How To Pass Prop Firm Challenges

You have probably tried the prop firm challenges already. Maybe even more than once, and have failed more than once.

Forget the hype, blowing a challenge account when you have gotten one step further to the finish line, for silly reasons such as over-trading, risking or even not sticking to your strategy probably because you wanted to rush through and start making the real bucks.

Well all that’s in the past, it’s time you passed this prop firm challenges once and for all.

If you haven’t even tried at all and are just gathering information about what it takes to pass a prop firm challenge, you are in luck as you would be gaining a lot of experience from lessons learnt over time with pain.

If you follow these steps accordingly you won’t blow too many accounts as we did before getting it right.

To give a promise that you won’t blow your first attempt is like giving a child a light trigger-loaded pistol and hoping he doesn’t fire it. 9 times out of ten, the gun is fired.

STEPS TO TAKE TO PASS THE PROP FIRM CHALLENGES

Becoming a funded trader in prop firms is not an easy task. Prop trading firms only want the best traders who can bring about the best returns under a very short loss leash.

In other words, not only do you have to achieve profit, you have to make a profit consistently. It is to test if you have this attribute that the challenges are in place. So basically, the challenge is to make sure most traders who try don’t pass and only the best of the best.

This goes without saying that your risk management, trading psychology, and understanding of indicators and the financial markets must be on point.

Below are three steps to take, to pass the prop firm challenge and always be at the top of your game:

1) TAKE 100% RESPONSIBILITY:

One of the hardest things in life is taking responsibility. We always want to push blame, procrastinate decisions, and ask for advice not because we need it but because of cold feet, and being a trader doesn’t automatically protect you from all these.

It makes it even more apparent.

You might be thinking well, the prop firm covers the loss from any trade but in reality, there are speculations that prop firms make their profit from the entry fees paid by wannabe prop traders than even the profit made by prop traders.

Whatever the case may be, one thing is clear, you are on your own. You are only valuable to the prop firm as long as you keep making a profit. You can only become a prop trader by consistently making profits.

Taking full responsibility means that you admit whatever weakness at trading you have and watch it, it means you learn every necessary information about the prop firm challenge so you never go against the rules, and it means you remember that no matter the advice and guidance you seek, you are to take the final decision and if it goes against your trading strategy you don’t make it, it means to understand your trading strategy to the ‘T’ and sticking by it, it means not over trading trying to chase a loss. Etc.

2) PACE YOURSELF, START SMALL AND ALWAYS RISK LESS THAN 1% PER TRADE (especially for Day Traders and Scalpers):

When facing a prop firm challenge, the first thing they aim to teach you is risk, the second is patience.

There are limits to how much you are allowed to lose in a prop firm-funded account. Reach that limit for the day and you can’t trade anymore for that day, reach the total loss limit and you lose your account, the profit in it and have to start from scratch.

An idea of this is given through the prop firms trading challenge.

You must realise that trading is a long-term game. And while you can make a lot of money within a short time, it comes from years of experience and trading, so you see long-term goals. For this reason, even a consistent 1% increase over time becomes huge.

When starting the challenge you must know the time allocated and with this information start by taking small trades to test out your strategy or even use a demo account if available.

When trading for real on the challenge, it is best not to risk more than a 1% loss per trade. In other words, put up your stop loss or trailing stop loss to make sure that in the case of a market reversal, you only lose at most 1% of the amount you placed on the trade or have made.

3) WATCH YOUR EMOTIONS, ESPECIALLY DURING NEWS EVENTS:

The trader’s greatest adversary is his emotions. Fear and greed are the two major ones and they can affect you whether you are winning or losing.

In other words, to pass the prop firm challenge, you must treat each trade analytically and emotionless.

You must be cold and calculative when placing the trade, and most importantly know when to get out.

While it’s not even advisable to trade during a news event no matter how impactful the news is, it all boils down to your strategy and if it works for you, then it’s fine.

It is however doubly important to be aware of your emotions during these special types of trades.

You would realise that these tips didn’t include a special trick or a golden ever-winning strategy. There is nothing like that.

Passing the prop firm challenge requires you to do the basics, completely understand the fundamentals and be very good at it.