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 emphasizing the importance of responsible risk management. Once a formal warning is issued, any subsequent violation of the margin rule in any existing account(s) or future purchased account(s) will result in account termination, regardless of whether the 1% Risk Limit Rule has been imposed. This warning serves as the final notice, and no subsequent warnings will be provided. For any other violations of this rule, immediate termination will occur without warning.
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 formal warning will be issued to the trader. This serves as the only warning a trader will receive and provides an opportunity to adjust their trading behavior.
FundedNext Accounts
The consequences for violating the margin usage rule in a FundedNext Account depend on the trader's warning history.
Violation with No Prior Warning History: If a trader violates the margin rule for the first time in their FundedNext Account (and has never received a warning before), they will receive their one and only formal warning. Any profits generated from trades that exceeded the 70% margin threshold will be deducted before Performance Reward processing.
Violation with a Prior Warning History: If a trader has already received a formal warning for excessive margin usage (70% or above), in any account (including the Challenge Phase), any subsequent violation in their FundedNext Account will result in immediate account termination. Any profits made from the trades that violated the rule will be deducted before the final Performance Reward is processed.
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 Performance Reward 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.
Enforcement Measures for Unsustainable Trading Behavior
If our review indicates that a trader is exhibiting a persistent losing tendency, engaging in gambling-like behavior, or demonstrating an otherwise unsustainable trading pattern, FundedNext will implement measures designed to encourage a return to more disciplined and strategic trading. These measures are intended to help traders reassess their approach and develop more sustainable habits. The following actions may be imposed, either individually or in combination, based on the specific circumstances:
1% Risk Limit Rule Enforcement
Performance Reward Cap
Cooling-Off Period for Account Purchases
Maximum Allocation Limit
Reduced Daily Loss Limit
Purpose and Benefits of These Measures
We are committed to fostering long-term, sustainable trading careers. Therefore, we actively monitor trading behavior to identify patterns that suggest a lack of sustainability, a tendency toward significant losses, or behavior akin to gambling. Such approaches contradict our principles of responsible risk management and are not aligned with the long-term success we aim for both our traders and the platform.
These policies aim to promote a culture of sustained profitability and professionalism. By focusing on sustainable trading practices and sound risk management, traders can better align with FundedNext’s values and build a solid foundation for long-term success on the platform.