The Prop Trader’s Guide: Win Challenges. Keep Funding. Scale up

Hey Traders, today we are going to look at the prop trading. It can be solution for traders who has tested and proven their strategies. In this article, we’ll break down the risk rules that keep traders funded, the habits that build consistency, and the mindset that separates steady growth from emotional gambling. If you can master this part of the game, the rest becomes much simpIer.

1️⃣ You must have your strategy well defined and proved on your capital. Prop firms are not solution to the poor financial situation. If you dont trade well and consistently on small capital, bigger capital is not solution. First you need to solve this and have strategy with good winning ration and risk reward. You can check my one. for inspiration I have described it in this post below.
👇 Click the picture to learn more

2️⃣ Understand that in prop firms you are not trading real capital. They just sold you a demo with strict rules and if you pass and earn, they will pay you from what they earned on others who lost challenges. Hence rules are set such that it's not easy to pass and keep the account - but it's not impossible if you adapt.

3️⃣ $100K capital is not $100K if your maximum drawdown is 10%. In the fact your account is 10K - the amount you can really risk. Hence making 10% to pass first phase with 10% max drawdown equals making 100% gain. And second phase 5% adds another 50%. So to get funded you literally need to make 150% not 15%.

📍 If we know that 90% of traders , loose 90% of capital in 90 days on the normal accounts. What will be statistics of prop firms ? Even worse. But you have a chance. if you have a good winning ratio. Which you achieve by filtering just to the best trade setups. I have made it multiple times and still Im funded in Crypto and Forex prop firms. Most important think it this game is risk management. But before I will explain my dynamic risk management for each phase and funded account I give you some tips from my experience.

🧩 Essential Rules for Prop Trading

🧪1) Its not a straight forward game
You must be ready to loose challenge and have money to buy another one. Don't expect get funded and keep the account forever. Unless you will risk 0,1% per trade. We want risk more, because you don't want spend passing challenge for a year. At some point you can loose account even with a good risk management. I lost over 30 challenges in different phases and funded accounts. My total investment was not small, but I withdrew multiple times more in 2025.

🧪 2) Reduce number of trades - Take only best trading setups
I trade less on prop account than on my personal accounts. I take there only A+ setups the ones which are obvious and Im confident to taking them. In the fact I should trade like this on my personal ones also, but I trade more often.🤷‍♂️

Don't fall for a trap to trade every day every move up and down. Have your routines. For your inspiration you can check this article 👇 Click the picture to learn more

🧪3) Grow prop capital not % gains
If you would be hedge fund manager who deliver 3% a month consistently you would be considered as top star trader. However we as retail traders want more. Because we mostly don't have bilion dollars portfolio's. But if you work well in prop trading 3% Is life changing and its actually not difficult to achieve.

⁉️ How to achieve a 3% a month
Is 3% gain a month difficult ? If you risking 0.5% per trade with 1:2 RR it actually means That you must win just 3 trades. Now look at your Trade journal, you definitely had 3 good wins in a month. Only thing you need to do is to eliminate those other unnecessary trades.

$ 100K Funded account - 3% gain - 80% Profit split = $2400 payout

How to make more ? Don't go for bigger % gains. Get another funded accounts and build your capital. If you pass another 4 x $100K challenges you will get $500K AUM capital. Then with your 3% gain and 80% profit split = $12 000 payout.

Then you reinvest and you aim for $1000 000 funding to aim for $20K a month with making 3% a month.

🧪4) Be patient and have a long term vision
Don't expect this happen in month or two. Write down your plan how you will acquire and will work on your prop trader career. Getting funded $1000 000 is a work for at least a year.

🧪5) Don't trade all challenges at the same time
Yes you will be missing profits if you doing well, but if you loosing it will be affecting your portfolio completely. Take trades separately. I trade each pair on different props and Crypto also separately in the different prop firm.

