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A company gives you capital to trade with. You don’t risk your own money beyond a one-time test fee. Here’s how the whole thing works.
Funded trading is a model where a company provides you with trading capital. You trade their money, not yours. If you’re profitable, you keep the majority of the profits. If you’re not, you lose access to the account, but your savings stay untouched.
The maximum you can lose is the test fee you paid upfront. That number is fixed before you place a single trade.
If you’ve been trading crypto with your own money on Kraken or any other exchange, funded trading works differently from everything you’re used to. You don’t deposit capital. You don’t custody assets. You take a trading test, prove you can trade within risk limits, and the company gives you an account with $5,000 to $200,000 of their capital to trade with.
How It Works
The process has three steps.
- Pay a fee, take a trading test. You pick an account size (say, $100,000) and pay a one-time fee. At Breakout, a $100,000 account starts at $330. Then you trade a test account. The goal is to hit a profit target while staying within the loss limits. At Breakout, there’s no time limit and no minimum number of trades or trading days required. Some traders pass in a day. Others take weeks.
- Pass the test, get the firm’s capital. Once you hit the profit target without breaching the loss limits, the company opens a funded account for you, backed by their capital. The $100,000 behind that account is the firm’s capital, not yours. You never deposited it, and you’re never on the hook for it.
- Trade profitably, get paid. You trade the funded account. At Breakout, you keep 80% of the profits you generate (90% is available as an upgrade), you can withdraw whenever you want, 24/7, and there’s no profit cap on the account. The share the company keeps is their cut for providing the capital.
That’s the whole model. Pay a fee, prove you can trade, trade someone else’s money, keep most of the profits. (How funded trading works breaks each step down further.)
What Happens If You Lose?
This is the question everyone asks, and the answer is the reason funded trading works the way it does.
If you lose money on the funded account and hit the loss limit, the account closes. That’s it. The company absorbs the trading losses because it was their capital, not yours. You don’t owe anything. There’s no margin call, no debt, no additional charges. The position closes, the account locks, and you move on.
The test fee you already paid is the worst-case scenario. You knew that number before you started. $330 for a $100,000 account means $330 is the absolute maximum you can lose, regardless of what happens in the market. BTC could drop 50% while you’re long, and you lose $330, not $50,000.
Compare that to trading your own $1,000 on an exchange using cross margin. A bad stretch can cost you $300, $500, the entire balance. The downside scales with how much you deposited. With funded trading, the downside is the fee, and the fee doesn’t move.
And if you want to try again after a loss, you pay another test fee and start fresh at full balance. The recovery math is where the structural advantage is sharpest. On a personal account, a 30% drawdown means you need a 43% gain just to break even. A 50% drawdown requires a 100% gain. The deeper the hole, the harder the climb. On a funded account, recovery is always the same: one flat fee, full balance, clean start. No hole to climb out of.
Why the Math Changes
The difference between trading your own money and trading funded capital shows up most clearly in position sizing.
Standard risk management advice says to risk 1-2% of your account per trade. On a $1,000 personal account, that’s $10-20. You can barely cover fees on some setups at that size, let alone produce results that justify the time you spent analyzing the trade.
So most traders with small accounts ignore the rule. They risk 5%, 10%, 20% per trade because $10 wins aren’t worth the effort, and sooner or later that sizing costs them the account. That’s not a discipline problem. That’s a math problem. The advice assumes capital you don’t have.
On a $100,000 funded account, 1% risk is $1,000 per trade. Same rule, same discipline, and outcomes that are finally worth the screen time. The math works because the capital is there. (For a deeper look at how this breaks down, see how much you should risk per trade.)
A concrete example: you spot a setup on ETH. You’ve done the analysis, identified the entry, set a stop loss, and calculated a target. On a $1,000 account with 1% risk, you’re playing for a $10-20 gain. If the trade takes two hours to play out, you’ve made less per hour than you would doing almost anything else. On a $100,000 funded account with the same 1% risk, that same setup plays for a $1,000-2,000 gain. Same analysis, same timing, same trade management. The only variable that changed is the account behind it.
If you’ve had the experience of being right about a trade and making $30 because your account was too small to express the position properly, that’s the problem funded trading solves.
The Compounding Problem
There’s another angle to the small account math that’s worth seeing clearly.
Say you’re a profitable trader making 5% per month on a $1,000 account. That’s $50 in month one. If you never withdraw and keep compounding, it takes about four years to reach $10,000. And that assumes zero drawdowns, zero withdrawals, and 5% monthly returns with no missed months. The reality is slower.
Funded trading skips the compounding timeline. Instead of spending years growing $1,000 into $10,000, you pay a $330 fee and take the test for access to $100,000. The gate is proving you can trade, not waiting for compounding to run its course.
This doesn’t mean compounding is wrong. It means that if you already have the skill, waiting years for your account to catch up to your ability is an expensive use of time.
