of disasters) natural events.

In other cases, you may take a chance on a government changing policy under pressure, a move that famously earned George Soros £1 billion in 1992 by betting against the pound on the assumption that the UK would be unable to sustain its membership of the Exchange Rate Mechanism, which pegged currencies against the German Mark.

There are various ways of managing risk. This may be done, for instance, by having a spread of positions on which some are low-risk and unlikely to incur a loss, creating a safety buffer while you pursue other positions that are riskier but also potentially more rewarding.

Your capacity to know how much risk to take is not just about judgment calls, but also how adept you are at taking steps to protect against losses, for example knowing when to stop a trade by applying devices like a stop-loss exit order.

This combination of skills will take you a long way as a Forex trader, making you a great partner for any prop firm.

There are typically three main ways in which traders structure themselves, make money and succeed, but in the fast-moving world of trading, there is a lot of overlap between the different types.

There are individual traders, who work with brokers and the apparatus of the markets to trade with exchanges directly, and on the other side are investment companies who receive money from clients to invest in the market in exchange for a share of the profits.

The third option is a prop trading firm, which rests in between the two extremes and has become extremely popular in recent years due to the rise of instant funding firms and online trading platforms to allow anyone in the world to invest.

What is a prop trading firm, how does it work, and how does it make money for everyone involved?

What Is Prop Trading?

Prop trading is short for proprietary trading, which is used simply to define trading institutions that use their own capital to invest in various financial markets rather than money from clients.

That is the simplest explanation, but in practice, a proprietary trading firm often structures itself somewhat differently from an investment firm, and in fact, if a financial company operates both a client investment fund and a proprietary trading desk, the two must be separated using an ethical wall.

There is a single, huge, very obvious risk to firms trading using their own money compared to client money, namely that they are risking their own capital and a particularly unsuccessful trade, margin call or short squeeze could cause huge losses.

However, the benefits of such an approach are so substantial that it offsets this potential risk and makes it a worthwhile approach for many investment firms.

The first one is that whilst an investment firm often relies on commissions and fees to make money from clients and thus generally needs to operate at scale in order to make substantial profits, a prop trading firm gets to keep all of the revenue for itself.

As well as this, prop firms can use any investment strategy they want to make money, which can involve complex derivatives, markets such as forex and futures, and other strategies that are sound, diverse and managed but might not be the types of investments that clients traditionally want to make.

This latter point also affects the structures of many prop trading firms and leads to the cluster of affiliated prop traders and profit split arrangements that are most commonly associated with prop firms today.

Prop firms are often the first place that unorthodox investors will develop their skills, network and become well-rounded traders, particularly those who have entered the financial market by transitioning from another profession.

Creative minds are prized by prop firms due to the greater freedoms involved, and successful traders who can sustain that success are the types of traders that proprietary trading wants to recruit.

This leads to an interesting mirror arrangement where prop trading firms will often provide generous profit-sharing arrangements with traders who have proved their ability to effectively manage accounts.

For traders, the benefits are that they can access far more capital than they would otherwise be able to as individuals unless they happened to have a high net worth. 

This means that certain markets such as forex are far more viable, as the constant liquidity and small market movements tend to be primarily profitable endeavours for accounts with large amounts of capital.

It also provides a platform for traders to develop their skills and learn the right way. Whilst the initial investment means that complete beginners should obviously avoid trying to join a prop firm until they know what they are doing, people who pass the test will likely become more effective traders whichever markets they settle on.

Whilst a trader’s freedom is not completely unlimited, as traders are required to exercise risk management and avoid particularly risky moves such as trading the news or high-frequency trading, there is a lot more scope and support for creativity on the market than there would be in a traditional investment firm.

For prop firms, the benefits more than outweigh the risks, and the primary hedge for them is the evaluation programmes and application fees for prop traders.

Most overly aggressive, reckless or outright bad traders will be filtered out through the evaluation system before they cause harm to a firm, leaving only traders that are likely to be able to succeed in the long term.

Ultimately, prop firms work by creating a support network of traders and developing a symbiotic relationship where the firm receives creative trading strategies in exchange for providing capital to investors.

Trading in forex is an investment strategy that often requires a lot of starting capital in order to make significant amounts of money from small moves in the market.

