What going live responsibly means

What changes, and what does not 

Almost nothing about the mechanism changes when an account is funded. The quote stream is the same stream. The contract specification is the same document, the order types behave the way they behaved, margin is calculated by the same formula, the close out rule fires at the same level, and the statement at the end of the period is produced by the same system. In every mechanical respect a funded position and a simulated one are the same object, described by the same words, and reported on the same screen.

What changes is the status of the balance. In a simulated account the balance is a number in a database, and it exists so that the arithmetic has somewhere to land. In a funded account it is money held by a firm under a client agreement, and a debit removes an amount that existed before the position was opened. Margin posted against an open contract is collateral that is not available for anything else while the contract runs. A close out is a real disposal, carried out by the firm, at whatever price the market provides at the moment it fires.

That asymmetry is the subject of this lesson. Everything mechanical crosses the boundary intact, because none of it was ever simulated in the first place. The single thing that does not cross is the one thing that changed.

The checks that precede a first funded position 

The checks below are mechanical in a narrow and useful sense: each has a determinate answer that can be read off a register, a document or a platform, and none of them is a judgement about a market. They are set out in the order in which their answers become harder to obtain. A licence entry can be read at any time. A contract specification can be read at any time. What a platform does when a stop is amended is considerably harder to establish for the first time while a position is open.

1. The entity. Which company the client agreement names, and whether that company appears on the regulator's own register with the permissions it claims to hold. The brand on a website is not the party to the contract, and the check runs from the register back to the agreement rather than the other way around. The mechanics of that check are set out in the guide to SCA regulation.
2. The terms. How cost is charged on the instrument in question, when a financing adjustment applies and on what basis, the level at which open positions become liable to be closed, and what the firm may do without an instruction. Each of those is stated in the firm's own documents, and each of them is specific to the firm rather than general to the industry.
3. The instrument. Its contract specification: the contract size, what one point of movement is worth per unit, the financing basis, the trading hours, and the expiry where the contract has one. The specification is the source of every calculation that follows, so a size arrived at without it is a size arrived at by guess.
4. The platform. How an order is placed, amended and closed, how a stop is attached to a position, how an open position and a closed one are each reported, and where a close out appears in the record when it happens. This is exactly what a simulated period establishes, and it establishes it completely.
5. The written rules. Whether the condition for opening, the invalidation, the sizing rule and the aggregate limits exist in writing beforehand rather than being recalled afterwards. A rule written in advance and an intention formed while a position is open have different authors, and only one of them had nothing riding on the answer.
6. The record route. Where statements arrive, in what form, how long the firm retains them, and what is kept independently of the firm. A record assembled after a dispute has started is assembled from whatever happened to survive.

Between them these settle two questions and no others: whether the arrangement is what it says it is, and whether the arithmetic is known in advance rather than discovered afterwards. They settle nothing about a market, because nothing about a market is knowable in that way. They settle nothing at all about how the person doing the checking behaves once the balance is money.

What a simulated record does not carry 

A simulated record is unusable as evidence about a funded account for two separate reasons, and the second is the one this module is concerned with. The first is mechanical and was covered earlier in the curriculum: the fills inside it were constructed by a rule rather than obtained from a market, so the prices in the record are not prices anyone paid. The second is behavioural. Every decision in that record was made by a person for whom the outcome carried no consequence, and a decision taken under a condition that did not obtain is not evidence about the decision that would be taken under the condition that does.

This runs in both directions, and the second direction is the one usually skipped. A simulated run that ended higher is not evidence that a funded account would end higher. A simulated run that ended lower is not evidence that a funded account would end lower either. The record documents a simulator and a person who was not exposed, and neither of those is the thing the question is about.

What a simulated period does establish is mechanical, and that part transfers intact: that an order ticket does what it appears to do, what a contract specification contains, how a platform reports an open position, what a close out looks like when it arrives. That is a real result and not a trivial one. It is simply a result about a platform and an arithmetic rather than a result about a trader.

