What is better a broker or a funded account?

What is better a broker or a funded account?

Hello trader´s, how are you? If lately you are doubting between choosing a broker or a financed account, let’s start and solve these doubts!

Funded account or broker depending on the risk

We are going to start comparing based on the risk you are assuming, what you can lose and in this case, indeed, a funded account is much better than working with a broker account.

For example, let’s imagine that we work with a $50,000 account in which we can lose $2,000.

You can lose 2,000 virtual dollars but what you are really losing is the cost of the evaluation, which is 160 dollars and that is not counting the fact that there is no promotion to make it cheaper.

On the other hand, if you are working with a broker, the risk you are assuming is a loss of $2,000, so here, we are comparing losing $160 to being able to lose $2,000.

Emotional management to choose a funded account or a broker

You always say it, in a simulated way I win but later when I start to invest in the stock market in a real way I lose, why? Very simple, because you do different things, so the easiest thing is to win in simulation.

A funded account where is it located? between a demo account and a real account, why? when you are losing you do not directly lose your capital and that takes a lot of pressure off. One of the main reasons why most traders lose is because they work with small capitals, the pressure is very high, the expectations are also enormous and the most normal thing is to win.

Trading with a funded account is not the same as trading on demo, you have a bit of pressure but it is not the same as when you are trading with your capital. The day you lose it pisses you off but you don’t have that pressure to say, I’ve lost $500 out of pocket.

It is a very important point along with the risk to assess because it is better to take a financed account than an account with a broker.

How much money do you need?

When they give you an account of 50 thousand dollars they only allow you to lose 2,000 dollars with the financed accounts and they let you operate with 5 contracts and for this we only need the cost of the evaluation which is 160€

On the other hand, if we wanted to have the same conditions, that is, to be able to lose the $2,000 with a broker account plus the guarantees of being able to use those contracts, if we value it, for example, with Ninja Broker, which has very low guarantees in the case Nasdaq is the product that I trade, we would need $500 for each contract + the $2,000 you stand to lose, that is, we would need $4,500 to do the same thing you are doing with a funded account.

Broker or Profit-Based Funded Account

If you work with a broker, 100% of the benefit is for you

If you work with an average funded account, you will take 80% of the profit.

Depending on the benefit we want to achieve, it is more interesting to work with a broker than with a funded account.

Broker or financed account regarding the cost of the data

For some financing companies, the data is free but for others they are usually charged and they usually charge you as a professional investor and they charge you the data of each American exchange at 105 dollars. If you operate with your broker it will be between 1 and 7 dollars per exchange.

It is much cheaper in this case to work with a broker as long as you work with a funded account that charges you $105.

What is better on the subject of taxes?

You can consult another video of the taxes of Spain and so you can see that it is more profitable for taxation. The best thing to do is talk to a consultant.

If you work with a broker, everything you earn has to be declared as capital income, but what you earn with a funding account is not because that is not yours until you receive it in your account, that is, what you have to declare are the withdrawals.

Personally, I think the best option is a funding account.

Is a trading account with a funding company the best option?

There are situations in which they are totally not recommended:

  • If you swing trade. If your operations do not meet the conditions that the financing company has
  • The evaluation has an extra great pressure since you want to achieve a certain objective in a certain period of time.
  • It depends on the companies with which we are working after being financed since some force you to operate.

I like funding companies, I work almost exclusively with them and I think they are very convenient. If you have more questions you can leave your comments here and I will solve them for you and if you want to improve your trading operations you can start with the free online trading course.


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