While funded trading programs offer attractive benefits, it's important for traders to be aware of the potential drawbacks as well. This article will highlight the drawbacks of funded trading that traders need to consider before entering into such programs.
Most funded trading programs operate on a profit-sharing model, where a portion of the profits generated is retained by the program provider. While this arrangement can be lucrative for successful traders, it also means that traders must share a significant portion of their gains. Traders should carefully evaluate the profit-sharing arrangement and ensure they are comfortable with the percentage of profits they will have to relinquish.
Traders must be aware that funded trading programs involve trading with the program provider's capital. While this eliminates the risk of losing personal funds, it also means that traders bear the risk of losing the provided capital. Traders need to ensure they fully understand the risk management guidelines and have the skills and discipline to trade responsibly and within the program's boundaries.
Funded trading programs often come with certain restrictions and rules that traders must adhere to. These can include limitations on the number of trades executed per day, maximum position sizes, and specific trading styles allowed. Traders should carefully consider these limitations and assess whether they align with their preferred trading strategies and style.