The SECRETS Prop Firms DON'T WANT you to KNOW

Summary

This video script offers insights into the world of prop trading firms, emphasizing the need for traders to adopt a sustainable approach rather than chasing quick payouts. The speaker, an experienced trader, advises on risk management, the importance of profitability, and the psychological aspect of trading. They suggest starting small, not risking more than 1% per trade, and waiting at least two weeks between challenges to reflect and improve. The goal is to outsmart prop firms by understanding their strategies and managing risk effectively.

Takeaways

• 📉 Prop firms don’t want you to win; it’s a numbers game where 95% of traders fail, and firms capitalize on this.
• 💼 Your prop firm results reflect your current trading level. You must be profitable in general before expecting success in a prop firm challenge.
• 📊 Risk management is critical to success in prop firm challenges. You should not risk more than 1% per trade.
• ⏳ Don’t rush through challenges. Limit yourself to one challenge per month, and avoid rushing into another if you fail.
• 🔄 If you lose a challenge, take at least two weeks to reflect, review your mistakes, and adjust your strategy before trying again.
• 💡 Choosing the right account size is crucial. Start smaller if large accounts make you feel uncomfortable and lead to emotional trading.
• ⚖️ Aim for long-term profitability rather than chasing big payouts. A gambling mentality is what prop firms expect and capitalize on.
• 🧘 Neutralize emotions around money—both what you spend on challenges and the profits you aim to make—so you can make rational trading decisions.
• 📚 The long-term strategy is to keep leveling up by passing challenges, getting payouts, and improving your game over time.
• 🧠 Prop firms play a psychological game by offering large accounts with lower drawdown, triggering emotional decisions in traders. Stay ahead by managing emotions and strategy.

Q & A

What is the primary goal of prop firms according to the speaker?

The primary goal of prop firms is not to make traders rich but to capitalize on the fact that 95% of traders fail. Prop firms operate as a numbers game, where only a small percentage of traders succeed, making the firms profitable in the long run.

What is the key difference between successful and unsuccessful traders in prop firm challenges?

The key difference is risk management during drawdowns. Successful traders manage their risk well, ensuring they don’t blow their accounts during periods of loss, while unsuccessful traders often take excessive risks and fail to recover from drawdowns.

What is the first rule to passing prop firm challenges successfully?

The first rule is to be profitable. Traders need to have a profitable trading strategy and a strong understanding of risk management before attempting prop firm challenges.

Why does the speaker recommend not risking more than 1% per trade in a prop firm challenge?

Risking more than 1% per trade increases the chances of failing the challenge due to potential drawdowns. By limiting risk to 1%, traders give themselves more room to recover from temporary losses and avoid blowing their accounts.

What is the speaker's advice on how many prop firm challenges a trader should attempt per month?

The speaker advises traders to limit themselves to one challenge per month. Attempting more than one can lead to desperation and poor decision-making, especially if a trader is not fully prepared or hasn't reflected on past mistakes.

What should a trader do after failing a prop firm challenge, according to the speaker?

After failing a challenge, traders should take at least two weeks or more to reflect on their mistakes. During this time, they should analyze what went wrong and how to fix those issues before attempting the next challenge.

Why does the speaker recommend choosing a smaller account size if a trader fails a prop firm challenge?

The speaker recommends choosing a smaller account size because many traders are uncomfortable with large sums of money, which triggers emotional responses that lead to poor decisions. By reducing the account size, traders can build confidence and reduce the pressure of managing larger sums.

What psychological factor do prop firms exploit by offering large account sizes?

Prop firms exploit the fact that most traders are not mentally prepared to handle large account sizes. The large numbers trigger emotional responses, making traders more likely to fail and make irrational decisions.

What is the long-term strategy for being profitable with prop firms according to the speaker?

The long-term strategy involves having a profitable trading system, effective risk management, taking only one challenge every two months, and choosing the right account size. By following these steps, traders can increase their chances of consistent payouts and long-term profitability.

Why does the speaker caution against aiming for large payouts with prop firms?

Aiming for large payouts encourages a gambling mentality, where traders take high risks to make high rewards. This approach increases the likelihood of failure, which is exactly what prop firms want, as it leads to more challenge failures and lost money for traders.

Outlines

00:00

📉 The Reality of Prop Firms and Why They Don’t Want You to Win

In this paragraph, the speaker explains the harsh reality of prop trading firms. These firms are not designed to make traders rich but rather to capitalize on the fact that 95% of traders fail. The speaker stresses that even though profitable traders serve as good marketing for these firms, the majority of participants will not receive a payout. The key takeaway is to approach trading with prop firms as a numbers game and to set rules that increase the odds of success, such as having a profitable trading strategy and understanding risk management.

05:01

🎯 Two Types of Traders and How to Approach Prop Firms

This section highlights two types of traders: those who try to sustain their accounts long-term and those who aim for large payouts quickly. The speaker recommends the sustainable route, advising traders not to risk more than 1% of their capital per trade, to leave room for inevitable drawdowns, and to focus on long-term profitability. By avoiding a high-risk 'gambling mentality,' traders can increase their chances of success. The speaker emphasizes that understanding risk management is critical to passing challenges consistently.

Keywords

💡Prop Firms

Prop firms, or proprietary trading firms, provide traders with capital to trade, often requiring them to pass a challenge or evaluation. This video explains that prop firms make money by taking advantage of the fact that most traders fail, and suggests that traders need to approach them strategically to succeed.

💡Challenges

Challenges are evaluations set by prop firms to assess a trader's skill level before providing access to trading capital. These often have specific rules around profit targets, risk, and time limits. The video emphasizes that understanding and passing these challenges is crucial for success with prop firms.

💡Risk Management

Risk management involves setting guidelines to control potential losses and ensure sustainable trading. The video highlights this as a key element of successful trading, especially with prop firms, advising traders to limit risk to 1% per trade and not exceed one challenge per month to manage risk effectively.

💡Drawdown

Drawdown is the reduction in a trader's account value due to losses. The video mentions that every trader faces drawdowns and that successful traders manage them wisely, not letting short-term losses derail their long-term strategy. It recommends keeping drawdowns manageable to avoid challenge failures.

💡Trading Strategy

A trading strategy is a systematic approach to making trading decisions, including entry and exit points, risk management, and other parameters. The video asserts that traders need a profitable strategy before attempting prop firm challenges, as unprofitable strategies will likely lead to failures.

💡Sustainable Trading

Sustainable trading focuses on steady, long-term gains rather than risky, high-reward trades. The video advises traders to take a sustainable approach by aiming for consistent small payouts and avoiding gambling behaviors, which increase the likelihood of failing challenges.

💡Mindset

Mindset refers to a trader's attitude and psychological approach to trading. The video discusses the importance of having a resilient mindset and avoiding emotional trading, which can lead to mistakes. It encourages a long-term, disciplined perspective to increase chances of success with prop firms.

💡Law of Large Numbers

The Law of Large Numbers is a statistical principle stating that results will be more predictable over a large number of trials. The video relates this to trading by suggesting that traders focus on the long-term outcomes of thousands of trades rather than short-term fluctuations, as this helps in achieving consistent profitability.

💡Account Size

Account size is the amount of capital a trader has available for trading. The video suggests choosing an account size that one is mentally comfortable with, to avoid stress and emotional decisions. It recommends scaling down after a failed challenge to regain confidence and control.

💡Emotional Trading

Emotional trading occurs when a trader's decisions are influenced by fear, greed, or other emotions, rather than strategy. The video warns against emotional trading, especially with large account sizes, as it often leads to errors and challenge failures, recommending traders remain neutral to the money involved.

Highlights

Prop firms are not in the business of making traders rich; they capitalize on the fact that 95% of traders fail.

Your performance with prop firms is a reflection of your current state of trading; profitable traders are profitable everywhere.

The first rule of prop firms is to be profitable and understand risk management.

There are two types of traders: those who try to keep their accounts long-term and those aiming for one big payout, which is riskier.

Do not risk more than 1% on a prop firm challenge to give yourself room for potential drawdown without failing the challenge.

