In proprietary trading, getting funded is just the first step. The real challenge is keeping the account. It's a tough lesson many traders learn the hard way: a great strategy means nothing without a rock-solid structure to protect your capital from avoidable losses.
Funding Pips approaches this challenge with a system designed to guide, not restrict. From clear daily and overall drawdown limits to rules around stop-loss use, news trading, and scaling up your account responsibly, this firm aims to instill discipline while giving you room to grow.
If you’re wondering does FundingPips have a risk management tool that aligns with serious, long-term trading, this guide will walk you through every essential component to help you decide.
1. So, does FundingPips have a risk management tool?
The short answer is a resounding yes. But it's not just a single "tool"; it's an entire framework. Funding Pips doesn't just hand you capital and wish you luck. They’ve built a structured system of rules designed to act as guardrails. These aren’t there to limit your potential, but to enforce the kind of discipline that separates consistently profitable traders from the rest.
At the heart of their approach are strict drawdown limits, which serve as real-time guardrails for your trades. These mechanisms are what set Funding Pips apart from less disciplined prop firms.
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2. The core of Funding Pips' risk system: Understanding drawdown rules
Before diving into advanced strategies or scaling plans, every trader must first master the rules that protect their capital. At Funding Pips, drawdown management is the foundation of their entire risk framework.
2.1. Daily loss limit (5%): Your daily trading shield
The Daily Loss Limit varies depending on the chosen program. For the standard Two-step Evaluation, the limit is 5% of the starting account balance for the day. However, for other popular programs, the limits are stricter. For instance:
- Two-step Pro Evaluation: 3% Daily Loss Limit.
- One-step Evaluation: 4% Daily Loss Limit.
- Zero Program: 3% Daily Loss Limit.
The calculation is based on your balance at the start of the day (5 PM EST). From that point, your equity (balance + open profits/losses) must not drop below the specified threshold (e.g., 95% for a 5% limit, 97% for a 3% limit).
For example, with a $100,000 account, your equity must not drop below $95,000 at any time during the day. If it does, even for just a moment, your account is considered in violation and will be terminated immediately.
Think of it as a hard stop that forces you to walk away, take a breath, and reset for the next day. It’s designed to prevent one bad day of emotional decisions from spiraling out of control and jeopardizing your account.
2.2. Maximum drawdown (10%): Your account's ultimate safety net
While the daily loss limit protects your account from single-day setbacks, the Maximum Drawdown rule provides an overarching safety net across your entire trading journey.
For the standard Two-step Evaluation, the Maximum Drawdown is 10% of the initial account balance. This means if you start with a $100,000 account, your equity must never fall below $90,000.
However, other programs have tighter limits:
- Two-step Pro Evaluation: 6% Maximum Drawdown.
- One-step Evaluation: 6% Maximum Drawdown.
- Zero Program: 5% Maximum Drawdown.
A key advantage of most Funding Pips programs (like the Two-step and One-step) is that the drawdown is static, based on your initial balance. It does not trail your profits. This gives you more room to trade as your account grows.
Important Note: The Zero Program is an exception and uses a trailing drawdown (also known as a relative drawdown), which follows your highest equity point.
2.3. Important note: Understanding static vs. trailing drawdown at Funding Pips
To fully grasp the benefit of Funding Pips’ risk system, it’s crucial to understand the difference between a static (or relative) drawdown and a trailing drawdown, two very different approaches used by prop firms to limit overall losses.
Here’s how they compare:
| Feature | Static/Relative Drawdown (Funding Pips) | Trailing Drawdown (Other Firms) |
| Calculation Basis | Based on the initial account balance | Based on the highest equity achieved |
| Does it Move? | No. Fixed at 10% below the starting balance | Yes. Follows your profits upward |
| Trader Benefit | More breathing room as profits grow. Easier to manage over time. | Less room to trade freely. Can trigger a breach even after good trades. |
As you can see, the static drawdown used by Funding Pips is far more trader-friendly. It provides a fixed floor, which helps you focus on building consistent performance without worrying that your past gains will tighten your risk limits.
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3. Beyond drawdown: Other key risk management rules at Funding Pips
Risk management at Funding Pips goes beyond just drawdown limits. To fully answer the question, does FundingPips have a risk management tool that supports real-world trading, you need to consider their broader framework, including rules around stop-losses, position sizing, and trading during news events.
3.1. Stop-loss: A mandatory rule or a strong recommendation?
Funding Pips offers significant flexibility regarding stop-losses. A stop-loss is not mandatory on any trade during either the evaluation phase or on a funded (Master) account.
While it is no longer a requirement, using a stop-loss is a fundamental practice of responsible risk management and is highly recommended to stay within the daily and maximum drawdown limits. The responsibility to manage risk and avoid breaching the drawdown rules lies entirely with the trader.
3.2. Position sizing: The unwritten rule for long-term success
Funding Pips doesn’t impose strict rules on lot size or percentage risk per trade. However, that doesn’t mean you should ignore position sizing; it’s arguably the most important unwritten rule in their entire risk framework.
