© Copyright Acquisition International 2025 - All Rights Reserved.

Article Image - Funded Trading vs Solo Trading – The Differences
Posted 17th October 2022

Funded Trading vs Solo Trading – The Differences

Choosing to become a funded trader or sole trader, can affect your journey in the financial market, what type of opportunities are presented to you, and your ability to take advantage of them. Each option has its fair share of pros and cons, and deciding which is best for you is one of the decisions experienced, and new traders must make.

Mouse Scroll AnimationScroll to keep reading

Let us help promote your business to a wider following.

Funded Trading vs Solo Trading – The Differences

Choosing to become a funded trader or sole trader, can affect your journey in the financial market, what type of opportunities are presented to you, and your ability to take advantage of them. Each option has its fair share of pros and cons, and deciding which is best for you is one of the decisions experienced, and new traders must make.

Before you make that decision, here’s what you need to know about both options.

What is Solo Trading

Solo traders are people who fully control their trading accounts and run them as individuals. A sole trader is largely independent, and it is a path taken by a lot of forex and stock traders.

There are many successful sole traders, and becoming one is simple. To become a sole trader, find a suitable trading platform that offers you several trading options and sign up. You can start with demo trading if you have no experience or make a deposit in your trading account and begin trading as soon as possible.

What to Consider When Becoming a Sole Trader

Here are some requirements for being a successful sole trader

Education
Continuous learning is essential for growth as a sole trader. It helps you to build on your capital and increases the opportunities presented to you in the market. Look for a means to earn relevant certification and search for a trading platform that gives you access to relevant news and resources to help you succeed.

Risk management parameters
For funded traders, the prop firm may set risk management requirements to follow, but a sole trader is responsible for that decision. Before actively trading, it is necessary to do your research to determine your preferred risk management tools, take profit targets, and stop loss levels.

Portfolio management
Invest capital you are comfortable risking and set realistic expectations for your trading journey. When starting, investing 20% or less of your initial capital on a particular asset is preferable. In addition, solo traders must define their trading strategy and perform extensive backtesting to perfect it.

RELATED: Best Solution for Portfolio Management

What is Funded Trading

Funded trading requires you to trade on behalf of a company. With a funded trading account, the company provides you with enough capital, purchasing power, and leverage to take significant advantage of the financial market.

Becoming a funded trader is a goal for some experienced traders because they can easily make profits in the world’s most profitable financial markets, and it can act as a primary source of equity. There is typically an agreement regarding the profit distribution between the trader and the proprietary firm.

There are various types of funded accounts depending on the financial instrument you are handling. For instance, forex traders have a chance to test their skills against the largest financial market in the world with a funded forex account. If you are an options or futures trader, some proprietary firms provide funded accounts that cater to those instruments.

What to Consider When Becoming a Funded Trader

Becoming a prop trader might seem like a big hassle and too difficult. However, according to experts at Howtotrade.com, becoming a prop trader is now more accessible and inexpensive than ever before.

A prop trader should look out for this before joining a trading firm:

Opportunity to Scale

After the first evaluation, funded traders are given an initial capital of up to $50,000. If the trader can consistently make profits, there should be a system to enable the trader to grow their account size by having access to more capital.

Monthly Income

Finding a prop trading firm that gives a monthly income is rare, but some do. The offer is made to help the trader focus more on their trading success while their basic needs are covered.

If you are interested in earning a base salary, applying to big prop trading firms is advisable. However, doing this may affect your profit agreement with the company and require you to work from an office rather than remotely.

Credibility and Reputation of the Platform Take time to look for a prop trading firm with a good reputation among other traders. Look out for reviews on sites like Trustpilot and read the terms and conditions before applying.

Funded Trading v Solo Trading

The differences between solo trading and funded trading include:

1. Freedom to Trade

Solo traders don’t answer to anyone but themselves. They are in charge of developing their strategy, doing their own research, and managing every aspect of their trading account. Solo traders only have to follow the general rules and regulations set by the company regarding trading activities.

Funded traders have to answer to the company they are trading for. They must follow certain rules and regulations since they are not trading their own money. These rules will outline the payment policies, business practices, and risk management practices that apply to the account. Sometimes, the terms and conditions can be changed at the company’s discretion.

When becoming a funded trader, it is advisable to remain aware of the firm’s terms and conditions regarding the funded account. If you are a new trader, reach out to other funded traders using the platform to get an idea of what you should expect from them. So, read the fine print when considering a prop firm to determine if it is in line with your trading strategy and profit target.

2. Access to Funds

Solo traders are mostly limited to their initial capital and may find it hard to secure extra capital, especially when starting out. The limit of their capital can affect their strategy and the amount of profit they can make while trading. But as they become more experienced and successful, solo traders can use the leverage provided by the broker to increase their position in the market.

With funded trading, traders don’t have to worry about risking their own money because they will receive all the capital they need. The capital at your disposal enables you to experience exponential growth at a level you might not get if you are trading with your own account. Your profits are greatly increased, and your experience grows along with it.

