Type of strategies
To pass a Prop firm Challenge you can have two strategies. You can have a strategy less risky and one riskier. In my case, I have the most success with the riskier one, but that is something you have to try for yourself and works better for you. The riskier one allows you to pass challenges faster and compound funded equity faster while the less risky one takes more time but the probability for you to lose the account is low.
Less risky strategy
So if you want to opt for the less risky strategy, you need to do this. Let’s imagine you are doing a 100k challenge and your goals are an 8% profit target and an 8/10% max drawdown and you don’t have a time limit to pass the challenge. These are the steps you need to follow.
Step 1: Risk 0.5% per trade, until you are 2% up on the account.
Step 2: Once you are 2%, you start to risk 1% per trade until one of two things happens.
Situation 1: You hit the profit target, if so congratulations you are one step further in being a funded trader.
Situation 2: You lose the next two trades, and now you are back at the starting point. If this happens you just need to start again and return to Step 1, and risk again 0,5% per trade. Now you just need to have control over yourself to not keep risking 1% per trade and lose control of your strategy to pass the challenge
This is the strategy that helps me pass these funding challenges. Keep in mind this strategy is way more aggressive and if you do not have a good strategy the probability for you to blow your account is very high.
Step 1: You start the challenge by risking 2% per trade, and you can have two outcomes.
Situation 1: You win the trade so now, now you risk again 2% and if your risk to reward is 1:2, and if you win both of your trades you just passed your phase 1 challenge.
Situation 2: You lose the trade, and now you risk again 2% for your next trade if win you keep risking 2% until you pass the challenge, if you lose your trade you are now 4% negative on your challenge and you start risking 1% per trade until you are again at breakeven.
This is the way I pass both of the phases of my challenges. Keep in mind, this is what works best for me and I am just showcasing it. This strategy was designed for a risk-reward 1:2.