Focus on long-term profitability over 100,000 trades, rather than short-term results over the next five trades.

It's recommended to take no more than one prop firm challenge per month, to ensure a sustainable approach.

If you lose a challenge, wait at least two weeks before trying again to reflect on what went wrong and how to improve.

Traders often fail because they are not comfortable with the account size they are trading, leading to emotional decisions.

Prop firms give traders large accounts to create emotional stress, knowing it will lead to more failure.

If you fail a challenge, lower your account size for the next one to find what you're most comfortable with.

Proper risk management, trading the right account size, and not over-trading challenges increase the likelihood of long-term success.

Eventually, experienced traders can start playing an advanced game of balancing risk-to-reward with prop firm challenges.

Passing prop firm challenges consistently can lead to higher payouts and refunds, but beginners should focus on the long-term strategy first.

The speaker emphasizes that even though they personally take bigger risks, they recommend beginners follow the steps to minimize failure.

Transcripts

you are treating prop firms the wrong

way and I say this as someone that has

done over 30 challenges with prop firms

and has been understanding the ins and

outs about the industry and seeing many

people succeed and many people fail so

let me save you a lot of failed

challenges a broken mindset and a lot of

desperation let's start by stating the

obvious prop firms don't want you to win

for them this is all a numbers game

because they understand that even

profitable Traders are just perfect

marketing for them they are not here

trying to make you rich even though they

make it seem as if that's the case they

are here trying to capitalize on the

fact that 95% of Traders fail in any

Market be it on Brokers especially

unregulated Brokers or even prop firms

95% of Traders are never going to get a

payout a withdrawal whatever it is but

that's just the reality of trading with

a prop firm or trading as a retail

Trader in general so if this is just a

game for them then let's treat it like

such let's define some rules to put the

odds in our favor and this is going to

be the secret to passing prop firms more

often than not first of all I think that

I say this every single time but your

prop firm results are a reflection of

where you are at in your trading right

now and what I mean by this is that you

cannot expect to be unprofitable in the

market in General yet going for prop

firms and being profitable there

obviously the first rule for prop firms

is be profitable have a profitable

trading strategy and understand risk

management I'm personally thinking of

doing a whole webinar just focused on

risk management and if you guys want to

see that happening then make sure to

leave a like and let me know in the

comments that you want to see the risk

management webinar it's going to be the

most in-depth webinar you've ever seen

on risk management with prop firms and

personal Capital but then once we get

that out of the way I want you to

understand that there's two types of

traders that go for prop firms so

someone that tries to keep their account

for longer and someone that tries to

make a lot of money with one payout and

it is what it is I would recommend 99%

of Traders watching to actually take

prop firms in a sustainable route and

the reason for this is because if you

are aiming for a big payout understand

that you're doing exactly what the prop

firm wants you to do you're having a

gambling mentality you're going to risk

High to make high and the probability of

you losing is way higher and as I said

in the beginning that's exactly what the

prop firms want but now if your goal is

to be a profitable Trader and not to

fill up the prop firm's Pockets then you

need to listen carefully you should not

be risking more than 1% on a prop firm

challenge because you want to give

yourself room for the possibility of

going into a little bit of draw down

while still not failing the challenge

every Trader goes through draw down now

the difference between profitable

Traders and unprofitable Traders is

their risk management while they're drw

down are you blowing an account because

you lost three Trad traes or are you

playing the long game in understanding

that as a profitable Trader you will be

profitable over 100,000 traits and not

over the next five it doesn't matter

what happens in the next five it matters

what happens in the next 100 and a th000

trades That's the Law of large numbers

that you can't predict the outcome of

the next few trades but you can predict

the outcome mathematically of the next

th000 trades so for you that are

listening and are actually trying to

become profitable with prop firms

understand and risk management is number

one now the next rule to have the card

stacked in your favor is that you should

not be doing more than one challenge per

month and one challenge per month is

actually a lot let me explain with the

fact that time limit right now is

industry standard even fdmo has no time

limit you should not be going through

10% draw down and still thinking that

you have a profitable Edge on your side

because there is the possibility that

either your mindset is not right or your

