Passing a prop firm challenge can be one of the most exciting yet challenging steps in a trader’s journey. Trading is already tough, but adding specific targets, rules, and restrictions can make it a stressful experience.
The reality is: you can’t control the market—but there’s something you can control that gives you a serious edge in passing a prop firm challenge. In this guide, we’ll break it all down step by step.
How to Pass a Prop Firm Challenge – The Key to Success!
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The Three Pillars of Successful Trading
Before jumping into a prop firm challenge, there are three key pillars you must master:
1️⃣ Strategy – Your Trading Edge
Before even considering a prop firm challenge, you need a proven trading strategy that works consistently. Your trading plan should outline your edge, meaning a strategy that provides a repeatable advantage over time.
If you don’t have a well-defined strategy yet, take the time to backtest and refine it before committing to a challenge.
2️⃣ Mindset – The Holy Grail of Trading
Many traders believe strategy alone makes money, spending years searching for the perfect system. But in reality, the holy grail of trading is mindset—your ability to stay disciplined, focused, and emotionally controlled.
Without the right mindset, even the best strategy won’t be profitable long-term. That’s why trading psychology is crucial.
I’m currently finalizing Mindset Mastery for Traders, a deep-dive program into market psychology, personal trading psychology, and building a success-oriented mindset.
📩 Want to master your trading psychology? Join the free waiting list for updates on the program! 🚀
3️⃣ Risk Management – The Secret to Passing Prop Firms
Risk management is the most important factor for passing a prop firm challenge—and it’s the only thing you can truly control in trading.
Most traders fail challenges because they don’t manage their risk properly. Let’s break down exactly how to structure your risk for success.
Understanding Risk in Prop Firms
Every prop firm has different rules and targets, but one common element is the maximum loss limit. This is usually a percentage of the account balance, and sometimes, a daily max loss as well.
🔹 Your first goal when starting a prop challenge? Avoid hitting max loss—not just chasing profit targets!
Let’s walk through how to calculate the correct risk per trade for a prop firm challenge.
How to Calculate Your Risk for a Prop Firm Challenge
Step 1: Determine How Many Losing Trades You Can Handle
Let’s say you’re trading The 5%ers Hyper Growth program, which has a 6% max loss limit.
If you risk 1% per trade, that means you only have 6 losing trades before you blow the account. That’s way too risky.
So, you need to ask yourself:
💡 How many consecutive losses can I handle before I start recovering?
Personally, I prefer to use 20 losses as my benchmark. It allows me to trade with confidence, knowing I have plenty of room for a bad streak. Relaxed trading leads to better decision-making.
Step 2: Calculate Your Risk Per Trade
Using the 6% max loss limit, I divide it by 20 trades:
6% ÷ 20 = 0.3% risk per trade.
0.3% might not sound like much, but trading is about scalability—you can increase risk once you’re in profit.
How to Increase Risk as You Win
Once you start building profit in a funded account, you can scale up your risk strategically.
📌 My personal risk-scaling approach:
✅ Once I reach +4% profit, I feel comfortable doubling my risk (e.g., from 0.3% to 0.6% per trade).
✅ If I drop back below 4% profit, I reduce risk back to 0.3% to protect my account.
This method protects the account while still allowing for faster growth when things are going well.
How to Calculate Lot Sizes for Prop Trading
One of the most common questions traders ask is: How do I calculate the right lot size?
Luckily, there are easy tools to help:
✅ Paid Tools: Magic Keys for fast risk calculations.
✅ Free Tools: MyFXBook’s free position size calculator—I started with this as a beginner, and it’s simple to use.
💡 Pro Tip: Always calculate your lot size based on risk %, not in dollar amounts. This keeps risk consistent and scalable.
Conclusion – Key Takeaways
✅ Prop firm trading is all about risk management!
✅ Never focus on hitting the target first—focus on protecting your account.
✅ Use a risk per trade that allows enough room for a bad streak.
✅ Increase risk strategically when in profit, but scale down when needed.
✅ Mindset is just as important as strategy and risk management!
📩 Want to master your trading mindset? Join the Mindset Mastery for Traders waiting list to learn how to develop the psychology of a profitable trader!
💬 What’s your risk management approach? Drop a comment below—I’d love to hear your thoughts!