Because of this, it can be difficult to get started in forex as an individual trader, as making enough money to not have it swallowed up immediately by brokerage fees requires either large initial investments or considerable use of leverage.

In both cases, the best and safest way to trade forex is by working with a funded trading account, typically accessed through a proprietary trading firm. 

They will provide the capital, trading platform and flexibility to execute effective strategies, with a successful trader keeping the majority of the earnings.

There are a lot of different types of accounts, with a range of application criteria and credit limits. 

Getting started is very simple, but passing an evaluation and making consistent returns is something that can catch out an unprepared and uninitiated trader.

With that in mind, here is how you apply for a funded account and, more importantly, how you keep hold of it.

Applying For A Funded Account

The quickest and easiest way to get a funded account is to apply for instant funding through a capable prop firm. 

They work in the same way as any other prop firm account; you fill out the application form, choose the capital program, platform and add-ons you want, pay the application fee and have access to an account that mirrors a live retail brokerage account.

Follow the account rules, including setting up risk management protocols, and you can earn as soon as you start trading with the account, with greater rewards and capital amounts available once you reach certain funding levels.

This includes not only access to capital but also access to leverage, something that can be essential for some types of forex strategies.

This is the quickest path to a funded account, but is it necessarily the best option for everyone? One-Step and Two-Step programmes are cheaper to apply for and are designed for traders who want to learn in an environment that ensures they are building up the right skills in the right way.

Beyond this, however, there is a difference between accessing an instant funding account and keeping hold of it. Traders who are impatient and underprepared tend not to stick around, either by breaching one of the account rules or hitting the drawdown limit and triggering an intervention.

Even with an instant funding account, that first stage should be treated as an evaluation, and with that in mind, here are some tips to keep your account and pass evaluation challenges when applying for a funded account.

How Do You Keep Hold Of A Funded Forex Account?

Half the battle is getting an account, and that half can be as simple as paying for instant funding. But keeping hold of it and making money from it is a completely different matter entirely.

Every trader is unique, and the point of prop firms is to take advantage of individual trading skill with the resources of a firm, but there are some tips that will give you a better chance of success.

The first and by far the biggest is to have a trading plan going in. Never think that you can develop your strategy whilst executing it.

That is the equivalent of learning to drive a car during the 24 Hours Of Le Mans; at best you come last, at worst you end up in a hideous accident.

Any prop firm will have a trial platform that you can use to test your skills, get used to different strategies and learn more about trading without money on the line.

As well as this, choose a market and build your skills, rather than trying to hop between different sectors with fundamentally different rules.

Even some of the absolute best traders in history have fallen flat by switching to an unfamiliar market. Stanley Druckenmiller, the architect of the most audacious and successful short play in the history of forex in 1992, lost billions in technology stocks in 2000.

As well as this, remember that the goal is consistent long-term profits. Most trading firms know that anyone can hit the jackpot once, and will often penalise traders for making reckless, risky plays even if they end up being successful.

Patience, discipline and consistency are what a prop firm is looking for, and developing those skills and the psychology that goes with them are the keys to success.

The barriers to entry for forex trading have been lowered in recent years thanks to the rise of online trading platforms. It’s possible to be a solo trader, but this requires you to put up your own capital, and you’ll need a high degree of personal risk tolerance. 

Most traders aspire to a funded account with a prop firm, which allows them to trade with much larger sums with no risk to their personal wealth. In return for access to their funding, the prop firm will keep a percentage of any profits you make and cover any losses. 

In prop firms such as FTUK, traders who hit their targets are rewarded for a consistent performance with higher profit shares and larger account sizes, up to a maximum of $6,400,000 with a profit share of 80 per cent. This offers the most talented traders an excellent opportunity to generate a very healthy income stream. 

Naturally, newcomers will have some questions about how this set up works; not least regarding the prop firm payout methods. You may be investing little or even none of your own capital, but you are investing your time, energy and skills and you want to know how you will be rewarded for this. 

The most common prop firm payout methods

The method of payout will vary depending on which prop firm you use, so it’s important to understand what they are before joining up. A reputable firm will be transparent and upfront about their payout structures, and happy to answer any questions you may have. Carry out some online research to compare the market and decide what’s best for you.

Payment processors: The most common payout method you will find is a payment processor such as PayPal, or in the case of FTUK, RiseWorks. These allow for swift and secure payouts with lower fees than many traditional banks, and can be accessed across international borders. 

Check if the prop firm will cover the transaction fees and what their default currency is: typically, this will be USD.  

FTUK traders will need to create and verify a Rise account before withdrawing a payout to either your cryptocurrency wallet or bank account. All payouts will be processed through Rise and processed within 24 to 48 working hours, or slightly longer in very busy periods.

Cryptocurrency: Many prop firms will also have the option to receive crypto payouts. This avoids the need for any extra currency conversions and they are usually fast with very low fees. It’s possible to request USDT cryptocurrency payouts via FTUK. Other prop firms may use Bitcoin or Ethereum. 

Payout frequencies and minimum thresholds

The frequency with which you can make withdrawals will depend on the level you are at, the amount of capital in your account and your performance. It typically starts on a monthly basis or every two weeks, but it can be up to twice weekly or on request for the most advanced traders. The prop firm should be upfront about their policy in this regard. 

At FTUK, the minimum amount of profit required for a payout is $250, which refers to your profit share, not the combined profit total in the account. This will vary depending on which level of scaling plan you are currently at. New traders may start on a 50 per cent profit share, rising to a maximum of 80 per cent if the targets are reached. 

A trader will only be able to make a payout request when they have passed the evaluation phase and achieved a profit target of at least ten per cent. Prop firms such as FTUK offer one or two-step evaluation programs. The most experienced traders can access instant funding in return for an upfront fee. 

Key considerations when choosing a forex prop trading firm

Prop firms offer forex traders an exciting opportunity to trade with large amounts of capital, maximising profits without any personal financial risk. They also offer attractive profit share deals with a 20:80 split for traders who have proved they can manage risk and hit certain profit targets.

Those who demonstrate a consistent trading performance will be rewarded with bigger accounts, boosting the potential to make larger profits. However, this does not mean that prop trading firms are looking for traders who are willing to take big risks. 

In fact, the opposite is true: prop firms such as FTUK are looking for traders who follow long term strategies with effective risk management, and avoid reaching the maximum drawdown limit. Here’s a look at how you can progress successfully within this structure, even if you do not have a lot of experience. 

Tips for increasing your forex earnings

The amount you make as a forex trader will obviously depend to a large extent on your current level of skill and experience. However, everyone has to start somewhere, and it is possible to progress steadily with the right approach. 

Arm yourself with knowledge

The first step is to learn as much as you can about basic principles of forex trading, and how the market works. This research and learning phase will provide you with a solid foundation to build on, and will equip you with the knowledge and confidence to build and implement your own trading strategies. 

Familiarise yourself with the meaning of commonly used forex terms such as pip, spread, leverage, lot, stop-loss order, margin, and so on, to give you a handle on how the process works. Learn about the history of the foreign exchange markets, the different styles of trading, and the various currencies of the world. 

You should also learn about the concepts of fundamental analysis and technical analysis. The former involves using economic indicators and geopolitical data to inform your trading strategy. Understanding this information will help you to anticipate market movements and plan your trades accordingly.

Technical analysis involves using tools and indicators and studying price charts to predict the future movements of the markets. You can base your trading strategy on either fundamental or technical analysis, or you can use a combination of both. 

Develop a solid trading plan

The next step is to develop a solid trading plan that you can use to guide you through each trade. This will help you to make quick but well informed decisions that are aligned with your trading goals and objectives, and within the rules of the prop firm. 

The trading plan should be regularly reviewed to ensure that it remains optimised for the current market conditions and your maturing skills and abilities as a trader. However, you should use a consistent trading style throughout your trading month in most cases, without any drastic shifts in approach.  

A basic plan will involve predefined market entry and exit points and a risk management strategy. As your skills advance, you will learn to combine technical indicators such as trailing averages with fundamental data such as interest rate changes. 

The prop firm may have a list of the type of trading styles they permit, so check this first to ensure that your trading strategy falls within the rules.

Risk management

Strong risk management tools are key to achieving consistent profits. It’s advisable to use stop-losses to protect your capital, and in cases it may be a mandatory requirement of the prop firm. Less experienced traders are advised to limit their risk to one or two per cent of their trading capital per trade.

