Some things just sound too good to be true in life. Wouldn’t you guess, prop trading is one of them!
Imagine an extremely rich individual or even a whole company comes along and gives you basically unlimited resources of money and pats you on the back and sends you off to your financial market of choosing to trade. Sounds dreamy, doesn’t it?
Well, this is basically what prop trading is; a particularly reliable and highly profitable method of investment for companies and also individuals.
But companies do not just provide their money to traders, sight unseen. There are various stages that must be passed first in order to obtain the trust of the firm first. Then you will become an official prop trader.
In this article we will focus on the challenges provided by prop firms, with the example of the well-known prop firm FundedNext which is similar to other well-known platforms such as FTMO. And we will also show you how you can pass prop firm challenges with the help of XauBot.
Why Engage in Prop Trading?
If it is so difficult, then why would traders want to engage in prop trading at all? Why would companies even want to give their previous money to traders they do not even know?
The answer to these questions can be seen in the benefits of prop trading.
For the firm of the investor(s) that provide the money, prop trading can be an amazing way to diversify their portfolio and also obtain quick returns.
- Diversification of portfolio: when companies or investors give their money to prop traders, they keep their money flowing and circulating. This is an important notion in capital preservation. If the money doesn’t move, then it loses its value as time goes on. So prop trading can provide them with another method of a diversified portfolio.
- Quick returns on investment: additionally, unlike other methods of investment where returns are only seen when investment comes to fruition, for instance in the form of a fully developed startup company, with prop trading companies and investors can almost instantly receive the return on their investment.
And of course for individual traders, it is well worth the effort to become a prop trader, since you do not have to have a high amount of capital for trading and you can use the capital provided to you by another party.
So as a prop trader, it doesn’t matter if you do not have any money to begin with. As long as you have the skill and expertise of a trader, you are good to go!
Prop Trading Firm Challenges: Example of FundedNext
FundedNext stands out as one of the top prop firms for forex traders. It offers flexible evaluation models (1-step or 2-step Stellar challenges) with account sizes from $6K up to $200K (scalable to $4M).
- Phase 1: 8-10% profit target (depending on model)
- Phase 2: 5% profit target
- Risk rules: 5% daily drawdown and 10% overall max loss
- Minimum days: Often just 5-10 trading days
- Profit split: Up to 90-95% for funded traders, with bi-weekly or on-demand payouts
Many traders choose FundedNext for its no-time-limit options, EA-friendly rules (automated trading allowed), and other featured such as the use of higher leverage.
How XauBot Helps Pass FundedNext Challenges
XauBot’s bot generator allows users to create Expert Advisors (EAs) tailored to FundedNext’s rules, focusing on consistent profits within strict risk limits.
Start by selecting Forex or Metals markets. Choose the Multi-Level Strategy for drawdown management or the Scalp Strategy for frequent small gains. Use entry logics such as XAUBOT (RSI, Bollinger Bands, and Stochastic reversals), MACD + EMA Trend, or options like Multi-Timeframe ATR Breakout.
Configure conservative risk settings: low to medium levels, drawdown caps at 5-10%, and tight take-profit/stop-loss values. Enable the news filter to avoid high-impact events. You can also activate AI sentiment filtering for improved trade direction.
Backtest on M15 or M5 timeframes to confirm reliable achievement of profit targets (8-10% in Phase 1, 5% in Phase 2) without rule violations.
Traders often pass FundedNext and similar firms (FXIFY, The5ers) using XauBot by deploying disciplined bots that prioritize steady performance. This ensures successful evaluation completion and prepares the system for funded accounts with up to 90-95% profit splits.
Conclusion
Prop trading firms provide traders with access to substantial capital, often ranging from tens to hundreds of thousands of dollars, for trading in financial markets without requiring personal funds at risk. In exchange, profits are shared, with leading firms offering splits as high as 90% or 95% in favor of the trader.
These firms require proof of consistent, disciplined trading performance before allocating capital. This is achieved through prop trading challenges, which involve meeting specific profit targets while adhering to strict daily and overall drawdown limits.
XauBot addresses this requirement effectively. As an advanced AI-powered trading bot generator, it enables users to create custom Expert Advisors optimized for any prop trading challenge, regardless of the firm, such as FTMO, FundedNext, FXIFY, or The5ers. XauBot supports multiple markets and pairs, maintains rigorous risk controls, and delivers steady performance that aligns with evaluation rules.