3. Ease of Application

Becoming a sole trader is relatively straightforward and fast. You will have to provide some personal information, find your account, and start trading. Nowadays, becoming a prop trader is easy because of the various trading platforms providing these services to traders. But there are several steps in the process of getting a funded account.

First, an interested trader will have to apply for a funded trading program by filling out a form. Typically, you will be asked about your background, trading experience, and educational level. Some would require you to take an interview to discuss your preferred market, skills, and trading strategy.

After the interview, traders will have to pass an evaluation challenge and prove they can be profitable. The trader will work with a given set of parameters. For instance, the trader may be required to make a 15% profit over 20 days.

If the challenge is completed successfully, the trader will be awarded a funded account and can start trading. But it doesn’t get there. With a funded account, you are not alone in the process, as the firm may provide training to help you make successful trades.

4. Monthly fee and profits

For solo trading, you will have to pay a commission for executing trades but don’t have to release any profits to the trading firm. On the other hand, most prop trading firms will charge a monthly fee for the service because the traders are using their capital.

The monthly varies from one firm to the other, and some may demand a one-time payment of up to $1000 for acquiring a funded account. Plus, profits will be split between the trading platform and the trader.

It is usually a 50%-50% split, but there are some cases where the company would offer a higher profit percentage to the trader, which is something most traders look out for before applying for a funded account.

5. Liability

Trading with your own capital means that you bear the full risk in the event of your loss. This is why it is important for traders to have a bit of experience before trading full-time, as many traders have lost their capital due to the volatility of the market.

Funded trading protects the trader’s capital from losses. But there might be a limit to it because funded traders are expected to be experienced professional traders who can make steady profits. For instance, the trader may be given a maximum drawdown of 10%, and their participation in the program could be reviewed if they go below that.

Final Thoughts

If you have a small account but want to expand your position in the market, becoming a funded trader might be the best solution. If you want to be in complete control of your profits and trading activities with enough discipline to learn on your own, solo trading could be the most profitable path for you. The path you choose depends on your goals and capital, and you should take your time to consider which is best for you.

Categories: News, Strategy


You Might Also Like
Read Full PostRead - Eye Icon
Empowering Your Accounting Software with AI Capabilities
Finance
03/01/2024Empowering Your Accounting Software with AI Capabilities

According to a recent study by KPMG, over 59% of large organizations already use AI in their financial, accounting, and tax departments and about 29% plan to implement AI-powered software within the next 12 months.

Read Full PostRead - Eye Icon
Clydesdale Bank Fined £20,678,300
Finance
15/04/2015Clydesdale Bank Fined £20,678,300

Clydesdale Bank Fined £20,678,300 for Serious Failings in PPI Complaint Handling

Read Full PostRead - Eye Icon
An Industry Innovator
Innovation
05/12/2016An Industry Innovator

Founded in Southern California in 1995, GoWireless has continually strived to be a driving force in the wireless industry.

Read Full PostRead - Eye Icon
Innovations In Eco-Friendly Business Heating Systems
Innovation
08/09/2023Innovations In Eco-Friendly Business Heating Systems

As the world continues to grapple with environmental concerns, businesses are increasingly exploring innovative ways to align their operations with eco-friendly practices.

Read Full PostRead - Eye Icon
Minimum Wage Workers Will Be Hit by Chancellor’s Cuts, Says TUC
Strategy
17/03/2015Minimum Wage Workers Will Be Hit by Chancellor’s Cuts, Says TUC

TUC General Secretary spoke about new minimum wage rates.

Read Full PostRead - Eye Icon
Bellpenny acquisition of Trustee Asset Management
Finance
04/08/2015Bellpenny acquisition of Trustee Asset Management

Bellpenny acquisition of Trustee Asset Management

Read Full PostRead - Eye Icon
How Much Is a Workers’ Comp Claim Worth in Philadelphia?
News
22/07/2022How Much Is a Workers’ Comp Claim Worth in Philadelphia?

How Much Is a Workers’ Comp Claim Worth in Philadelphia? A workplace injury can have devastating consequences, particularly if you’re unable to return to work swiftly or you sustain long-term damage. Fortunately, most employees in Philadelphia are eligible

Read Full PostRead - Eye Icon
AI December 2016
Innovation
21/12/2016AI December 2016

AI December offers a wide range of outstanding content, the latest news on M&A deals, and celebrates many cutting-edge financial and law firms across the globe.

Read Full PostRead - Eye Icon
3 Ways to Grow Your Law Firm
Legal
13/10/20203 Ways to Grow Your Law Firm

Like all businesses, law firms need to grow if they want to increase profitability. Whether it’s via expansion to new locations or through the acquisition of more clients, law firms must find viable ways to increase revenue if they want to achieve their grow



Our Trusted Brands

Acquisition International is a flagship brand of AI Global Media. AI Global Media is a B2B enterprise and are committed to creating engaging content allowing businesses to market their services to a larger global audience. We have 14 unique brands, each of which serves a specific industry or region. Each brand covers the latest news in its sector and publishes a digital magazine and newsletter which is read by a global audience.

Arrow