9 Practical Tips On How To Pass A Prop Trading Challenge

Joining a prop trading firm can feel like you’re up against a massive wall, with no hammer or chisel in sight. Even with the best-funded trading accounts at your disposal, the real challenge is proving that you’re good enough to be trusted with company capital. The prop firm challenge is a way to demonstrate your skills, and if you’re successful, you’ll become a member of the firm you’re trying out for. 

We’ll use the AquaFunded funded trading program to show you how to navigate the process, what to expect from each step, and maybe even how to have fun along the way.

What Is A Prop Trading Challenge

Consider this you're eyeing a role as a funded trader at a proprietary trading firm. But before you can get to work, you’ve got to make it through what’s known as a prop trading challenge. This isn’t just a casual test. It’s a rigorous evaluation designed to sift through traders, pinpointing those with the skills to responsibly handle the firm's cash.

The Selection Process: Not a Walk in the Park

Firms don’t just hand over their money to anyone. They’ve got a systematic selection process with multiple stages. You must show you can hit a specific profit target while sticking to strict risk rules. Think drawdowns, position sizing, and restrictions on particular trades or strategies. It’s all about testing your trading abilities, risk management, and emotional control to ensure you’re up to the task.

What to Expect: Time and Effort

While some firms might offer a more straightforward evaluation or skip it altogether, that's rare. You'll often need several weeks, maybe even months, to work through this phase. Adjust your calendar accordingly—you’re in it for the long haul.

Related Reading

• Is Prop Trading Worth It
• How to Get Funded Account for Trading

How Profitable Is Prop Trading?

Is Prop Trading Worth It? Understanding the Opportunity

Prop trading stands out as a potentially lucrative avenue for traders. Unlike brokers, prop firms generate revenue directly from market activities and share those profits with you. Your earnings are determined by a profit-sharing ratio, which usually ranges from 75/100 to 90/100. Avoid firms offering less than a 70/100 split. Some firms adjust these ratios based on your experience and strategy, allowing for flexibility and growth.

Are There Employee Benefits? What to Expect

Working as a prop trader differs from traditional employment. You’re a contractor, not an employee, so you won't receive benefits like health insurance. Your income comes from profits from trading various assets like stocks, Forex, options, and futures. Your choice of firm and its profit-sharing system will significantly impact your earnings.

So, Can You Profit From Prop Trading?

The profit potential varies. It depends on trade volume, profitability, negotiations, and your skills and strategies. To maximize your earnings, consider using leverage carefully, developing strategies based on solid theory, and trading only with money you can afford to lose. Beginners should start with $500 to $1,000. Also, select a firm that aligns with your skills and trading style. Risk diversification and comprehensive data analysis are crucial to success.

AquaFunded: Breaking into Prop Trading with Ease

Ready to take your trading to the next level? AquaFunded offers a funded trading program that allows traders with large capital accounts and up to 95% profit splits. With an easy-to-achieve 8% profit target and fast payout options, AquaFunded is designed to help traders of all levels thrive using the firm's capital. Get started with AquaFunded's funded trading program today!

Types of Prop Trading Challenges

Simulated Trading Challenges: The Zero-Risk Playground

1. Perfect for Beginners 

Simulated trading challenges are your entry point to the world of prop trading. These competitions use demo accounts, so there's no real money at risk. They’re ideal for beginners who want to practice strategies, build confidence, and understand market dynamics without financial pressure. This is where you can experiment freely and fine-tune your approach to trading.

Real-Time Trading Challenges: Bridging the Gap with Real Stakes

2. For the Intermediate Trader  

Once you’ve experienced real-time trading challenges, you can trade with a small portion of natural capital. This stepping stone between simulated and full-fledged trading provides a more realistic experience. It’s perfect for those who are ready to test their skills with actual money but still want to keep risks manageable. This phase involves transitioning into the real trading world while maintaining a safety net.

Tiered Challenges: The Ultimate Test of Skill and Consistency

3. Structured Progression for the Confident Trader  

Tiered challenges are designed for advanced traders ready for a structured progression. These involve multiple stages, each with increasingly difficult trading conditions. As you pass each stage, you’ll face stricter criteria, requiring you to adapt and prove your consistency. This setup is perfect for traders looking to demonstrate their skill across various market conditions, testing both strategy and discipline in the process.