What changes when the capital is real 

Behavioural economics names an asymmetry between the weight a loss carries and the weight an equivalent gain carries, and calls it loss aversion. Naming a tendency is not the same as measuring it in a particular person, and this page attaches no figure to it and makes no claim about any reader. What can be said more precisely is narrower and more useful: where the asymmetry is present, it leaves marks that a record shows. Positions held longer when they are adverse than when they are favourable. A size that does not match the sizing rule that produced every other size. A shortening interval between one position and the next after an adverse result. A note written once the result was already known.

Two things are worth separating. The first is that none of those marks requires a large amount of money to appear, because the quantity that governs how an amount is experienced is what it represents in the circumstances of the person holding it, and no page can assess that. The second is that a simulated period cannot rehearse the thing that changes, because the thing that changes is precisely what the simulation removed. A simulator can reproduce a quote, a ticket and a calculation. It cannot reproduce consequence, and consequence is the variable under discussion.

There is an arithmetic reason as well as a psychological one. Profit and loss on a CFD are calculated on the full contract value while only a percentage of that value is posted as margin, so an adverse move is measured against the whole contract rather than against the margin: a loss can exhaust the margin posted and is not limited to the amount deposited. A favourable move is measured on exactly the same basis and to exactly the same degree. On a simulated balance that calculation produces a number on a screen. On a funded one it produces a transfer.

The rows carry two statements. The arithmetic is indifferent to the status of the balance behind it, which is why the calculation transfers out of a simulated period intact. And the same amount is a different proportion of different balances, which is why an amount that is unremarkable in one set of circumstances is not unremarkable in another. A firm's minimum opening balance is a term of that firm, stated in its documents. It is not a statement about what any set of circumstances requires, and the two are routinely read as though they were one sentence.

Where practitioners disagree 

Two questions here are genuinely unsettled, and a reader will meet confident answers to both. The first is whether a first funded position at a deliberately small size is a bridge or a distortion. One tradition holds that a small size reproduces the condition a simulated period could not supply, money at stake, while bounding the amount at risk. Another holds that a size chosen to be small enough not to matter reproduces the simulated problem with a cost attached, and that a size which does not come out of the written sizing rule is not the rule being tested. Both arguments are coherent, neither has been settled, and no size is put forward on this page.

The second is whether a simulated period helps at all. The case for it is the mechanical one above, and it is demonstrable: the platform behaviour it establishes is the platform behaviour a funded account uses. The case against it is that a stretch of decisions taken without exposure is a stretch of habit formation under the wrong condition, and that habits formed there are the ones most likely to fail when the condition changes. Both positions are usually stated as though the disagreement did not exist. It does, and the honest summary is that the mechanical benefit is checkable while the behavioural one is contested.

What finishing this curriculum means 

This curriculum sets no examination, awards nothing, and produces no score. Nothing in it is an assessment of any reader, and reaching the end of it is not a finding about anybody. That is not modesty and it is not a formality. Assessing whether a particular person should be putting a particular amount of money at risk would require knowing that person's circumstances, obligations and capacity to absorb a loss, and a page that has never met its reader knows none of them. A curriculum that implied otherwise would be making the one claim it is least equipped to make.

What reading has established is comprehension: what the instruments are, how the arithmetic works, what the documents contain, what the standard fraud patterns look like, where the records live and where a complaint goes. That is worth having, and it is the part that could be taught in writing. It is also not the same capacity as the one that governs a funded account. Knowing how a close out level is calculated and stopping a sequence of positions at a written limit are two different capacities, and the second is not established by the first. Comprehension is a necessary condition. It has never been a sufficient one.

The one instruction in this whole curriculum whose author was demonstrably not exposed is a rule written before the boundary was crossed. A stated invalidation, a written loss limit for a day or a week, an aggregate exposure ceiling, and a nominated occasion on which the document is read again, all recorded while nothing was at stake, are the only rules in the account that were authored by someone with nothing riding on the answer. That is the whole mechanism of a pre commitment, and it is why the risk module puts those rules on paper rather than in memory. A document can still be disregarded. It just cannot be quietly rewritten by a person who already knows how the position turned out.

The academy ends where it can honestly end. It can describe how these instruments work, what they cost, what a regulator does and does not cover, and what the recurring frauds look like from the outside. It cannot tell anyone whether to open a position, when, or in what size, and it cannot tell anyone that they are ready, because readiness is not a property this page can observe and no amount of reading converts into evidence about conduct under exposure.