Although the barrier to entry in trading has significantly decreased in the last decade, there are surprisingly still very few ways to become a professional trader.

So how does someone successfully earn money in the markets?

Here we highlight the pros and cons of the four ways there are to earn money in the markets:

1. SELF-FUND

   One of the most popular ways to make money trading is to fund your own account at a brokerage.

   Upsides: The main upside to this method is that you get to keep all of the profits. You can trade however you’d like, using whichever tools or strategies you’d want. You are fully autonomous.

   Downsides: You are taking on all the risk. If you’re not trading well, it’s your money you’re losing. If a “black swan” event happens, it’s your margin at risk. Also, as a retail trader, you don’t get the best commission rates or margin requirements, and the fees can really add up.

   Conclusion: More autonomy = more risk.

2. GET HIRED

   This is another popular, albeit far more difficult, route to trading professionally. If you lived in Chicago or New York City during the trading floor days, this job was pretty achievable. Most people who grew up there either worked or knew somebody who worked on the trading floor.

   Upsides: Trading jobs are generally very high-paying and you have no personal money or stake at risk. If the firm or fund has a down day, month or year, you may not get a raise, but you’re not the one losing money!  

   Downsides: Technology has eliminated many of the true “trading” jobs. In today’s trading world, you’ll need an advanced degree in Statistics, Engineering, or Computer Science for your resume to even get looked at. And even if you get a job, are you really a trader or just a programmer for a trading firm?

   Conclusion: If you like math and computer systems, and can stomach years of schooling, this may be for you.

3. CONTRIBUTE CAPITAL 

   In this model, you basically pay for leverage. You make what is called a “capital contribution”, usually $5K-$10K, to an account with a firm and they provide you greater leverage to trade.

   Upsides: Limited risk. You have a very defined amount of money at risk, which is the amount of your capital contribution. This sometimes includes access to proprietary trading technology or firm resources.

   Downsides: This model is risky as these firms often charge high commissions and take 20-40% of the profits. If your account falls by the total amount you contributed, you lose your account and trading privileges. Essentially, the firm has zero risk “funding” you.

   Conclusion: You’re better off using the capital contribution elsewhere.

4. EARN A FUNDED ACCOUNT®

   Firms like TopstepTrader­® provide an opportunity for anyone to earn funding. You have your trading evaluated in a Trading Combine® - a real-time, simulated account. If you meet the objectives, which are focused around risk criteria and meeting profit targets, you earn a Funded Accountwithout any of the risk and all of the upside.

   Upsides:

   • Low cost. You invest a comparatively small amount of money ($150-$375) for a big reward.
   • No risk. You don’t have thousands of dollars at risk in the markets.
   • Access. Anyone, anywhere can be evaluated for funding, regardless of social or economic status.
   • Development. This inherently is a great way to develop your trading without the cost or risk associated.  

   Downsides: Since you are “trying out” to trade someone else’s money, you have to play by their rules. Depending on your strategy, this could be a non-issue or potentially prohibitive.  
   

   Conclusion: Rewards far outweigh the risks.

So, which option do you think is best? Let us know in the comments below.