Related Reading

• Best Prop Firms for US Traders
• How to Pass Prop Firm Challenge
• How to Get a Funded Trading Account
• SurgeTrader Competition
• Prop Firm Reviews
• Best Forex Funded Account
• What Is a Prop Firm Challenge
• Forex Prop Firms
• No Minimum Trading Days Prop Firm
• Trading Companies in UAE

Key Considerations Before Taking a Prop Trading Challenge

Hone Your Trading Abilities

Before tackling a prop trading challenge, sharpen your skills. You’ll need to master technical analysis and understand market rhythms. Get comfortable with spotting chart patterns and using indicators. Equally important, learn to manage stress and control your emotions. These are your tools for finding profitable trades.  

Understand the Firm's Rules

Know what you're getting into. Different firms have different requirements. Research their profit targets, allowed instruments, and rules. This knowledge will help you tailor your strategy to meet their standards.  

Practice with Realism

Use a demo account or trading simulator to recreate the challenge environment. Practice your strategies seriously. Evaluate your decisions and familiarize yourself with trading conditions. Treat these sessions as if they were the real thing.  

Keep Your Emotions in Check

Trading can be emotionally taxing, especially in a prop challenge. To manage your emotions, use techniques like mindfulness and keeping a trading journal. Seek advice from experienced traders. Staying calm and focused under pressure is key.

9 Practical Tips On How To Pass A Prop Trading Challenge

1. Try AquaFunded for a Competitive Edge

Consider starting with AquaFunded. This Dubai-based firm offers traders access to significant capital accounts with up to 95% profit splits. Their funding model is unique, with an achievable 8% profit target and fast bi-weekly payouts. AquaFunded is ideal for traders at all experience levels who wish to trade with reduced risk using the firm’s capital instead of their own. With its competitive features and UAE-based operations, AquaFunded aims to provide a trustworthy platform for traders looking to scale their profits. 

2. Know the Rules Inside Out

Before you start, fully understand the firm’s rules and guidelines. This includes risk limits, leverage restrictions, and any other crucial considerations. As Mike Bellafiore from SMB Capital advises, not knowing the rules is like trading blindfolded. Take the time to study the fine print so you don’t make avoidable mistakes.

3. Get Your Strategy in Check

Make sure you have a well-defined trading strategy before starting the challenge. Whether you’re a trend follower, breakout trader, or have a different approach, clarity on your strategy is crucial. Brett Steenbarger, a trading psychologist, stresses that successful traders have a well-defined edge and know how to adjust when market conditions change.

4. Prioritize Risk Management

Risk management is a top priority for proprietary trading firms. Show them you can manage risk effectively by setting stop-loss orders, diversifying your trades, and understanding your risk-reward ratio. Mark Douglas, author of "Trading in the Zone," says that you're vulnerable to emotional trading without a consistent way to manage risk.

5. Sharpen Your Analytical Skills

Trading challenges require you to analyze market trends and make quick decisions. Hone your analytical skills to interpret charts swiftly, news, and other relevant information. As John Murphy, a technical analyst, advises, keep your analysis simple but disciplined by using a checklist of key technical indicators.

6. Stay Disciplined and Patient

Discipline is vital to successful trading. Stick to your strategy, avoid impulsive decisions, and stay patient during market volatility. Paul Tudor Jones, a legendary hedge fund manager, emphasizes that playing defense is the most essential rule in trading. Protect what you have so you can keep playing the game.

7. Keep Learning

Proprietary trading firms value traders who are committed to continuous learning. Stay updated on market trends and economic indicators, and be dedicated to improving. Ray Dalio, founder of Bridgewater Associates, believes in lifelong learning and says that each trade offers valuable lessons if you pay attention.

8. Be Open to Feedback

If the prop firm gives feedback during the challenge, use it as a tool for improvement. Adapt your strategy accordingly, showing your willingness to evolve as a trader. Jack Schwager, author of "Market Wizards," points out that successful traders learn from setbacks and adapt to ensure longevity in trading.

