Simulated funded account
A simulated funded account is a funded account that runs on virtual capital: your orders execute against live market data in a simulation, never in a real market, while the firm pays real money on the profit split.
Most modern online prop firms operate this way, and their terms commonly say so — the words "simulated", "virtual", or "demo environment" appear in the fine print even where the marketing says funded. The reasons are regulatory and financial: routing thousands of retail-sized accounts to live markets is expensive and heavily regulated, while a simulation caps the firm's exposure at the payouts it owes. Some firms state that they mirror their most consistent traders into live positions, but the account you trade remains the simulation.
For the trader, the environment behaves like a strict demo account: the same data and modeled execution, plus an enforced rulebook and real consequences — a fee paid to get there and a real payout if the rules stay intact. The commonly raised caveat is execution realism: fills in a simulation can be cleaner than a live market under stress, since your orders consume no real liquidity.
In a prop-firm challenge
Both the challenge and the funded stage typically run in the same simulated environment, so the skills that pass one are the skills that keep the other. What actually differs between paper, demo, and live execution — and how much of it transfers — is examined in paper trading vs demo vs live, and the payment mechanics behind the model in how prop firm payouts work.