How you lose the account
Losing an account in these firms happens primarily through three triggers: breaching drawdown limits, violating prohibited trading strategies, or falling into inactivity.
In FundedNext, the account is deactivated if it remains inactive for 60 consecutive days. You can also lose it by using prohibited strategies such as latency trading, tick scalping, or account sharing. A specific risk in FundedNext is the mandatory use of a Stop Loss; failing to use one or exceeding the maximum risk limit of 3% per trade can lead to account closure.
Velotrade is stricter with time: inactivity is triggered after only 30 calendar days. It also prohibits Martingale, grid trading, and HFT. Unlike its competitor, Velotrade does not mandate a Stop Loss, but it does require "qualifying days" to reach a payout (days with at least 0.8% profit), which forces a certain level of performance risk on the trader.
Maximum drawdown
The maximum drawdown defines the ultimate "floor" of your account.
- FundedNext: Most plans (Stellar 1-Step, 2-Step, and Lite) use a Static Drawdown. This means the floor is set based on the initial balance and never moves. However, the Stellar Instant plan uses a 6% Trailing Drawdown, which follows your highest recorded balance and caps at the starting balance.
- Example: In a $100,000 Stellar 2-Step account (10% Max DD), your floor is $90,000. If your account grows to $110,000, your floor remains $90,000.
- Velotrade: Uses a Static Drawdown across all phases. The floor is calculated from the starting balance of the current phase and does not move with profits or payouts.
- Example: In a $100,000 Classic 2-Step account (10% Max DD), your floor is $90,000. Even if you reach $115,000 and take a payout, the floor stays at $90,000.
Daily drawdown
The daily drawdown is often the most common reason for account failure due to how it is recalculated.
- FundedNext: Uses a Balance-based daily drawdown. This is generally more favorable as it ignores floating profits from the previous day when setting the new day's limit.
- Example: If you start the day with a balance of $100,000 and the daily limit is 5%, your floor for that day is $95,000.
- Velotrade: Uses a more aggressive calculation. It is recalculated at 00:30 UTC based on the higher of balance or equity at that moment. This means floating profits can "lock in" a higher floor for the next day, increasing the risk of a breach if the market reverses.
- Example: If your balance is $100,000 but you have an open trade with $5,000 profit (Equity $105,000) at 00:30 UTC, your 5% daily floor is calculated from $105,000, setting it at $99,750. If your trade then turns into a loss, you have very little room before hitting the limit.
Rules beyond drawdown
Risk is also hidden in the technical requirements and consistency rules.
- FundedNext:
- Stop Loss: Mandatory.
- News Trading: Allowed, but only 40% of the profits made within 5 minutes of high-impact news will count. This prevents "gambling" on news but limits the upside of high-volatility strategies.
- Consistency: No specific consistency rule for most accounts, but it is required (40%) to access On-Demand payouts.
- Velotrade:
- Qualifying Days: You must have 5 days per phase where you realize a profit of at least 0.8% of the starting balance. This prevents "one-shot" passing and forces you to stay in the market longer.
- Hedging: Only allowed within the same account. Cross-account hedging is a hard breach.
- Risk per trade: No fixed numerical cap, but "abusive risk" is prohibited (a subjective term that adds an extra layer of firm-side discretion).
Risk that comes from the setup
The environment where you trade affects execution and, consequently, your drawdown.
FundedNext offers a wide variety of platforms: MetaTrader 4, MetaTrader 5, cTrader, MatchTrader, and TradingView. This allows traders to use tools they are familiar with, reducing operational risk. They use "Liquidity Providers" as brokers, which is a common but vague description regarding exact spreads.
Velotrade limits traders to DXtrade only. While DXtrade is a modern platform, the lack of choice is a risk for those accustomed to MetaTrader. Additionally, Velotrade charges a fixed overnight funding fee of 0.05% of the notional value for all assets, which adds a constant "drain" on accounts holding positions overnight, especially in crypto and stocks.
What is at stake and what you recover
The initial cost is the first loss a trader faces.
- FundedNext: The registration fee is refundable after the first payout (or third in Stellar Lite). This means if you are successful, your initial risk is eventually neutralized. Payouts are frequent (even every 5 days on some plans), and they offer a "Brand Promise" of $1,000 extra if a payout is not processed within 24 hours.
- Velotrade: There is no standard fee refund. Once you pay for the challenge, that money is gone. Furthermore, there is a significant hurdle on withdrawals: the first and second payouts are capped at 20 times the fee paid. Anything earned above that is forfeited. This significantly limits the reward-to-risk ratio for the first two payout cycles.
Frequently asked questions
Which firm is cheaper for a $100,000 evaluation, FundedNext or Velotrade?
FundedNext is significantly cheaper for a $100,000 account. Their Stellar 2-Step costs $549.99, while the Stellar Lite version is even lower at $399.99. In contrast, Velotrade charges $769 for its Classic 2-Step and up to $1,075 for its Classic 1-Step of the same size.
Which firm offers more time before closing an account for inactivity, FundedNext or Velotrade?
FundedNext is more lenient, allowing up to 60 consecutive days of inactivity before deactivating the account. Velotrade has a much tighter window, marking accounts as inactive after only 30 calendar days without a trade that lasts at least 60 seconds.
Does FundedNext or Velotrade require a mandatory Stop Loss?
FundedNext requires a mandatory Stop Loss on its accounts as part of its risk management rules. Velotrade, on the other hand, lists the Stop Loss as optional, although it warns that market orders may experience slippage during high volatility.
Which firm allows you to recover the initial challenge fee, FundedNext or Velotrade?
FundedNext allows you to recover your initial fee, as it is refunded after your first payout (except for the Stellar Lite plan, where it is refunded after the third). Velotrade does not offer a standard refund of the registration fee once the platform has been accessed or the first trade has been placed.