To stay compliant with the 5% daily and 10% maximum loss thresholds, you must size your positions conservatively. Most professional traders risk no more than 0.5% to 1% of their account per trade, allowing them to endure a series of losses without breaching risk limits.
Position sizing isn’t just about avoiding violations—it’s about sustainability. Proper sizing lets you compound over time while keeping your drawdowns controlled, which is essential to long-term success in prop trading.
3.3. News trading restrictions: Managing event-driven volatility
The rules for trading during high-impact news events differ based on your account stage:
- Evaluation Accounts (All Programs): There are no restrictions on news trading. You are free to open and close trades at any time.
- Funded/Master Accounts: There is a restriction around major news events. You are not allowed to execute (open or close) trades on the affected currency pair within a 5-minute window before and 5 minutes after the news release.
Any profits made from trades executed within this restricted 10-minute window will be deducted. However, violating this rule does not lead to account termination unless it is done repeatedly. Positions opened more than 5 minutes before the news event can be held through the event.
The takeaway here is simple: this rule is designed to protect you from the wild, unpredictable slippage that can blow up an account in seconds during a major news release. Always check the firm's news calendar before you trade.
4. How Funding Pips rewards responsible trading
Risk management at Funding Pips isn’t just about avoiding breaches; it’s also about recognizing and rewarding good trading behavior. Traders who follow the rules and show consistent discipline gain access to valuable growth opportunities.
4.1. The scaling plan: Growing your capital for good risk management
Funding Pips doesn’t just penalize reckless trading; it rewards discipline. Through their Scaling Plan, traders who demonstrate consistency and risk control can unlock larger account sizes and greater earning potential.
Here’s how it generally works:
- Profit target: Reach a specific profit percentage (often around 10%) over a set evaluation period, such as two or three months.
- Consistency: Show stable performance without breaching any rules or relying on oversized trades.
- Reward: Once qualified, your account size increases by a fixed percentage (e.g., 25%), and your drawdown limits adjust proportionally.
This plan is designed to encourage sustainable risk management while giving traders a clear path to grow with the firm. Instead of chasing big wins, you’re rewarded for trading with structure and control, exactly what long-term success requires.
4.2. Flexibility in strategy: The advantage of no consistency rule
A trader-friendly aspect of Funding Pips' main programs (Two-step and One-step evaluations) is the absence of a consistency rule. This means you are not penalized if a single large trade accounts for a significant portion of your total profit. As long as you respect the drawdown limits, your profit distribution is up to you.
However, it is crucial to note that the Zero Program is an exception and does have a consistency rule. Under this rule, your best trading day cannot account for more than 15% of your total profits.
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5. Frequently asked questions about Funding Pips risk management (FAQs)
5.1. What happens if I breach a risk rule?
If you breach either the daily loss limit or the maximum drawdown rule, your account will be automatically and permanently terminated. This is considered a hard breach, meaning there are no second chances. You will also forfeit your challenge fee and must purchase a new challenge to start over.
5.2. Is the drawdown calculated from balance or equity?
This distinction is critical. The daily loss limit is calculated based on your start-of-day balance, while the maximum drawdown is calculated from your initial deposit. However, in both cases, breaches are triggered by your equity, which includes your balance plus or minus any open trade profits or losses.
5.3. Can I use EAs or trade copiers for risk management?
Yes, Funding Pips generally permits the use of Expert Advisors (EAs) and trade copiers, including those specifically designed for risk management, such as EAs that auto-close positions at a defined loss level. However, you are fully responsible for the actions of any automated system you deploy. Using illicit, high-frequency, or latency arbitrage EAs may violate the firm’s terms and result in disqualification.
5.4. Do these risk rules apply to all account sizes and challenges?
Yes, the core principles of risk management apply across all accounts. However, specific drawdown percentages may vary depending on the challenge type. For example, the Zero account has a 3% daily and 5% max drawdown, while some one-step programs may feature different thresholds. It’s essential to confirm the exact rules based on the program you choose.
6. Conclusion: Is Funding Pips' risk management right for you?
Funding Pips offers a clearly defined risk management system centered on two critical rules: a 5% daily loss limit and a 10% maximum drawdown. These are enforced consistently across all accounts to protect both trader and firm capital.
What makes their approach stand out is the use of a static drawdown, the absence of a consistency rule, and a scaling plan that rewards disciplined trading. These features provide structure without rigidity, allowing traders to grow with confidence.
So, does FundingPips have a risk management tool that supports long-term success? Absolutely, and it’s built to encourage responsibility, not punish ambition. If you’re a trader who values clear boundaries and room to develop, this framework may be exactly what you need to thrive.
Want to explore how other prop firms compare or dive deeper into trading strategies? Check out more expert insights in the https://h2tfunding.com/blog/ and Prop Firm & Trading Strategies section at H2T Funding.
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