How Does a Crypto Funded Account Work? | Avatar Prop Fund

We’ve all heard the buzzword: funded account! But what exactly is a funded account and how does it work, especially in the world of crypto? If you ever wondered if buying a funded account may be worth it for you, or if you just want to know how it all works, keep reading.

Table of Contents

• What is a Funded Account?
• Understanding Prop Firms
• The Evaluation Process
• Skipping the Evaluation Process
• Account Sizes and Funding Amounts
• Profit Splits
• Training and Education
• The Advantages of Crypto Funded Accounts
• Choosing the Right Crypto Prop Firm
• The Role of Technology in Prop Trading
• Common Mistakes to Avoid
• Conclusion

What is a Funded Account?

A funded account refers to the concept that if you are a skilled enough trader, you can get your trading account funded by another person or entity. Most commonly, this involves using the capital of a proprietary trading firm, or “prop firm” for short.

Understanding Prop Firms

A prop firm is a business that offers its own capital for traders to use, hoping that the trader will generate profits. The business model is pretty simple: the firm provides the money to trade with, and the trader splits any profit earned with the firm. This setup allows traders to access capital they otherwise would not be able to, without risking their own funds, while the firm benefits from the traders’ skills and profits generated.

The Evaluation Process

Before you can start trading with a prop firm’s capital, you typically need to pass an evaluation stage. This evaluation, or test, often comes with a fee. The fee generally increases with the amount of capital you seek to be funded with. For instance, at Avatar Prop Fund, you can view and choose from various challenges designed to test your trading skills 

During the evaluation phase, you will need to follow specific risk parameters and profit targets. For example, you might have a maximum risk limit of 10% of your total account size and a profit target of 15%. Successfully meeting these criteria on a demo account (simulated money) proves your trading abilities and earns you a live funded account.

Skipping the Evaluation Process

Some traders, confident in their skills, prefer to skip the evaluation phase and jump straight into a funded trading account. While many prop firms do not offer this option due to the risk involved, Avatar Prop Fund allows traders to bypass the evaluation in exchange for a higher upfront cost. This option offsets the risk for the firm while providing experienced traders immediate access to a live trading account!

Account Sizes and Funding Amounts

The amount of money you can receive in a funded account varies widely among prop firms. Most offer account sizes ranging from as small as $5,000 to as large as $1,000,000. At Avatar Prop Fund, we provide accounts with funding up to $1,000,000, allowing traders to have almost no limits to how much they can earn.

Profit Splits

The profit split is a critical component of trading with a funded account. It defines how much of the profit generated is kept by the trader versus the firm. Profit splits can vary widely; for instance, Avatar Prop Fund offers a 90% profit split, meaning traders keep 90% of the profits generated on their funded accounts. Other prop firms might offer profit splits ranging from 50% to 100%, depending on various factors.

Training and Education

For new traders still finding their footing, many prop firms offer training services to help them become profitable. Avatar Prop Fund provides free courses on advanced trading strategies, and each challenge purchaser receives in-depth training to enhance their chances of success. This educational support is crucial for traders looking to thrive in the competitive world of prop trading.

The Advantages of Crypto Funded Accounts

Crypto funded accounts offer several unique advantages:

1. Access to Capital: Traders can access significant amounts of capital without risking their own money, allowing for larger trades and potentially higher profits.
2. Risk Management: Prop firms often provide risk management guidelines, helping traders learn and adhere to disciplined trading practices.
3. Profit Potential: With high-profit splits, traders can retain a large portion of their earnings.
4. Educational Support: Many firms offer training and resources, which are invaluable for both novice and experienced traders.

Choosing the Right Crypto Prop Firm

When selecting a prop firm for a funded account, it’s essential to consider several factors:

1. Reputation and Reviews: Look for firms with positive reviews and a solid reputation in the industry. Online forums, review sites, and social media can provide insights into other traders’ experiences.
2. Evaluation Costs: Compare the costs of the evaluation process across different firms. Ensure the fees are reasonable and align with the amount of funding you aim to receive.
3. Profit Split: Evaluate the profit split offered by the firm. Higher profit splits are generally more favorable, but it’s crucial to balance this with other factors such as support and resources.
4. Support and Resources: Assess the level of support and educational resources provided by the firm. Firms that offer comprehensive training and ongoing support can significantly enhance your chances of success.

The Role of Technology in Prop Trading

Technology plays a big role in prop trading, especially in the crypto market. Advanced trading platforms, analytical tools, and real-time data are essential for making informed trading decisions. When choosing a prop firm, ensure they offer robust technological support, including:

1. Trading Platform: The trading platform should be user-friendly, reliable, and equipped with advanced features such as charting tools, technical indicators, and risk management tools.
2. Analytical Tools: Access to high-quality analytical tools can help you analyze market trends, identify trading opportunities, and make data-driven decisions.
3. Real-Time Data: Accurate and real-time market data is crucial for executing trades effectively and staying ahead of market movements.

Common Mistakes to Avoid

Trading with a funded account can be highly rewarding, but it’s essential to avoid common pitfalls:

1. Over-Leveraging: Using excessive leverage can amplify losses. Adhering to risk management rules is critical to long-term success.
2. Ignoring Risk Parameters: Failing to follow the prop firm’s risk parameters can result in disqualification. Always stay within the specified risk limits.
3. Lack of Discipline: Emotional trading and lack of discipline can lead to poor decision-making. Stick to your trading plan and remain disciplined.

Conclusion

A crypto funded account is an excellent opportunity for traders to leverage significant capital and maximize their trading potential. By partnering with a reputable prop firm like Avatar Prop Fund, traders can access funding, benefit from educational resources, and potentially achieve substantial profits through disciplined trading practices.

If you’re interested in exploring the world of crypto funded accounts, start by understanding the evaluation process, selecting the right prop firm, and preparing yourself with the necessary trading skills. Visit Avatar Prop Fund to learn more about our challenges and how you can get started with a funded crypto trading account today.