At FundedNext, we emphasize disciplined and responsible trading. High-risk practices such as excessive margin usage—defined as utilizing 70% or more of available margin—fall outside the principles of sound risk management. Such behavior introduces unnecessary volatility, increases financial risk for both the trader and the firm, and disrupts the goal of long-term sustainable trading.
To promote professional trading, FundedNext recommends maintaining margin usage within 20-30% and implementing structured risk management. Professional traders typically risk no more than 1% per trade while using only 20-30% of their margin, allowing them to manage drawdowns effectively and maintain consistency. If this approach is not maintained, FundedNext may take corrective actions, including:
Formal Warning – A notice highlighting the importance of responsible risk management.
Leverage Reduction – Trading leverage may be lowered to enforce better risk control.
1% Risk Limit Rule Implementation – A restriction limiting the trader’s exposure to 1% risk at a given time.
How Does FundedNext Enforce This Rule?
Challenge Phase Accounts
If we detect margin usage of 70% or higher, a warning will be issued to the trader. This serves as an opportunity to adjust trading behavior and adopt a more responsible approach.
FundedNext Accounts
First Violation: The trader will receive a warning, and any profits generated from trades that exceed the 70% margin threshold will be deducted if the trader is eligible for a payout.
Repeated Violation: If, after receiving a warning, a trader continues to take excessive margin (70% or above), any profits made from violating this rule will be deducted before payout processing, and the account will be terminated.
Additional Considerations
If a trader exhibits inconsistent risk behavior—such as using minimal risk and margin in the Challenge Phase but excessively increasing risk in the FundedNext Account with no correlation to prior strategies—FundedNext may issue a warning and deduct profits from trades violating the risk and margin rules.
For repeated occurrences, FundedNext will proceed with account termination, ensuring payout processing (if applicable) after deducting profits from any trades that violate the rule.
To further understand trading practices that are not permitted, please refer to our FAQ: Are there any restrictions on my trading strategy?
Understanding and Calculating Margin Usage
To help traders manage their risk effectively, FundedNext encourages the use of proper margin calculation. Margin is the required capital to open and maintain a position in a trading account. It acts as a security deposit to cover potential losses for running trades.
Traders can calculate their used margin and margin utilization by using the FundedNext Margin Calculator. This tool helps traders determine how much of their trading capital is being used, allowing them to manage their exposure effectively and avoid margin-related violations.
For a detailed understanding of margin utilization and its impact on risk management, please refer to our comprehensive Margin Utilization FAQ.