Following on from my previous Blog Post: ‘Typical Stages of Trader Development’, the next natural topic would be ‘How do you actually pass a Prop Firm Evaluation?’ Here are some trading tips which might be of some use.
Firstly you have to find a Prop Firm that matches your style of trading. Are you a Position Trader, a Swing Trader or an Intraday Trader?
Do you need to have the ability to keep your trades open over weekends and for several weeks or even months? Some firms will accommodate this and others won’t.
Are you an Economic News trader? Some Prop Firms don't allow this. Do you need to keep Swing Trades open over the weekends? Many firms stop this and insist on all trades being closed before the Friday Close. Are you accustomed to trading with a reduced level of Leverage of say 10:1 or even 5:1? If not then try trading like this, because you will be restricted by the Prop Firm Rules.
Are you used to trading with a minimal drawdown % because a Prop Firm will likely impose 4 or 5% either Daily or in total or both. Get used to it.
The point is you need to be familiar and happy with the likely restrictions or rules that will be placed upon you and your trading before you start an Evaluation and then adapt to them and manage yourself and your trading accordingly otherwise the likelihood of passing the Evaluation is slim.
You want to be under the least pressure possible during your Evaluation period, so perhaps choose a Prop Firm that doesn’t impose a time limit on your Evaluation period.
Trading Large Sums of money IS emotionally different to trading a smaller account so if you haven’t done so before, why not select a smaller to medium sized account instead of the Prop Firm’s largest one on offer. You need to grow accustomed, in an incremental fashion, to trading larger sums of money. If you trade well in a smaller sized account and meet your targets for a payout then the Prop Firm will likely increase the size of your trading account by the same %, typically 10% increments. This will allow your mind to slowly become accustomed to trading larger sums of money.
Once you have signed up and setup your Trading Platform, typically MT 4 or 5, there is no rush to make money and particularly if you haven’t traded for a while then just watch the markets and get in the zone or groove and then if you see an opportunity and it passes all your filters then take it and see it through to its’ natural conclusion. Just note that there may be time limit due to inactivity in your account, maybe 30 days, so yes you can have a holiday!
Only Risk 1% or less on any one trade, use Robust Risk and Money Management and in the first instance until you have gained some confidence trade at 0.5% Risk or less. Once you are in the groove then you can consider increasing your Risk up to 1% per trade.
If you really want to pass the Evaluation don’t be self-destructive and trade like a ‘Child in a Sweet Shop’, keep it one or two trades open (Max) at any one time, this will protect you to some extent from hitting your Drawdown Limit (which means Evaluation is Over!).
Just think Slow and Steady, rather Fast and Furious. If you are desperate to make a quick buck then go and do something else, as it will add pressure and often will work against you, impairing your trading decision making.
Read all the Prop Firm Rules then get your head comfortable with them and think how you will stay within those boundaries and what trading behaviour that requires. Try trading your own Live or a Demo account using your selected Prop Firm Rules first and see how you get on as this will give you an indication of whether you are ready or not.
Above all, approach it like a business and be Professional.
Good Luck! But then you shouldn’t need luck IF you are ready in all respects for a Prop Firm Evaluation.
If you consider yourself ready then we recommend a couple of Prop Firms which suit out trading styles, and they are:
(Prop Firm A Has a 20% Discount until the end of March 2023)
But at the end of the day do your own research as the onus is on you.
If you feel that you aren’t yet ready but need a guiding hand to get you there, then you might consider our Trader Coaching & Mentorship service, for more information just click on the link below: