Prop trading is an innovative form of trading. Traders can start their trading even without having enough capital. But getting funded is not an easy task. Prop firms first require traders to complete an evaluation process but these challenges are designed to be tough. Prop firms aren’t in the business of handing out money to just anyone. They want traders who can prove they’ve got the skills, discipline, and mindset to handle risk like a pro. But if you have the right trading strategy and approach then you can easily pass this challenge and achieve profit targets. So let’s discuss everything you need to know—from preparing mentally to fine-tuning your strategy.
Understand the Challenge Rules Inside and Out
Before you even place a trade, you need to fully understand the rules of the challenge you’re taking. Every prop firm has slightly different requirements but most follow a similar structure:
- Profit target – The percentage you need to grow the account by usually 5-10%.
- Max daily drawdown – The most you can lose in a single day before failing.
- Overall max drawdown – The total amount you can lose before being disqualified.
- Time limits – Some challenges have a minimum trading period of 10 days or a maximum time frame of 30 days.
- Trading restrictions – Some firms limit lot sizes, news trading, or weekend holding.
Read the fine print and make sure you’re not accidentally breaking any rules. The last thing you want is to hit your profit target only to fail because you overlooked a simple rule.
Develop a Solid Trading Plan
A solid trading plan is your way to success. If you’re just winging it then you’re already setting yourself up for failure. Here’s what your plan should include:
Your Trading Strategy
Stick with what you know. If you’ve been consistently profitable using a certain strategy then don’t suddenly change it just because you’re in a challenge. Some common strategies that work well in a day trading in a prop firm challenges include:
- Breakout Trading – Catching moves as the price breaks out of important levels.
- Momentum Trading – Riding strong price movements in the direction of the trend.
- Scalping – Quick in-and-out trades for small gains.
- Mean Reversion – Trading price reversals at key support/resistance zones.
Risk Management Rules
This is where most traders mess up. The biggest reason traders fail these 2-step challenges isn’t because they can’t hit the profit target—it’s because they blow their account by over-leveraging or ignoring risk management. Here’s how to stay in control:
- Risk per trade – Keep it low usually 1% or less per trade.
- Daily loss limit – Set a personal max loss per day ideally half of the firm’s max daily drawdown.
- Position sizing – Don’t go all-in on one trade. Calculate lot sizes based on your risk percentage.
Trading Hours & Sessions
Know when you trade best. If you thrive in high volatility, focus on the London and New York sessions. If you prefer slower moves, stick to Asian session trading. Having a set schedule keeps you disciplined and prevents overtrading.
Master Your Psychology
Trading is a mental game as much as it is a technical one. A solid strategy is useless if you’re making emotional decisions. Here’s how to keep your head in check:
Avoid Revenge Trading
If you take a loss, accept it and move on. Chasing losses with reckless trades is a one-way ticket to blowing up your account. Stick to your plan and don’t let emotions drive your decisions.
Stay Cool Under Pressure
When real money is on the line (even if it’s a simulated challenge account) then the pressure is real. The best way to stay calm? Trade small at first. Build confidence with consistent wins before increasing your lot sizes.
Take Breaks
Staring at charts all day can lead to overtrading and burnout. Step away, go for a walk, or do something non-trading related to reset your mind.
Trade Smart, Not Hard
Trading more doesn’t mean making more. Overtrading is a common reason traders fail these challenges. Instead, focus on quality over quantity. A few solid trades per day are better than 20 impulsive ones.
- Wait for A+ setups – If it doesn’t meet your criteria then don’t trade.
- Use alerts – Set price alerts so you don’t have to stare at charts all day.
- Limit your screen time – Decide on a fixed trading window and stick to it.
Leverage a Demo Account First
Before taking on a paid challenge, test your strategy in a demo account that mimics the challenge conditions. This helps you:
- Get comfortable with the rules and drawdown limits.
- Identify weaknesses in your strategy.
- Build confidence before risking real money.
If you can consistently pass the challenge in a demo environment then you’ll be much more prepared when real money is on the line.
