Becoming a prop trader is not hard. Those with positive trading experience only need to confirm it during the entrance exam – a challenge for one of the programs.
After passing the exam, a challenger becomes a prop trader and starts earning from their profitable trading. They also get a scaling option, allowing traders to scale their payoffs by 600-700%, from several thousand euros to beyond imaginable limits.
Novice traders have a more challenging path. They need to develop trading skills and achieve positive trading consistency before passing the exam to become a prop trader. This article will guide newcomers on making their training short and easy.
Top tips
- Prepare for a marathon, not a sprint
- Find your pattern
- Designate your risk and enjoy trading
- Start your first challenge
Prepare for a marathon, not a sprint
Timing is crucial in trading. It’s not about the time spent in the terminal but your psychological timing and desire to achieve positive results quickly. This desire can be destructive for stable and profitable trading.
When a trader feels FOMO, their psychological timing compresses, leading to inexplicable trading decisions. It’s essential to avoid rushing and instead enjoy trading for years. Even with a non-optimal strategy, you can still make profit.
This is what professional are focused on.
Trader’s best assistants are:
- Trader’s logbook
- Rest
A trader should reflect on their previous trading day every morning and follow the three-to-one rule: three weeks of trading and one week of rest. These rules help eliminate time pressures, making trading a pleasure that eventually brings money.
Find your pattern
Trading is often mistaken for fortune telling. No computing power on Earth could be enough to model it.
Prop traders don’t know the future but can still make money by recognizing patterns where the chances of a price rise are higher than a decline. If use buy at these moments alone you would likely get an increase of your trading account in 15-20 trades.
Reliable patterns lead to more profitable trades and higher returns.
So, you have to constantly research the market to get your trading ideas. Ideally, the more accurate is your patter the better, but to establish your profitable trading you can start with patterns with 60% accuracy.
How to identify these patterns? There are many options:
- You may snoop it from others
- You can take educational courses
- Or you may conduct your own research
Snooping is the fastest, educational courses are reliable with a proper instructor, and conducting your own research is the longest but most promising. You may spend months to find a good pattern.
Designate your risk and enjoy trading
Newcomers often fear risk, but risk is a trader’s best friend. It allows for outperforming bank deposits and government bonds yields. However, managing risk is crucial. Set limits to avoid excessive commitments, including daily and overall loss limits.
Daily loss limit. If reached, stop trading until the next day.
Overall loss limit. If reached, suspend trading for a few weeks or even more to reconfirm your trading pattern effectiveness.
For challenges, SpiceProp limits daily losses to 5.5% and overall drawdown to 11.0%. To pass, challengers usually scale down their risks to fit these limits. A pattern with 60% reliability means six positive and four negative trades out of ten. Ensure consecutive negative trades don’t exceed the 5.5% daily loss or 11.0% overall loss.
This is a very simplified representation. Realistically, challengers are even more careful. One trade shouldn’t bring more than 0.5% loss of the deposit, eliminating possible casualties and making trading comfortable. This approach allows passing the challenge in 3-4 weeks with a consistent pattern.
Start our first challenge
When ready, start your first challenge. You don’t have to impress anyone. Choose a beginner or second-level program and demonstrate positive trading skills within 2-3 weeks, enjoying the process. Take a week for rest while becoming a prop trader.
SpiceProp is a prop trading company. Everyone who comes to us becomes a member of our team. We grow and develop together. Among us are market experts and those who are just beginning to learn about it. We are different. But we are all united by self-confidence and the desire to get as much as possible from the market. Join SpiceProp