Funded Trading vs. Solo Trading- Pros and Cons

Funded Trading vs. Solo Trading

Funded Trading vs. Solo Trading

Stock Trading

Looking to get some money from stock market in a professional capacity? Aside from joining a stock trading firm, you have two broad options: become a funded trader or a solo trader. Let’s take a closer look at funded trading vs. solo trading in detail so you can learn which may be a better pick for you.

What is Funded Trading?

Getting started as a market trader can be pretty difficult if you don’t have enough capital to make significant investments out of the gate, as well as pay required fees. 

In a nutshell, funded trading means trading with a proprietary trading account on behalf of a company.

With a funded trading account, one individual (the trader) is allowed to trade on behalf of a company or a corporate license. This provides a number of amazing advantages for the trader, such as gaining immediate capital to work with, and minimizing paperwork.

However, not anyone can become a funded trader. Funded traders have to qualify for dedicated funded trading programs and show that they have what it takes to trade responsibly on behalf of a corporation.

You can think of funded traders as freelance professional traders who, after proving their skill or value, can earn money for a company from a distance and take profits for themselves at the same time.

Through this system, trading companies benefit by selecting the best traders and taking a share of the trader’s profits or charging them for subscription fees and other costs. 

In this way, both the organization with the startup capital and the individual trader benefit.

How Do You Become a Funded Trader?

To become a funded trader, an individual has to enroll in a specialized funded trading program or training course. 

After taking the program, the prospective trader then has to pass an exam that shows they know what they’re doing and can be trusted to handle trading company funds and financial assets responsibly.

Should the prospective funded trader pass the exam and fulfill all other requirements, they may get an offer to open a funded trading account with the sponsoring company. Once hired by a trading company, the funded trader can start operating, working to make profits for themselves and for their funder.

If you’re interested in becoming a funded trader, check out the different programs available and what companies provide them. 

Different programs will have different completion requirements or educational background requirements, so they may be more or less of a good fit for your needs/experience level.

Creating a Funded Trading Account!

Even after completing a funded trader program assessment, you’ll need to consider which account to open or accept. Not all funded trading accounts are equal.

For instance, most funded trading accounts have a profit split ratio or percentage. In a nutshell, you gain access to the trading company’s capital to buy and sell financial securities and assets. In exchange, the company gets a cut of the profits you make.

Naturally, funded trading accounts that offer a higher chunk to you are more profitable overall, but they may also come with less capital.

Additionally, check whether a funded trading account comes with ancillary fees. Some trading companies make their money by charging their funded traders fees. As a bonus, many of these funded trading accounts come with special tax statuses.

Be mindful to read the fine print before signing up for a new funded trading account – all of the potential fees could add up over time and minimize the profits you make in the long run.

Funded Trading Pros and Cons

As you can imagine, there are some benefits and downsides when opening a funded trading account and investing as a funded trader. Let’s take a look at these in more detail.


  • One of the biggest benefits by far is that funded traders are free to use the funds allotted to their account largely as they please
  • By becoming a funded trader, you gain access to more immediate capital to make bigger moves on the stock market than you would otherwise
  • You’re somewhat protected as a funded trader since you aren’t using your own money to make trades
  • It’s very difficult to become a professional or sole trader, especially when it comes to acquiring licensure and passing certification programs. By becoming a funded trader, you get the certifications and licenses necessary to start trading immediately
  • Most funded trading programs give you extra freedom to trade wherever you have access to the Internet rather than requiring you to work from an office


  • Despite being nominally free to use their funds as they deem fit, funded traders do have to abide by certain rules or regulations on behalf of their sponsoring company. These can include daily loss limits, maximum position sizes, and more
  • Of course, it also takes time to become a funded trader, especially if you don’t already have the expertise or knowledge necessary to take a program immediately
  • Certain trading companies impose huge fees on their funded traders, meaning your profits may be lower than you expect for the first couple of years

Solo Trading Pros and Cons

The flip side to funded trading is solo trading. A solo trader takes the longer path and earns their professional licensure and certifications by themselves, then saves up enough capital to start trading on stock market. On the other side, a sole trader can also get funded through personal loan investment, though this option might be risky.

There are positives and negatives to this path as well, let’s check some of them out.


  • Solo traders don’t have to answer to anyone and don’t have to split their profits with any employing company, either
  • Solo traders have maximum freedom and only have to pay fees related to their licensure or certificates
  • Solo traders do not have to obey mandates or special rules put in place by their employing company
  • Solo traders are free to change their portfolios or focuses whenever they like


  • It’s much more difficult to become a solo trader if you don’t have a lot of start-up capital. You either have to save for several years or be the lucky recipient of a large inheritance in many cases
  • You have to pay for your licensure and certification, as well as study hard to acquire both of those necessities


Ultimately, funded trading and solo trading can be valuable pathways to success on the stock market

It’s up to you to determine which of the two paths you want to check out and try to complete. Now you have better information to make the best possible choice. Good luck!

About Sashi 553 Articles
Sashi Singh is content contributor and editor at IP. She has an amazing experience in content marketing from last many years. Read her contribution and leave comment.

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