Day trading futures is a form of speculative trading that involves buying and selling futures contracts within the same trading day. Futures contracts are agreements to buy or sell an underlying asset, such as a commodity, currency, or index, at a predetermined price and date in the future. Day traders aim to profit from the price fluctuations of these contracts, without holding them overnight or taking delivery of the asset.
A funded prop firm, also known as a proprietary trading firm, is a company that provides capital and trading platforms to traders who trade on its behalf. The firm typically takes a percentage of the profits and losses generated by the traders, as well as charging a monthly fee for access to its services. The firm may also offer training, coaching, and mentoring to its traders, as well as risk management and performance evaluation.
Day trading futures with a funded prop firm is an alternative way of trading futures for traders who do not have enough capital, experience, or confidence to trade on their own. By joining a funded prop firm, traders can benefit from the following advantages:
- Access to more capital and leverage: Funded prop firms can provide traders with larger trading accounts and higher leverage ratios than they could obtain on their own. This allows traders to trade more contracts and potentially earn more profits, as well as diversify their trading strategies and markets.
- Access to professional trading platforms and tools: Funded prop firms can provide traders with advanced trading platforms and tools, such as charting software, market data, news feeds, indicators, scanners, and algorithms. These can help traders to analyze the market, execute trades, and manage risk more effectively and efficiently.
- Access to education and support: Funded prop firms can provide traders with education and support, such as online courses, webinars, videos, articles, books, and podcasts. These can help traders to learn the fundamentals and technicals of futures trading, as well as develop their trading skills and psychology. Funded prop firms may also offer live coaching and mentoring sessions, as well as feedback and reviews of the traders’ performance and progress.
- Access to a trading community: Funded prop firms can provide traders with a trading community, such as chat rooms, forums, blogs, and social media. These can help traders to interact with other traders, share ideas, tips, experiences, and challenges, as well as seek advice, guidance, and encouragement.
However, day trading futures with a funded prop firm also has some disadvantages, such as:
- Sharing profits and losses: Funded prop firms usually take a cut of the profits and losses generated by the traders, ranging from 10% to 50%, depending on the firm and the trading program. This means that traders have to share their hard-earned profits with the firm, as well as bear some of the losses if they occur.
- Paying fees and costs: Funded prop firms usually charge a monthly fee for access to their services, ranging from $100 to $500, depending on the firm and the trading program. This fee covers the costs of the trading platforms, tools, education, and support provided by the firm. However, this fee also reduces the net profits of the traders, and may not be worth it if the traders do not trade frequently or profitably enough.
- Following rules and restrictions: Funded prop firms usually impose rules and restrictions on the traders, such as trading hours, markets, strategies, risk limits, drawdown limits, profit targets, and evaluation periods. These rules and restrictions are designed to protect the capital and reputation of the firm, as well as to ensure the consistency and quality of the traders. However, these rules and restrictions may also limit the freedom and flexibility of the traders, and may not suit their personal trading style, goals, and preferences.
Therefore, day trading futures with a funded prop firm is not for everyone. It is suitable for traders who are looking for more capital, leverage, platforms, tools, education, support, and community to trade futures, and who are willing to share their profits and losses, pay fees and costs, and follow rules and restrictions. It is not suitable for traders who are looking for full control, ownership, and independence of their trading, and who are not willing to share their profits and losses, pay fees and costs, and follow rules and restrictions.