What is forex Funded firm?

A forex funded firm (also known as a proprietary trading firm, or prop firm) is a company that provides traders with access to its capital to trade financial markets, primarily in forex. Traders do not use their own money; instead, they trade the firm's capital. In return, the trader typically receives a share of the profits generated, while the firm absorbs the losses.

Here’s how it works:

1. Evaluation Process: Most funded firms require traders to pass an evaluation or challenge to prove their skills. This involves trading a demo account under strict rules, such as profit targets, maximum drawdown limits, and risk management criteria.
2. Funded Account: If the trader passes the evaluation, they are given access to a live trading account funded by the firm.
3. Profit Split: Traders who generate profits typically receive a percentage of those profits, often ranging from 50% to 90%. The firm keeps the rest as compensation for providing the capital.
4. Risk Management Rules: Funded traders must follow specific guidelines to manage risk, such as maximum daily loss limits, total drawdown restrictions, and position sizing requirements.

Some well-known forex funded firms include FTMO, MyForexFunds, FundedNext, and The5ers. These firms offer aspiring traders a chance to trade larger capital without risking their own money but require discipline and adherence to their rules.