After 3 months of hiatus, it’s time to get back on the trading scene and start collecting some money. As you know, I trade a very specific style combining both fundamental macroeconomic views and technical analysis with a simple secret behind, data-engineering.
Last year, I spent 4-6 months updating my Excel datasheets with the only objective of making it as streamlined as possible, where at any given time I can run up my own numbers and eliminate any noise or interference such as watching or reading the news from popular channels or trade someone’s else idea, 2 strategies which will make you lose tons of money.
This being said, I decided to try my luck at doing those funded trading account challenge with a proprietary trading firm going usually from 25,000$ up to 500,000$ funded account. In order to get one of those accounts you must pass a trial period where you need to make generally 10% with 5% risk, most will have time limits where you have 30 days up to 6 months to complete the challenge. Once completed, you are rewarded with a “live” account and can withdraw just like any other regular account.
However, make sure you read all the rules which must be followed in order not to get disqualified. Most prop firms will require you to put a stoploss on all your trades and you cannot carry trades over the weekend, must usually close all trades on Friday by 4-5pm. I should warn you, most people fail at these challenges because 10% gains/5% risk under 6 months is very difficult. Think about it, institutional money and investment funds make on average 10-12% a year, if they are lucky. You need luck or a serious trading plan, hence why a proprietary trading firm is so lucrative since more than the majority who sign up fail and those who win are usually already profitable but looking for a way to fast track their growth.
Speaking of fast-tracking your growth, I have myself just signed up to one of those challenges. I am trying my luck at a 25,000$ funded account. I figured, if it cost you 200$ a few times to get 25,000$, I don’t see how it can play against you if you actually know how to trade. Hear me out, 200$ to 25,000$ is 125x, meaning that in order for you to lose money you would need to try and repetitively fail for 125x consecutive times. Sure you only get to risk 4-5% which is about 1000$ and not actually 25,000$ but the goal here is to be able to put in those bigger volume/lots number, unless you can afford to put a 2.00 lot trade on the fly which I think is either 20$/point or 200$/point. In my opinion, if you fail more than 10x in a row, you need to go back to the drawing board for a few months, re-think your strategy, test it, run it and retry the challenge.
Here is my strategy. In order to make these numbers happen, you must understand that these rules were meant to make it very difficult for you to pass. Because of this, people tend to switch their strategy in order to meet the platforms requirement and therefore deviate from the process they know so well and eventually start making mistakes until they break one of the rules and end up disqualified. These challenges are meant for you to overtrade, and as we all know, overtrading will blow your account.
I will show you how to win these challenges in less than 4 trades maybe 5 depending on the maximum lot size allowed with your platform. The idea here is to risk whatever you won+risked on previous trade using a 1:2 reward/risk ratio meaning you risk 5$ to get 10$. The whole standard of saying 2:1 ratio is non-sense since it would be 2:1 risk/reward. I am not risking 10$ to make 5$, it is clearly the opposite way around but people never really pay much attention to it since it is now a faulty standard.
Let’s do an example with a 25,000$ account:
Here on the first trade we risk 125$ in order to make 250$. On the second trade, we will risk 375$ (125$ initial risk+250$ just made) to make 750$. On the 3rd trade, I should be risking 1125$ in order to make 2250$ but as you can see, that would make our total balance to well above the 10% target profit mark, meaning we are risking more than necessary to win this challenge. I have adjusted the risk of my last trade to 875$ risk with 1750$ reward which would bring the total account to 27,750$ just above the 27,500$ required. With this strategy, you can win these challenges in less than 5 trades depending on your risk tolerance level instead of overtrading for months and most likely end up breaching one of the rules and losing the challenge.
Of course, in order to do this you must actually believe that you have a winning system because starting over after moving up levels really suck and can possibly push you to doubt your own trading abilities, hence why you must see it as, I have X many times to try this challenge to make it worth it without changing your trading strategy which has been working well for you.
Another very important aspect to this trading style is to have a lot size calculator. Each forex pairs available have a different pip value. Meaning that you can trade a pair which a pip value is 0.67 and another which is 1.04. What this means is that you must play with your lot size and target profit to determine the right lose size for your trade. A 1.00 lot trade on EURJPY and 1.00 lot trade on GBPUSD will not have the same return over a 60 pip profit run. Therefore you must adjust your size according to the risk/profit for the current pair.
Here is last week’s results:
Trade 1: EURCHF, Sell, Win, +250$
Trade 2: GBPCHF, Sell, Win +750$
As you can see, lot size calculator becomes so important when using this strategy. Here, I made a mistake on EURCHF selling with 0.55 lot trade when instead it should’ve been 1.25 lot trade. Had I not corrected my mistake , while profitable, trade would’ve returned me 117$ instead of 267$, quite the difference.
All I need now is another win and the 25,000$ funded account is mine.
To be continued…