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.