🧪6) Start with small $10K account to practice
Trading is performance discipline, dont put yourself under the stress by buying $100K or $200K challenge on the beginnings. Start with $10K just to practice and trade within their rules. Once you pass these easily you are ready to go big.

🧩 Dynamic Risk management for the Prop trading
When it comes to successfully passing Crypto prop challenges, an effective risk management strategy is crucial. Finding the right balance between risking too little and too much is key. Both extremes have their downsides; risking too little may result in prolonged evaluation phases while risking too much can lead to blowing through challenges quickly and struggling with the emotional aspects of trading.

Therefore, you can employ a dynamic risk management approach that combines the strengths of both methods. The specific risk management protocols may vary within different phases of the funded account, typically consisting of two evaluation phases and the funding stage upon successful completion of both.

1️⃣ The 1st Challenge Phase:
In this phase, where a 10% profit target is required for quick progress, you can adopt an aggressive risk management approach. With the following dynamic risk management

Start with risking 0.5% per trade
if your balance increases +1% increaser risk pert trade to 1%
if your balance increases +3% increaser risk pert trade to 1.25%
if your balance drops back to 0% reduce risk to 0.5% If your balance drops below 3% reduce risk per trade to 0.25%
If your balance drops below 5% increase risk to 1%

You might wonder why the risk per trade increases to 1% even when the drawdown exceeds 5%. This is to minimize time opportunity costs. Rather than slowly trading out of drawdown, you can prefer to increase risk and attempt to either break even quickly or accept the possibility of losing the challenge.

If you can not afford to lose a challenge, sticking to lower risk like 0.25% per setup until the account returns to break even might be a better option.

2️⃣ The 2nd Evaluation Phase – Verification
Once phase 1 is completed, and a lower profit target is required, a less aggressive risk management approach is employed: Aim to keep our time-based opportunity costs relatively low in the 2nd evaluation phase. Losing the 2nd phase account would mean having to repeat the 1st phase, which is why we adopt a more cautious approach and strive to minimize potential drawdown.

Risk is only increased when we have a cushion of at least +2%. If the drawdown falls below -2%, we maintain a risk of a quarter percent until the drawdown is fully recovered and back above the -2% threshold. This approach is designed to create a balance between preserving capital and meeting the objectives of the 2nd evaluation phase.

🎯 The Funded Account:
In the funded account, where both phases have been passed, preserving the account becomes the top priority, followed by receiving the first pay-out and refund of the signup fee. Funded accounts should be approached conservatively, and the risk management protocol is adjusted as follows: Lowering the risk per setup as the drawdown increases serves as a protective measure to prevent breaching the maximum drawdown rule. This approach may result in a longer process of trading out of drawdown, but it is a more favorable alternative to losing the account Completely.

As mentioned, your goal should be build longterm big capital and diversify between prop firms. For instance, you might allocate one account for swing trades and another for day trades. This diversification is just one example; there are various possibilities to explore.

👉 Prop Firms Selection
Opening a prop firm is easy, you just need couple thousands and you buy complete setup with platform and system. Then you start selling demo accounts. Hence there is thousands of prop-firms these days. You want to go just with the serious ones. Which means not the easiest conditions and not the cheapest challenges. But these will most likely last longer.

‼️Avoid Prop firm which has:
- Cheap challenges or massive discounts
- Easy conditions to pass challenges
- Trailing Drawdown rules
- Too big profits splits
- Too many consistency rules
- Restrictions trading news
- Too many bad reviews (they will most like have more good reviews than bad - its Fake)
- If you Trade Crypto look for prop firm on Crypto exchange. Not in CFD broker.

Trading is not easy and prop firms makes it even more difficult, but its not impossible.
Expect failures and frustration on your journey. You can handle it, you will handle everything, you will always find solution. Keep going re-invest profits and build portfolio.
Main goal is to build personal account from their money without their rules.

Good luck

David Perk aka Dave FX Hunter