Know Your REAL Funded Trading Capital

📌 PASS THE PROP TRADING TIP

Did you know that ONLY 5-10% of your funded account (the maximum loss) is real capital? The remaining 90-95% is your leverage. 💰

While prop firms may say that you are controlling $250,000 of capital, in reality, only a small fraction of the total amount at risk 📉 is your actual capital.

The rest, the majority of the 💼 .account balance is available for leveraging your trades.

For example:

Let's say you have a funded trading account with $50,000. According to the statement, only 5% of this amount, which is $2,500 ($50,000 0.05), is your real capital. The remaining 95%, which is $47,500 ($50,000 0.95), is allocated for leverage. 💳

Now, suppose you decide to use leverage to enter a trade. Your broker offers a leverage ratio of 20:1. This means for every $1 of your real capital, you can control $20 in the market. 📊

With your $2,500 real capital and 20:1 leverage, you can effectively control $50,000 in the market ($2,500 x 20). This allows you to take larger positions 💪 than you could with just your real capital alone.

So, if you were to trade stocks with this leveraged amount, you could potentially buy shares worth $50,000 in the market. 📈

The statement emphasizes that while you have access to a larger pool of funds through leverage, your maximum potential loss is limited to the 5% of your funded account that represents your real capital, helping to manage risk while trading with leverage. ⚖️

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