What assets will I trade?
Knowing which assets to trade is important because you should focus on the assets or instruments you’re most familiar with. For some traders, this could Forex, Cryptos, Stocks, etc.. When dealing with a prop firm challenge, it’s important that you focus on the assets that are likely to help you get funded. It’s common for many traders while taking these prop firm challenges to switch up assets to help speed up the process. Unfortunately for many traders that attempt to rush the process, end up failing due to the high pressured situation they put themselves into. So by focusing only on the assets that you are most familiar with, it will prevent you from making mistakes, loosing trades and ultimately help you from failing your challenge.
What time of day will I trade?
Knowing what time of day you’ll trade is important because it will help you design a routine that works best for you and optimizes your energy levels. Trading around the clock might seem like a way to reduce your risk by constantly watching your positions but could also drain your energy if you’re working too hard. By setting a time schedule for when to trade, it will help maintain high levels of energy which will help with your decisions.
How much volume should I trade?
Many traders whether you’re a beginner or even a pro trader, can at times over expose themselves with too much margin. This is why it’s important to plan for the maximum volume you should trade per asset. If you’re over exposed, you may breach that 5% daily drawdown limit and miss other low risk trading opportunities. This could cause frustration and ultimately lead you to failing your prop firm challenge.
One of the best ways to know how much volume you should trade is by trading with a demo account before taking on your prop firm challenge. By trading a demo account, you can experiment with different lot sizes, targets and stop loses to see how much volume you should trade.
Some traders like trading heavy positions to quickly pass their prop firm challenge, whereas others may want to trade more conservatively and not rush the process.
Should I trade the news?
Trading the news can be extremely exciting especially if the trade turns profitable. However, most prop firms don’t allow news trading as they consider this style of trading risky. Prop firms look for traders that treat their account as if the funds were their own and so news trading is not accepted by most prop firms.
Should I trade multiple pairs?
A great way to mitigate risk is by diversifying. Prop firms love traders that know how to manage risk and sometimes trading multiple pairs may provide that reduced risk exposure from diversifying which pairs or instruments you’re trading.
Should I use a stop loss or target?
This may seem like an obvious answer but it really depends on your strategy. Many professional traders will tell you to use stop loses especially if you’re taking on a prop firm challenge while other experts may say it’s not necessary. Regardless of whether you decide to use stop loses or not, this should be included in your trade plan on how you plan to pass prop firm challenge.
How will I enter and exit my trades?
Knowing how you plan to enter and exit your trades is an important part in passing your prop firm challenge. Many traders like waiting for a certain key level of support and resistance to be tested. While other traders like using price action or a combination of several indicators such as RSI and Moving Averages to give entry/exit confirmations. However you decide to enter and exit your trades is up to you but should also be included in your plan for how you pass your prop firm challenge.
How will I manage risk?
Managing risk can be a difficult part in trading for prop firms. Risk management is being able to handle every aspect of risk which includes a large number of variables.
How will I handle the 5% daily drawdown limit?
Will I use an EA that will auto close at a certain drawdown limit of say 4.9% or will I manually configure stop loses per trade so I know the EA won’t fail and I won’t breach the daily drawdown limit.
Which prop firm should I use?
There are a large number of highly reputable prop firms like FTMO, MyForexFunds, TheFundedTrader, FundedNext, etc.. But when it comes to deciding on which prop firm is best for you, it’s a good idea to match a prop firm that works best with your strategy. It’s also very important to know and understand all of the rules pertaining to that prop firm to ensure you don’t break any of their rules.
