In this case, the prop traders would pay an initial fee which is usually equivalent to the max loss allowed on the account. Then, the prop trader would go through a one-time evaluation for a specific period to qualify and become fully funded. The evaluation max time could be up to 1 year. The profit share is usually between 50% – 70%, with great scaling plans that are not available in the challenge funding models.
Suppose the prop trader wants to save the hassle of going through an evaluation. In that case, this option of “Direct Funding” comes in handy as the prop trader would get fully funded straight away. The fees for this option are generally higher. Still, you pay for saving months of your time so you can start earning big bucks straight away and without having all the rules that you would have to abide by when choosing the evaluation option. This option is generally suitable for more experienced prop traders who know what they are doing.
This is probably the most popular option so far but also the one that attracts gamblers because of its very short time window given by the prop firms to the prop trader to pass the Challenge, which is usually only 30 calendar days to make an unrealistic 10% target. However, statistically speaking, the pass rate is a lot lower than the previous two. It’s most likely that it would turn out more expensive, given that even with the lower fee, you end up paying more because of trying to buy multiple Challenges until you get lucky and pass the Challenge once.
This is the 100% No-Go to funding option because you would be charged a monthly fee to access the account. So technically, you need to pay the prop firm to trade. But what happens when you want to take a break? Or when you don’t have a profitable month? Depending on the funded account size, the fees could be anywhere between £50 to £250 per month.
One piece of advice, stay away from prop firms that offer this option because having a high monthly expense just to get access to a funded account will only harm your trading psychology and hinder your performance as a prop trader.