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Looking for tips and information to help you pass any prop firm challenge? While each firm’s challenges vary and there is no singular best strategy to pass prop firm challenges, you can certainly increase your odds of passing the first time with some of the tips we’re about to provide. But first, let’s review what prop firm challenges are and why they are often so difficult.
The Importance of Prop Firm Challenges
If you find yourself here, chances are you’ve researched prop firms, how they work, and how are aware of how they differ from traditional brokerage firms. With that knowledge in mind, you still might be wondering why prop firm challenges exist, or even what exactly they are.
Simply put, prop firm challenges, sometimes also called evaluation tests or prop trading challenges, are designed to test a potential trader’s level of skill, consistency, risk management, and more. Because prop firms provide their own money to traders, the level of risk is high. While each prop firm’s challenge is different, this is the basic idea.
You’re probably not surprised to hear that prop firm challenges are, by their very nature, difficult to pass. They’ll test you on things like profitability, drawdown limits, and trading style. What’s more, prop firm challenges are beneficial to would-be traders as well, since prop firms sometimes require their traders to offer collateral, and if the trader is unsuccessful, they could lose that collateral! So these challenges protect you as much as they do the firm giving them!
So how do you give yourself the upper hand? Here are a number of actionable tips and strategies to follow to make passing any prop firm challenge more manageable.
5 Essential Tips for Passing any Prop Firm Challenge
Here are five key tips that can help you pass any prop firm challenge with confidence;
1. Master Risk Management
You should already understand the basics of trading and risk management. Developing an even deeper understanding of how to manage risk as a trader is essential to passing any prop firm challenge. We recommend that you respect the challenge’s drawdown limits and aim to cap your risk on each trade to preserve your capital and improve your chances of passing.
2. Develop a Trading Strategy
This is key to managing your risk properly. You should have a trading strategy in place before you attempt to complete a prop firm challenge. This helps automate your decisions to a degree while giving you something to fall back on when emotions run high. Your strategy should be back tested, ideally for 6-12 months, so you know that it works.
3. Be Consistent
This piece of advice goes hand in hand with your trading strategy. Once you have a strategy in place, stick to it! This can be easier said than done in the moment, but this is exactly the type of situation that a prop trading evaluation is meant to test! Remember that many prop firms no longer have time limits to their evaluations, meaning that the only pressure you’re applying to yourself to pass is internal! Avoid putting that kind of pressure on yourself.
4. Learn to Master Your Emotions
Prop trading, and any trading for that matter, is as much a mental game as anything else. In order to be profitable and make sound, data-driven decisions, you need to learn to keep your emotions in check and avoid acting on impulse. Fear and greed can hold a lot of sway, especially for newer traders. Do your best to wrangle these emotions and instead stick to your proven strategy.
5. Choose the Right Prop Firm
There’s a lot you can control when it comes to passing prop firm challenges. But what you can’t control? The terms and rules set for the challenge by the firm. This is why it’s so important to do your research and choose the prop firm you work with wisely and strategically. At FundedNext, key elements of our challenges include:
- 5% daily drawdown
- 10% overall drawdown
- 5%-10% profit target
- 15% profit share from the challenge phase
- Unlimited free retakes and no time limit to challenges
- Bi-weekly rewards
See How FundedNext Challenges Compare to the Rest
While designed to test your efficacy as a trader, our challenges are known as some of the most trader-friendly in the industry. Pass your evaluation model with very realistic targets and no time limit. Sign up now at FundedNext.com!
Have more questions about how we differ? We invite you to check out our General FAQ page.
