What Are the Funded Business Rules?

Trading deservedly and firmly holds its ground among some of the most intelligence-intense human activities. To excel as a trader, apart from acquiring trading skills, one has to master the nuances of marketing, business, economics, and human psychology, as well as learn thousands of formal and informal rules within those disciplines.

Nonetheless, there’s no need to grasp everything simultaneously. You can apply for funding from a prop trading firm and start practising trading at your own pace and with your current skills. For that, knowing only the basic funding traders rules will suffice.

Funded Traded Rules Explained

Modern prop trading firms create highly favourable conditions to attract talented traders. For instance, FX2 Funding has condensed its funded trading rules to a trio of simple and transparent limitations:

  1. Drawdown maximum limit – as a client and a funded trader, you should constantly keep a watchful eye on the state of your account balance and ensure it doesn’t fall below a 6% drawdown threshold. If that happens, your account will be locked, but you can always bring it up and running by achieving a 6% return on your funds.
  2. Drawdown daily limit – while the above rule applies over any period, the daily drawdown rule is only valid for your daily operations and is set at a 4% threshold. Other prop trading firms may implement even tougher thresholds of 3 and even 2 percent.
  3. Inactivity limit – if your account stays inactive, i.e., you don’t perform any trading operations for 30 days or more, you will face account termination. Keeping a trading account inactive for long periods of time is not good for many reasons, including your earnings and learning curve.

Observing this trio of simple rules will keep your account active at all times and allow you to acquire experience and make more profits. 

How To Track Financial Indicators

To track and analyse drawdowns and other trading indicators, it is most convenient to use an Excel table. Some will say that it is better to use a specialized service that can analyse statistical data. Indeed, there are already quite a few specialized applications on the market. However, the majority of novice and even professional traders still prefer Excel.

Following the analysis, it’s important to compare the outcomes derived from employing different trading instruments. In addition, it is quite useful to trace the connection between position sizes and achieved results. This factor can be used to determine how capable you are as a trader in keeping risks in check.

The Bottom Line

Trading takes place in a highly volatile and constantly changing marketplace. Knowing a few basic rules of the firm that provides you with funds for trading is essential for your financial well-being.

In addition, keeping a transaction log allows you to calculate at any time how profitable and unprofitable your trading transactions are. The chances of making a profit are directly dependent on this indicator, since it demonstrates whether the trader can stay away from the maximum drawdown limits.