Learn How to Pass a Prop Firm Challenge
#501: Learn How to Pass a Prop Firm Challenge
In this video:
00:28 – Lacking the capital to make a good income?
01:25 – Prop firms to the rescue
01:52 – Make sure you are profitable first
03:33 – How much to risk per trade?
05:19 – High Reward:Risk Trades
06:15 – View my new on-demand masterclass
06:54 – Take a look at Blueberry Markets
Prop firms. They’re a great way to make a substantial income through trading in the Forex market. But how do you pass their Challenges successfully and consistently? Let’s talk about that and more right now.
Hey there, Forex traders! Andrew Mitchem here, the owner of the Forex Trading Coach with video and podcast number 501.
Lacking the capital to make a good income?
Now, traditionally people have always had an issue when it comes to trading and the feeling that they cannot make a substantial income out of their trading.
And it’s a question that I’ve been, you know, sort of presented with for years and years and people go. Look, Andrew, love to do your course, but I’ve got $10,000. I spent a couple thousand dollars on your course. I don’t really have enough money. Even if I can make 50% in a year, you know, to actually make something substantial out of my trading account.
And it’s understandable. And my answer has always been, well, that’s fine. And I know it’s easy for me to say, but you’ve got to learn to trade properly first, learn how to first still doesn’t actually solve the issue for the individual. And, you know, in the past, people were able to do things like maybe trade funds for other people or sell signals and things like that, but it’s always been a little bit difficult.
Prop firms to the rescue
However, over the last few years, you’d have noticed we’ve got a massive influx of prop firms and like everything in the Forex market and everything online, there’s good in this. Maybe not so good. You have to do your research to find out what you consider to be a good prop firm. But my job as an educator and as someone who provides a forex strategy is to give you some tips and information of how you can best passed those firm challenges.
Make sure you are profitable first
So the first thing you need to do before you even get to that stage of thinking about a prop firm is make sure that you are consistently profitable yourself. If you’re learning a new strategy, like if you’re coming to us and it doesn’t matter how big your account is, how long you’ve been trading, I always say to people, get onto a live demo account and a small live demo account of that and make sure you’re profitable on that first.
The reason is then you gain confidence in yourself and the strategy and the group of people like us that you’ve joined, etc. You’ve got to gain confidence in doing this properly first, then move on to your own personal live account. Doesn’t has to be big. It doesn’t really matter what size it is, but the ability to be successful and consistent on a live account with low drawdown.
Really important point there. because when you move to a prop firm, you’re then got confidence in yourself. You’ve got confidence in your strategy and your ability. The reason I mention low drawdown is because ultimately when you go to a prop firm, you have to make sure you’re preserving their capital. That’s why they have those rules in place. Most of them have like about a 5% maximum drawdown, and rightly so.
This is their capital that, you know, even if you passed a few demo challenges and you want to real money, this is their capital. They’re risking this for you to trade it. If you don’t know what you’re doing and you’re out there risking 3%-5% to trade, you don’t last long. You’re just going to keep paying them. Lots of small subscriptions.
But if you’re there to do this properly, you have to ensure that all your trades are very low risk.
How much to risk per trade?
In my normal day to day trading, I recommend a half of 1% on prop firms. I’d probably go lower. I’d be looking at something like a 0.25%, a quarter of 1% risk. I’m not saying that’s the actual figure you should do, but I’m saying something like that is a really smart idea because when you think about it, if you have a 5% maximum drawdown and it’s going to take you for losing trades to get to 1%, four times five is 20, you have to have 20 losing trades all in a row at quarter of 1% to fail that challenge.
Now, sure, it may take longer to get to the profit target and it’s important that you choose a prop firm who do not have a limit on or a maximum number of days that you have. I don’t think that’s a great idea. These prop firms say you’ve got to reach 10% in 30 days.
I would steer completely clear of them personally. I wouldn’t go near them. Why? Well, 30 days In reality, it’s probably 20 trading days time. You take out weekends and things and you take out maybe Mondays. Not particularly active. Friday may not be that active. You really only have a few trading days to make that money and let’s say you’re up at 6%, 7% and you’ve got a couple of days left.
You’re then going to do something stupid and you’re going to take silly risk. Yes, you might fluke it once, but probably not. And you’re going to end up losing it and regretting all that work you’ve done because of their silly rule. To me, a good prop firm should have no limit on the time it takes you to get to that 10%.
Therefore, you can keep within the risk parameters and therefore you can have slow, steady gains. So risk is obviously one major factor because it’s their capital that they want you to preserve.
High Reward:Risk Trades
And the second thing is making sure you have trades with high reward to risk, because therefore when you have profitable trades, they’re going to be two or three, four times your risk.
Therefore, quarter percent risk, you might be up to like half percent, three quarters, 1%, even 1% account gain for every trade that’s profitable. And that’s how you’re going to get yourself through these prop firm challenges. Obviously, if you know what you’re doing in knowing how to trade, you’re in within their rules of low risk and get to their profit targets.
The the upside potential is literally unlimited and that’s what a lot of our clients are doing. And that’s because the way that we trade and the way we teach is a sensible, low risk, but with high reward risk twice, it’s what the prop firms want. It’s what you should want. If you’ve got any interest in being a successful and good quality professional trader out of this.
View my new on-demand masterclass
So have a look at our masterclass. It’s a new masterclass. It’s about an hour long. It’s an OnDemand session. You can watch it at any time that suits you. I really encourage you to go and have a watch of that session to see how we trade and what we’re doing on that. At the end of that session. We also give you the option to book a live 30 minute session with myself or with Paul.
Paul is over in the US and I’m here in New Zealand and between us we can cover you know, the clock and the globe. And that’s an opportunity at the end of that masterclass session to find out if we’re a good fit for each other and how we can help you further.
Take a look at Blueberry Markets
If you’re out there looking for a good forex broker for your personal account, I can highly recommend Blueberry Markets are a fantastic bunch of people, fantastic brokerage, low spreads, low commissions and MT4/MT5 ASIC regulated over in Australia as well.
Been around for a number of years now personally owned by and I know the guy who personally owns it and so you’ve got a lot of credibility there and that’s why we like working with them. Their customer service is absolutely the best you will find. So have a look at the link I’ll put on here to blueberry markets, Have a look at the link I’ll put on here to our masterclass.
And if you are looking at increasing your income through the use of prop firms, consider all the things I’ve just mentioned and it will massively help you. So once again, this is Andrew Mitchem here at the Forex Trading Coach. I see this time next week. Bye for now