Master the trading mindset

It’s important to train yourself not to make rash decisions, which can be tempting when you are under pressure. Greed for profits or fear of losses can sometimes distract traders from their strategy and cause them to take unnecessary risks. Learn how to keep your emotions in check, cultivate patience and stay objective and rational at all times. 

Keep track of your trades

The best way to monitor your progress is by keeping a trading journal. This means a method of recording and analysing your trades separately to any records kept by the trading platform. It could be a digital journal, or a pocketbook that you can keep handy to jot down notes in at any time of the day or night.

Go beyond recording basic facts such as the time, date, and outcome of the trade. Write down your motivation and reasoning for making the trade, and your feelings about it before, during and afterwards. This will help you identify patterns in your thinking that can be revealing if you are trying to understand why your trades are underperforming.

It can help to reveal common mistakes, or indeed successful behaviours and processes. This will give you a better understanding of your trading style and help you to refine your strategy, iron out any issues, and pinpoint your most profitable trading styles. 

Forex trading is now a realistic career choice for anyone who can demonstrate the necessary skills and commitment, thanks to the accessibility offered by prop funding firms. These firms give the trader access to capital, so that the trader has the opportunity to develop their career by making consistent profits over time without risking their own funds. 

Here’s a look at how these funded accounts work, and how to get started.

What is a funded forex account?

A funded account refers to an account where the capital is provided by a broker or proprietary (prop) trading firm. At one time, the vast majority of forex trading was carried out within investment banks or other financial institutions. The rapid rise of digital technology has lowered the barriers to entry, opening up access to anyone with an internet connection.

However, self-funded forex trading accounts are difficult to maintain unless you already have significant private capital, plenty of trading experience and a high risk tolerance. Prop firms offer the trader the opportunity to trade with the firm’s capital rather than risk personal wealth. In return, the prop firm will keep a percentage of any profits made. 

The best traders who can prove their worth to the prop firm will be rewarded with a scaling trading plan that increases their account size and profit share. This can lead to a very lucrative income stream, and even become a full time career. However, it will be necessary to demonstrate a consistent performance and hit the firm’s profit targets. 

Selecting a prop firm

To access a funded prop firm account, it’s usually necessary to pass a structured evaluation process. Many prop firms will offer a free two-step evaluation process, whereby you need to pass two tests during a 14 day free trial. During the evaluation, you’ll need to demonstrate that you can manage risk responsibly, stay within drawdown limits and hit set profit targets. 

You’ll be trading in simulated market conditions without the pressure of risking real money. If you are successful, you will have free access to a funded account, with the opportunity for a scaling trading plan that rewards good performance. However, more experienced traders may prefer to purchase instant funding accounts that allow them to trade live from day one. 

Some firms such as FTUK also offer a one-step evaluation program, whereby you will only need to pass one test instead of two. You’ll need to pay a fee to access the one-step program, but it will be refunded to you if you are successful. 

This path may suit more experienced and confident traders who want the opportunity to familiarise themselves with the prop firm’s trading interface and operating rules before entering live market conditions.  

Less experienced traders are advised to learn as much as they can about the basics of forex trading before applying to a prop firm. 

Understanding scaling trading plans

Once you have passed the evaluation stage or purchased instant funding, you’ll be given a funded traded account. Typically, this will start at around $10k, but if you hit set profit targets and prove that you can trade within the rules of the prop firm, you’ll be rewarded for your good performance. 

All prop firms have a slightly different structure, so it’s important to research them carefully and choose one that suits your trading style, time constraints, and profit goals. 

The best way to make progress in your forex trading career is to use a prop firm that offers scaling trading plans. These are designed to reward committed traders who perform well with increasing account sizes and larger profit shares as set milestones are reached. 

Skilled traders who have demonstrated a consistent track record in managing risk and hitting profit targets have the potential to trade with seven figure accounts, with a profit share of 80:20 in their favour. The prop firm will cover any losses that are made, and the trader will be able to access their payouts at weekly or monthly intervals. 

This means that in return for their time and effort, the trader will be very well rewarded with no personal financial risk. With a strong trading strategy and a clear risk management plan, it’s possible to earn lucrative profits from a forex prop trading firm.