Simulated account
Also known as: simulated funded account, demo funded account, sim account
Simulated account: A simulated account is a trading account that uses fictitious capital and does not execute trades in the real market; many prop firms use simulated accounts for challenges and for funded accounts, and pay real payouts from their own revenue.
Are prop firm accounts simulated?
At many retail prop firms, yes. FTMO, for example, states that all accounts it provides are demo accounts using fictitious capital, and E8 Markets states that all its accounts are demo accounts. Whether a funded account is simulated or trades real capital depends on the firm’s terms: what is a prop firm?
How can a simulated account pay real money?
A payout from a simulated funded account is paid by the prop firm from its business revenue, mostly fees, not withdrawn from a balance in the market. The trader’s profit on the account is the basis for calculating the payout, under the firm’s profit split: how do prop firms make money?
Worked example
Illustrative only: a simulated $100,000 funded account shows a $3,000 profit. The firm pays the trader 80% of it, $2,400, from its own funds; no trade on the account was executed in the real market.
Sources
Regulatory and official sources
- What capital will I trade on an FTMO account?, FTMO
- Is my account live or demo?, E8 Markets
Learn more
- What Is a Prop Firm? How Prop Trading Firms Work
What a prop firm is and how prop trading firms work: challenge fees, prop firm evaluations, funded and simulated accounts, profit splits, rules and risks.
- How Do Prop Firms Make Money? The Prop Firm Business Model
How do prop firms make money? The prop firm business model explained: challenge fees, resets, add-ons, simulated accounts, payouts and conflicts of interest.
- Prop Firm vs Broker: Funded Account or Your Own Account?
Prop firm vs broker: who owns the capital, simulated vs live accounts, who bears losses, regulation, profit split and withdrawals compared, with an example.
Related terms
- Funded account
A funded account is the prop firm account a trader receives after passing a challenge, or directly through instant funding, on which profits are shared under the firm's profit split.
- Challenge fee
A challenge fee is the price a trader pays a prop firm to take an evaluation (a challenge) with a profit target and loss limits; it pays for a service, is kept by the firm if the challenge fails, and some programmes refund it after a qualifying payout.
- Payout
A prop firm payout is the payment of a funded trader's share of eligible profits, made by the firm under its profit split and payout rules.