9. Practice Under Real Conditions

Use a trading simulator to practice under conditions that mimic real trading scenarios. This helps you refine your skills and manage the psychological pressures of live trading. Alexander Elder, author of "Trading for a Living," stresses the importance of simulated trading to test your strategies under live conditions before risking natural capital.

Comparison of the Best Prop Trading Challenges

1. AquaFunded: Setting the Pace in Prop Trading

AquaFunded, based in Dubai, offers traders a chance to manage large capital accounts with up to 95% profit splits. Its standout feature is an easy-to-reach 8% profit target paired with swift bi-weekly payouts. The platform caters to traders of all levels who want to trade with reduced risk using the firm’s capital. AquaFunded aims to differentiate itself in the crowded prop trading market with its UAE-based operations.

2. FTMO: The Gold Standard

FTMO is a leading prop firm that has a two-step evaluation: the FTMO Challenge and Verification. Successful traders receive funding and a generous profit split.

Details

• Account Sizes: $10,000 to $200,000
• Profit Target: 10% (Phase 1), 5% (Phase 2)
• Max Daily Drawdown: 5%
• Max Overall Drawdown: 10%
• Profit Split: 80% to 90%
• Fee: Starts at €155 for a $10,000 account (refundable)
• Leverage: 1:100
• Reputation: Excellent for clear rules and transparency

Pros

• Generous profit split
• Refundable challenge fee
• Strong support system

Cons

• Strict drawdown limits

3. MyForexFunds (MFF): The New Contender

MyForexFunds offers multiple evaluation options, with the Evaluation model being popular for prop challenges.

Details

• Account Sizes: $10,000 to $300,000
• Profit Target: 8% (Phase 1), 5% (Phase 2)
• Max Daily Drawdown: 5%
• Max Overall Drawdown: 12%
• Profit Split: Starts at 75%, increasing with consistency
• Fee: Starts at $84 for a $10,000 account
• Leverage: 1:100
• Reputation: Gaining traction quickly

Pros

• Lower profit target
• High overall drawdown limit
• Competitive Pricing

Cons

• Relatively new compared to FTMO

4. The5ers: Focused on Long-Term Success

The5ers prioritizes long-term success with lower pressure for high-profit targets but requires stricter risk management.

Details

• Account Sizes: $10,000 to $160,000
• Profit Target: 6% (unlimited time)
• Max Daily Drawdown: None (strict risk limits)
• Max Overall Drawdown: 4%
• Profit Split: 50% to 100%
• Fee: Starts at €275 for a $24,000 account
• Leverage: 1:10 to 1:30
• Reputation: Known for trader-friendly policies

Pros

• No time pressure
• Swing trading accounts available

Cons

• Lower leverage
• Smaller profit splits

5. TopStep: A Futures Trader’s Paradise

TopStep caters to futures traders, focusing on markets like CME, CBOT, and ICE with a familiar two-step evaluation process.

Details

• Account Sizes: $50,000 to $150,000
• Profit Target: $3,000 on a $50,000 account
• Max Daily Drawdown: $1,000 for a $50,000 account
• Max Overall Drawdown: $2,000 for a $50,000 account
• Profit Split: 80% to 90%
• Fee: $165 for a $50,000 account (monthly)
• Leverage: Up to 1:50
• Reputation: Respected in the futures trading community

Pros

• Strong futures focus
• Excellent educational support

Cons

• A higher barrier for non-future traders
• Monthly fees can add up

6. Earn2Trade: Education and Funding Combined

Earn2Trade blends education with funded trading programs, which is ideal for traders looking to enhance their skills.

Details

• Account Sizes: $25,000 to $200,000
• Profit Target: $1,750 for a $25,000 account
• Max Daily Drawdown: Varies
• Max Overall Drawdown: Varies
• Profit Split: 80%
• Fee: $150 for a $25,000 account
• Leverage: 1:50
• Reputation: Known for its educational platform

Pros

• Strong educational focus
• Futures and forex accounts available

Cons

• Non-refundable fees
• Lower profit split

Benefits of Prop Trading Challenges

Sharpen Your Skills: Why Prop Firm Challenges Are Game Changers

Taking on a prop firm challenge is like stepping into a fast-paced training ground. You'll push yourself to improve your trading tactics as you face off against others. The competition is intense, and it forces you to refine your strategies and make smarter decisions. In this environment, you’ll hone your risk management skills and learn to read market data more effectively. The result? You become more adaptable and proficient, ready to tackle the professional trading world.

