A few simple & easy steps to ensure never to fail a trading challenge or live trading.
this works for almost all Proprietary Trading Firms, the content below is based on EnFoid Proprietary Trading
Get Real Risk Management Prevent Disqualification Tools to help Understand the business
1. Getting Real
First, you need to keep these things in mind, most of which are listed here if visit this site.
If you can not accept and live with any of the points below,
better save the time and money for something else.
- NO Propfirm on this Planet has any interest in you making fast money!
Fast profit’s come with rapid losses, resulting in high account volatility, making you a liability, not an asset. - Prop firm’s measure your drawdown, not your profits!
- Instagram traders and Prop traders are not the same!
Proprietary traders are in for the long run, to make money every month, Instagram traders just want your money.
If you down every day by 5% and at the end of the month you have a 5% Profit, that simply makes you a terrible trader!
Because you continuously generate significant risks to the company, and the reward is small, compared to the drawdown.Rule of thumb: the lesser you risk, the more capital you will get!
2. Risk Management
To effectively perform Risk management, you need to have two things in mind at all times.
- At what point/price your trade is not going to work out.
like breakouts, failures on price movement, horizontal levels .. whatever float’s your boat (eg. strategy) - How much will you lose when 1.) happens.
These are the most important values to be successful!
Again: profits come by themselves. The job of the trader is to protect the Equity at all times!
if you know when/where you are wrong, you need to take action (e.g. Stoploss, Close positions, Scaling out, Hedge, … )
3. It’s not your money!
Prop Firms have a set of Rules to Guide Traders, EnFoid Fast-Track has a “5% Intraday & 10% Total” ruleset.
This is to protect the Funds the Firm will provide to you, not to make your life difficult.
Keep in mind this is NOT YOUR MONEY!, you have to respect it and the rules attached to it.
If you follow these simple guidelines, it will be IMPOSSIBLE to Fail.
4. Prevent Disqualification
These simple rules making sure you NEVER fail a Challenge or a live trading account.
- Always risk a portion of your limit!
This allows you to have multiple losing positions in a row without getting disqualified.
Static risks like x% per trade are not practical and do not include already sustained losses or profits.
Having a static risk is just what the so-called Guru’s teach to Retail traders.
example A:
Your balance today is $50000, which means your max loss for today will be $2500 or $47500 Equity.
If you risk 10% of the allowed drawdown on each trade, you can have more than ten losing trades in a row without breaking any rule.
Not enough? WRONG! 10% of $2500 = $250 == 0.5% risk for this trade!
0.5% is already a substantial risk when Daytrading money that is not yours!
Also, with just a 1:2 Risk/Reward, 10 profitable trades would already lead to completing the Evaluation.
If that is not fast enough for you, better go to the Racetrack and bet on some horse with 200:1 or some random crypto coins!
example B:
You trade with $50000 but you in a significant loss (let’s say 8%)
that means your Max loss objective is in effect, limiting your Equity to $45000.
at an 8% loss, your Balance is at $46000 with $1000 until the max loss is hit.
Risking 10% of the rest-Equity would mean your next trade will have a max risk of $100.
as you can see, it’s a bit less than half of what you can risk from example a.
even with a significant drawdown, the exposure is still moderate making it easy to recover.
If your account is not in a loss & no rule violation recorded, you can restart the test, unlimited times free of charge!
there is no need to overtrade EVER!
4. Tools
EnFoid provides a “Prop Indicator” for cTrader & Metatrader 4 where you can see the rest equity your current account has.
Divide the number you see by 10, and you know what you can risk in the next trade, yes it is that simple!
In combination with the Position size Calculator from earnforex.com and the PSC-Script (MT4/MT5 only)
you can make trades easy, without engaging in too much math.
- Download the EnFoid Prop Indicator [ MT4 | cTrader ]
- Earnforex Position Size Calculator [ MT4 | MT5 ]
- Earnforex PSC-Script [ MT4 | MT5 ]
5. Understanding the Prop Business
- Prop Trading and Twitter/Instagram Trading is not the same!
- its much better to have a 2% monthly profit with a 0.2% drawdown, than having a 20% Profit with a 2% Drawdown!
if you do not understand the difference, you not cut out to trade someone else’s money! - the smaller your Drawdowns, the larger your potential capital will be.
For example, making a 10% return on 10k and making a 1% return on 100k is the same money for you,
but it’s a huge difference in terms of risk for the company. - a Prop firm will always prefer the trader with smaller Drawdowns over someone risking it all every day.
Thankyou for all your efforts that you have put in this. very interesting information.