Hands up if you’ve ever begun a prop firm challenge filled with confidence, only to FOMO into a trade at the last minute and watch helplessly as your profits fall away…
Well, you’re certainly not alone.
Many traders enter funded account challenges with all the confidence in the world, only to find themselves struggling to meet the requirements. While trading skills are important, most traders fail not because of bad strategies but because of poor risk management, lack of preparation, and emotional decision-making.
Passing a funded challenge is really an exercise in consistency, discipline, and sticking to a structured approach. Traders who succeed aren’t only skilled at finding good trades; they understand how to manage risk, follow a plan, and adjust their strategy when needed.
If you want to improve your chances of passing a funded challenge, here’s what you need to focus on.
1. Understanding the Challenge Rules and Limits
One of the biggest mistakes funded traders make is not fully understanding the challenge requirements, especially when they’re starting afresh with a new prop firm.
Many jump into a funded challenge for a new funded trading account, assuming they can rely on their usual trading habits, only to be caught off guard by rules they didn’t consider.
Before taking any challenge, traders need to review the following:
- Profit Targets: Falcon Funded requires a 7.5% profit in Phase 1 and 5% in Phase 2.
- Drawdown Limits: A maximum of 4% daily drawdown and an 11% total drawdown must be respected.
- Consistency Rule: Prevents traders from passing with a single high-risk trade, encouraging sustainable performance.
Trading talent that fully understands these requirements can develop a strategy that aligns with the challenge rather than making costly mistakes.
2. Mastering Risk Management
Even the best trading strategies fail without proper risk management. Many traders pass profit targets but get disqualified for breaking drawdown rules, often because they risk too much on a single trade. While we understand that meeting your financial trading objectives is important, that shouldn’t come at the expense of the challenge.
Slow down, get to grips with risk management, and do your homework, and you’ll find your first payout on its way sooner than you think.
To improve consistency and successfully complete the challenge, traders should follow these risk management principles:
- Position sizing: Never risk more than 1-2% of capital per trade to avoid large losses.
- Stop-loss placement: Always define a clear exit point before entering a trade.
- Risk-to-reward ratio: Aim for at least 1:2 or 1:3 to ensure that profitable trades outweigh losses.
Traders who manage their risk effectively stay in the challenge longer, giving themselves more opportunities to reach their targets.
3. Developing a Consistent Trading Strategy
Many traders fail funded challenges not because they lack skill, but because they lack consistency. No matter your trading experience, switching between different strategies or taking impulsive trades leads to poor results over time.
Before attempting a challenge, traders should have developed and honed a well-tested strategy that fits their trading style.
- Scalping: Requires a high win rate and tight risk management due to frequent trades.
- Day trading: Allows traders to balance risk and reward while making multiple trades per session.
- Swing trading: Works well in challenges with no time limits, as it requires patience for trades to play out.
The best way to ensure consistency is backtesting a strategy before using it in a funded challenge. Traders who can execute the same setup repeatedly, with a proven win rate, have a much higher success rate.
4. Managing Emotions and Psychological Discipline
One of the biggest challenges in trading isn’t finding good setups—it’s controlling emotions when the market moves against expectations. Fear, greed, and frustration lead to impulsive decisions that can break a challenge’s rules.
Common psychological mistakes include:
- Overtrading: Entering too many trades in an attempt to recover losses (often impulsively, without a real evaluation process, and with high financial risk)
- FOMO (Fear of Missing Out): Taking trades outside of a strategy because you see that candlestick pumping upwards is not a good strategy. Remember, past performance does not mean future results!
- Revenge trading: Doubling down on a bad trade to make back losses quickly and letting emotions dictate their behavior.
To build psychological discipline, traders should:
- Follow a written trading plan to avoid emotional decision-making.
- Take breaks after big wins or losses to reset mentally.
- Set daily profit and loss limits to prevent emotional trading.
- Start with a virtual trading capital account over real capital so they can master the techniques.
- Build a schedule around trading – if you find you can think sharper and clearer in the afternoon, then plan your trading days around that.
Traders who approach the entire challenge duration with a calm, disciplined mindset are far more likely to pass than those who let emotions dictate their trades. Don’t believe us? Just read a few success stories for what real traders have to say.
5. Tracking Performance and Adjusting Accordingly
Many traders repeat the same mistakes without realizing it because they don’t review their performance. Whether you choose a two-step evaluation process or a more detailed journaling approach, tracking your trades helps you identify patterns, refine your strategy, and avoid costly errors.
Successful traders of all account sizes take a data-driven approach, analyzing past trades to identify patterns and weaknesses.
Ways to track performance effectively:
- Keep a trading journal and write down trade setups, entry/exit points, and your reasoning behind them. This will help you spot patterns that you can use to your advantage in the live markets.
- Review win/loss ratios to identify what’s working and what needs improvement. It might be difficult to think about when you’re on your first trade, but you’ll likely lose some of your trades, too. Keeping on top of your losses and your wins helps you to build your skills for each trading challenge.
- Analyze drawdowns and set a max drawdown for each session. Remember, if losses are too large, it may be a sign of poor risk management.
Small adjustments based on performance tracking can significantly improve results in future challenges.
6. Practicing Before Attempting a Challenge
Many traders take a funded challenge on a new trading platform without first testing whether their approach works under the same conditions. This often leads to failure—not because they aren’t skilled, but because they aren’t prepared.
The best way to increase the chances of passing is by practicing under real conditions before attempting a challenge.
Spend 1-2 months trading under the exact challenge rules to build confidence. Before moving up to a funded account, create a trading account with virtual trading capital (no matter whether you decide to specialize in forex trading, futures trading, or even day trading). This is a critical step on a trading journey as it gives you the support and practice you need before you start with real money. In this demo platform, don’t forget to track your trading performance over time.
In reality, traders who prepare properly are far more likely to pass their challenge than those who enter untested. So, to give yourself the best chance of successfully completing the challenge, always give yourself a dry run first.
Final Thoughts
Consistently passing funded challenges isn’t just about being a good trader. And it’s never about simply luck. Instead, a funded account challenge comes down to preparation, risk management, and emotional control.
Traders who focus on:
- Understanding the rules
- Managing risk effectively
- Sticking to a proven strategy
- Controlling their emotions
- Tracking performance
- Carving out regular time in their schedule
- Practicing before taking a challenge
… have a much better chance of qualifying for a funded account.
Success in prop trading is about repeatable, disciplined execution, so traders who approach challenges with a structured mindset will always have a competitive edge. If you’re ready to test your strategy with real capital, join a prop firm like Falcon Funded and take one of our prop firm challenges today.