Unlock Big Capital: The Perks of Winning a Prop Firm Challenge

Passing a prop firm challenge gives you access to a large pool of trading funds. With this capital, you can take more prominent positions in the market, which means you have the potential to earn more significant profits. This financial boost lets you diversify your portfolio, seize lucrative opportunities, and manage risk more effectively. The impact on your earning potential is substantial, making these challenges a compelling option for traders looking to maximize their profits.

Skyrocket Your Earnings: Profit-Sharing Opportunities with Prop Firms

When you win a prop firm challenge, you don't just get access to more capital—you also get access to profit-sharing arrangements. These setups allow you to share your profits, aligning your interests with the firm's success. This creates a win-win situation where you're incentivized to perform your best, and the firm benefits from your success. As a skilled trader, you'll have the chance to earn substantial rewards for your expertise and performance.

Learn from the Best: How Prop Firms Connect You with Expert Traders

Joining a prop trading firm gives you access to a community of experienced traders who can offer valuable mentorship and guidance. Learning from these seasoned professionals can be transformative, accelerating your learning curve and helping you navigate the financial markets more effectively. These relationships create a supportive ecosystem where you can grow as a trader and access invaluable insights and wisdom.

Get Real Experience: The Value of Prop Firm Challenges

Prop firm challenges are designed to mimic real trading scenarios, exposing you to the complexities of live markets with actual risk. This practical experience is invaluable and goes beyond what you can learn from paper trading or demo accounts. You'll learn to make decisions under pressure, honing your trading skills and resilience.

Reduce Your Risk: How Prop Trading Firms Share the Burden

In a prop trading firm, you use the firm’s capital, which means you’re not personally responsible for losses beyond your initial investment. This risk-sharing arrangement acts as a safety net, giving you the confidence to take calculated risks and explore opportunities without fear of catastrophic financial consequences. This safety net is one of the reasons prop trading is an attractive career choice for many traders.

Expand Your Network: The Social Side of Winning a Prop Firm Challenge

Winning a prop firm challenge opens doors to networking opportunities in the trading industry. Connecting with fellow traders and professionals can lead to collaborative ventures and career advancement. These relationships create opportunities for knowledge exchange and potential partnerships, broadening your horizons in the finance world.

AquaFunded: Breaking into Prop Trading with Ease

AquaFunded is a Dubai-based funded trading program that offers traders access to significant capital accounts and profit splits of up to 95%. The company’s funding model includes easy-to-achieve 8% profit targets and fast bi-weekly payouts, with the option for a first payout in just 7 days. AquaFunded caters to traders of all experience levels, making it an attractive option for those looking to trade with reduced risk using the firm’s capital instead of their own. Get started with AquaFunded’s funded trading program today!

Join Our Funded Trading Program Today - Trade with our Capital and Keep 90% of the Profit.

AquaFunded’s funded trading program offers a fresh take on the prop trading market, especially for those just starting. With an easy-to-reach 8% profit target, traders can unlock access to significant capital. Consider trading with $200,000—without risking your own money. 

The beauty of AquaFunded is in its simplicity. You don’t need to be a Wall Street guru to succeed. Plus, with the option for a first payout in just 7 days, it’s a win-win. AquaFunded’s lower-risk model is a game-changer for beginners and those with some experience alike.

Profit Splits and Payouts: Why AquaFunded Stands Out

AquaFunded boasts one of the highest profit splits in the industry, offering up to 95% to traders. That’s more cash in your pocket, faster. If you’re looking for a prop firm that values your hard work, AquaFunded’s fast bi-weekly payouts have you covered. Getting paid without delay is essential for maintaining a positive trading experience. AquaFunded’s payout structure ensures you reap the rewards of your efforts without unnecessary stress. And let's be honest—who doesn’t want to enjoy the fruits of their labor sooner rather than later?

Related Reading

• Trading in UAE
• FundedNext Prop Firm
• Best Trading Platform in UAE
• E8 Prop Firm
• 5 Ers Prop Firm
• FTMO Alternative
• TFF Prop Firm