There are two choices for a newbie trader in the world of marketing. He can either use his resources and bet them for trading. Or, he could go to a proprietary trading firm, get the leveraged capital, and start trading. The second option is the most sought-after amongst the traders for apparent reasons. Firstly, most traders need more funds to put their bets on trading on their own. Secondly, even if they have some personal funds, putting them in the market for trade is a dangerous step. However, some people still utilize their funds through traditional trading actions and make independent choices. Both these approaches have their pros and cons.
In this article, we shall discuss cheap funded accounts and traditional trading, what sets them apart, and, as traders, which choice is better for you.
Cheap Funded Accounts vs. Traditional Trading
Though the traders opting for these paths eventually have to reach the same destination, their choice impacts their journey. The choice between cheaply funded accounts and traditional trading is tricky. It decides upon the safety net the traders get, the mentorship they receive, and the discipline they get used to in the process.
Let’s start with traditional trading! When traders have some funds lying in their banks and decide to use them for trading, this refers to conventional trading. As they don’t involve a third party in the process, they don’t have to follow the rules set by them. They can make independent decisions and are not bound by any procedures.
Benefits of Traditional Trading:
For the newbies, starting with traditional trading may appear to be a risky shot. However, there are numerous benefits associated with it, including;
- Freedom Of All Kinds
Independent traders not associated with any prop firms are independent in their decisions. They don’t have to adhere to the rules and regulations a firm sets. As there is no profit-split ratio, they are not bound to pay any amount from their profit to anyone. Regarding the trading strategy, it is ultimately the prerogative of the trader to use whatever strategy he wants. The trading style is separate from what the firm allows. Hence, all kinds and types are independent for the trader.
- Flexibility in Trading Schedules
To keep the traders safer, the firms set a fixed schedule during which the traders can make their trades. They are not allowed to make any bets outside of this time. However, independent trading has no schedule to follow; traders can make bets at any time, day or night. This gives them a certain kind of independence and freedom in their actions.
- No Hidden Costs Incurred
Newbie traders joining prop trading firms often become victims of hidden costs. Being new in the field, they can’t judge and find out if the company they have joined is exploiting them with additional charges. When the traders play in the field independently, they don’t have to worry about the hidden costs.
Downsides of Traditional Trading:
Here are some significant downsides associated with traditional trading:
- Financial Risk
This is the most significant financial risk associated with traditional trading. As the trader uses his funds to make trade actions, he would face a massive economic loss if he loses out on the bet. When associated with firms, traders can gain an advantage because the firm absorbs the trading losses. Conversely, traders often cannot recover from the loss in independent trading, which affects them psychologically.
- Lack Of Safety Net
As the traders are independent in their actions, there is no safety risk to back them. For instance, they cannot get any refunds in case of a loss, and all their capital vanishes in thin air! Alongside this, they need mentors to motivate them or educational resources to get assistance from.
Benefits of Cheap Funded Accounts:
- Entry Into The Trading Market
The most significant benefit of funded accounts from Best Prop Firms is that they provide aspiring traders with a secure pathway to enter the market. They are a low-cost entry option. As the traders do not have to utilize their funds to trade, they get them loaned from firms that help them fulfill their dreams without putting their funds at stake.
- Leveraged Capital
The traders don’t have excessive funds. Instead, their bank accounts have limited money, so they can’t go all out while trading. Contrary to that, prop firms have extensive capital to lend to traders willing to play a big game in the field. By leveraging their capital, they can fulfill all their trade ambitions. Also, when they showcase consistently good performance, the prop firm can trust them and provide them extensive capital without inhibitions.
- Minimum Upfront Cost
The traders must pass an evaluation test to be a part of the prop trade firms. For that evaluation test, there is a fee to be paid. Consider it an upfront cost, which is minimal compared to the prop firm’s benefits. You can grow extensively with this minimum amount of money you spend on the Cheapest One Step Challenge.
Which One Is Right For You?
As a newbie trader with minimal personal funds, there is no better choice than the cheap funded accounts. They give you an excellent networking option and open new doors to associate with mentors. Also, you get to use the company’s educational resources that further expand your horizons.