Why Would a Company Do This?
Fair question. The business model works because the company earns revenue in two ways.
First, the test fees. Not everyone passes the trading test, and the fee is non-refundable whether you pass or not. This is the company’s primary revenue source.
Second, the profit share. When funded traders are profitable, the company keeps 10-20% of the profits. Across hundreds or thousands of funded traders, that share adds up.
The company’s risk is managed by the loss limits on each account. If a trader hits the maximum allowed loss, the account closes automatically. The company’s exposure on any individual account is defined and limited.
It’s a straightforward business: the company provides capital and risk infrastructure, traders provide skill and execution.
Is This Legitimate?
The funded trading industry is real, but it’s unregulated, which means the quality of firms varies wildly. Some firms have been operating for years, paid millions to traders, and built verifiable track records. Others have appeared and disappeared within months.
The difference usually comes down to who’s behind the firm and whether you can verify their claims.
A few things worth checking before you trust a funded trading firm with your test fee:
Who backs them? Some firms are backed by established financial institutions. Breakout, for example, is backed by Kraken, one of the longest-operating cryptocurrency exchanges. That kind of backing means the firm has institutional-grade infrastructure and accountability behind it. An anonymous team running a website is a different proposition.
Can you verify payouts? Claims about payouts are easy to make and hard to verify from screenshots alone. Look for firms with public leaderboards showing aggregate payout data that anyone can check. Breakout has paid over $50M to traders since launch and publishes a public leaderboard.
What are the rules? Some firms layer on restrictions that create ways to lose your account for reasons unrelated to trading. Rules like consistency requirements (your profits have to arrive evenly to count), profit caps, minimum trading days, and news trading restrictions can trip up otherwise profitable traders. The simplest firms set loss limits and let you trade however you want within them.
How do payouts work? Check whether you can withdraw profits when you want, or whether the firm gates payouts behind approval cycles and minimum trading day requirements.
None of this means you should avoid funded trading. It means you should verify before you commit, the same way you’d verify any financial service.
Who Funded Trading Is For
Funded trading isn’t designed for beginners. You need to pass a trading test, which means you need to know how to analyze markets, manage risk, and execute trades. The model assumes you already have skill and gives you capital to express it.
It’s designed for traders who have the ability but not the capital. Traders who are tired of being right about setups and making pocket change because their account is $500 or $1,000. Traders who know how to manage risk but can’t follow standard position sizing rules because 1% of their account is $10.
There are a few profiles where funded trading makes the most sense:
You’ve been trading crypto actively on exchanges, doing real analysis, and your P&L is limited by your account size rather than your decisions. You know what a good setup looks like. You know when to cut a loss. You just don’t have enough money behind your trades.
Or you’ve been profitable but can’t grow your account fast enough through compounding alone. You’re making 5-10% a month on $1,000, which is $50-100. At that pace, meaningful capital is years away, even though you’re doing everything right.
Or you’ve been through the cycle of depositing, losing, and depositing again, and you want a structure where the maximum cost of a bad stretch is a flat fee rather than another chunk of savings.
In all three cases, the constraint is capital, not skill. Funded trading addresses the constraint directly.
What Funded Trading Costs
Test fees vary by account size and firm. On firm websites, including Breakout’s, you’ll see them listed as evaluation fees. Smaller accounts ($5,000-$25,000) have fees under $250. Larger accounts ($100,000-$200,000) range from roughly $330 to $1,100.
A $100,000 account at Breakout starts at $330 to attempt. That $330 is the total amount at risk. If you pass and trade profitably, you keep 80% of what you make (90% is available as an upgrade). If you don’t pass, you can try again for another $330.
Compare that to the alternative. If you’re trading your own money and you’ve deposited $500 three times this year after getting wiped out, that’s $1,500 spent to trade a $500 account. For the same $1,500, you could have attempted four $100,000 funded account tests at $330 each, with a maximum loss of $330 per attempt instead of your entire deposit each time.
How to Get Started
If funded trading sounds like it fits how you trade, the process is straightforward:
Pick an account size that matches how you want to trade. If you trade BTC and ETH and want to use reasonable position sizes, a $50,000-$100,000 account makes the math work. If you’re starting out and want lower stakes, smaller accounts are available.
Choose a firm. Verify the things mentioned above: backing, payout track record, rules, and withdrawal terms.
Pay the test fee and start trading. There’s no time pressure on most tests. Trade the way you normally would, hit the profit target, stay within the loss limits, and the account upgrades to funded.
From there, you’re trading the firm’s capital. Your savings stay in your bank account. Your maximum loss on the entire venture was the test fee. And every dollar of profit you generate, you keep the majority of.
Funded trading changes who provides the capital, not how you trade. If you already know how to trade, it removes the capital constraint.
