Passing a prop firm challenge can be tricky. Understandably, trading is difficult enough as it is. However, add in those specific rules, targets, and restrictions. No wonder it becomes a stressful experience. Irrespective of how you trade, one thing remains a fact, which is that you cannot control the markets. However, there are a few things that you can control and that can give you an edge when you are trading. Here are some of the top tips from the experts that can help you pass a prop firm challenge on the first go.
You Need a Strategy
To pass a prop firm challenge, there are some essential things that you must master. The first pillar to master is strategy. Before you can even consider a prop firm challenge, you need a proven strategy or a trading edge that you can use to consistently make profits while trading. Your trading strategy should outline your edge, which should be something that you can repeat and get an advantage over time. Also, make sure to test your strategy and only incorporate it if you have tested the strategy over a specific period of time and in various market conditions.
Your Mindset Makes a Big Difference
According to expert traders, if you want to pass a prop firm challenge on your first attempt, you must rewire your mindset, as your mindset can establish the difference between winning and losing. As a matter of fact, your mindset is the Holy Grail of trading. Your mindset establishes your ability to focus and stay patient, and disciplined. Most importantly, you need to stay emotionally aware when you are attempting a prop firm challenge and want to pass it on the first attempt.
Really Understand the Requirements
The next step is to understand the challenge requirements, as different prop firms have different evaluation processes. However, you must develop an understanding of the following requirements before you start the challenge such as the profit target, drawdown limits, trading time, and risk management rules. It is important to mention here that you should always read the fine print carefully so you do not come across surprises. Why, you might ask? The underlying reason is that some prop trading firms have hidden conditions, clauses, and rules that can potentially affect your trading strategy.
Learn Risk Management
According to the pro traders, there is another pillar that you can control. We are talking about risk management. Risk management is absolutely crucial if you want to pass a prop firm challenge. Every prop firm has its own set of rules and targets. However, one common element that all prop firms share is the maximum amount of drawdown, which is also the maximum stop-out level.
This aspect is usually the percentage of the account balance, and on days, there can also be a daily max loss limit as well. When starting a prop firm challenge, your first priority should never be to reach those targets, but it should be to try your best to get away from that max stop-out level as soon as possible. With that said, you should be able to work out the correct risk per trade.
Conclusion
To survive in a prop trading firm and to pass the prop firm challenge on your first try, you should set up profit goals and make sure never to risk more than one percent per trade. Networking with the pro traders can provide you with useful insight into the trading world.