stri strategy because it is not normal

for someone to either go through 5% of

available capital in one day or 10% in a

month so if you're following the other

two rules you should not be trading more

than one challenge per month but what do

prop firms try to do what's their secret

well they show you the success of the

people that took a lot of challenges

risked a lot and made this big payout

right but that's exactly what they want

you to think while a profitable Trader

which they don't want to think like one

understands that they should not be

going through so much draw down if they

have a profitable strategy and so the

next rule to our game of being

profitable with prop firms is if you

lose the challenge wait at least 2 weeks

or more until you buy and try your next

challenge and why am I saying this well

because you need to understand that it's

not like this that you simply go from

unprofitable to profitable and so if

you've just lost a challenge that means

that there's something that you need to

fix you you need to go back to the

drawing board you need to go back to the

charts and understand what you did right

and what you did wrong and for that two

weeks or month that's what you are going

to do you are going to reflect on the

mistakes that you did through the

challenge you are going to write

everything out and then at the front you

are going to write how you are going to

solve that the next time you try to go

for such Challenge and this takes me to

the number one issue everyone goes

through and that's the fact that you are

trading an account that is way way too

big you're not comfortable with the

amount of money you spent on the

challenge and you're not comfortable

with the numbers that you are seeing on

your computer on your charts on your

phone whatever it is because you are not

ready yet mentally to take on such big

of a challenge and so if you lose a

challenge I want you to dial it back I

want you to go to half the account size

that you just lost so if you lost a 100K

challenge go for a 50k if you lost a 50k

challenge go for a 25k and then you will

be able to understand which account size

you are most comfortable with for the

longest time I was doing 100K 200k

Challenge and I was always super

uncomfortable with the possibility of

losing 500 400 600 or dollars and I was

failing because of that the pressure

always got to me and when you're doing a

challenge you don't want to feel the

pressure of oh my God if I lose this

challenge then I don't have money for

the rest of the month you don't want to

feel that you want to remove your mind

from the numbers that you are seeing on

the charts you want to become neutral

neutral to the money that you spent and

neutral to the money that you're making

and you need to trust me here when I say

that in due time you will take bigger

challenges but take it one step at a

time again let me tell you something

that is not so obvious about props why

do you think that they give you a 100K

account with 10% draw down instead of a

10K account with 100% draw down well the

reason they do this is because they know

that people are not ready for the amount

of money that they're seeing on the

charts that is going to trigger an

emotion that then will make them more

likely to fail because else they would

just give you the 10K they would give

you the $10,000 in an account and you

would have the whole available drw down

but that does not happen does it they

give you an account that is too big for

regular people to even fathom so they

make emotional decisions and so you need

to be one step ahead of the curve and

understand this so in reality if you

have a profitable strategy proper risk

management meaning you are not risking

more than 1% on the challenge and you

are not losing more than one challenge

every two months adding on to that the

fact that you choose the right account

size the probability of you making money

with prop firm increases and that is how

you are going to get an edge in the prop

firm industry that is how you are going

to make money long term because I do

believe that prop firms are here to stay

and you can check some of them in the

description and then for the people that

stick to the end and have not called me

yet a hypocrite in the comments because

the reality is I do risk more on the

challenges that is how you will make it

long term because that's the type of

Trader that you want to be there comes a

point where you will go through this

journey of doing the challenges

consistently passing getting some

payouts refunds Etc and that's when you

can start playing an advanced game and

that's the game of Risk to reward with

prop Firs this means how much money are

you putting in and how much money are

you putting out becomes a whole game in

of itself which is what some Traders do

but I still don't recommend it that is

the game of passing challenges quick and

trying to get a big payout a refund

whatever it is also this will make you

fail more challenges but again you will

understand that this is a game pop firms

are playing a game with you and that if

you do these steps right eventually you

can level up and reach the goals that

you are trying to reach so I hope you

guys enjoyed if you guys want to see

that webinar then let me know by leaving

a like and a comment and I will see you

next week peace