I Tested Every R:R Ratio to Pass Prop Firm Challenges – Here’s What I Discovered

Summary

In this video, the presenter discusses the importance of risk-to-reward ratios (R/R) in passing prop firm challenges. Drawing from personal experience and extensive data analysis, they emphasize that the ideal R/R ratio for success is 1:2 (2% risk, 4% reward). The video breaks down several strategies, including the use of hedging to minimize losses, and explains how speed, safety, and pass rate are the key factors in choosing the right R/R ratio. By optimizing for speed while staying compliant with prop firm rules, traders can increase their chances of becoming funded traders.

Takeaways

• 😀 Prop firm challenge success is highly influenced by your risk-to-reward ratio, and adjusting it can significantly impact your chances of passing.
• 📊 The speaker has tested various risk-to-reward ratios using simulations and data, and built a backtest tool specifically for prop firm challenges.
• 🔐 The most important criteria for selecting a risk-to-reward ratio is ensuring it is 'safe' within the rules of prop firms, avoiding behaviors like one-sided betting or gambling.
• ⏱ Speed is another key factor, with a focus on how quickly you can pass or fail a challenge. Faster strategies are often more effective for the speaker's approach.
• 💰 Hedging is a critical strategy for managing risk and improving profitability, even when a prop firm challenge is failed. The speaker demonstrates how hedging can minimize losses and sometimes even result in a profit.
• 📉 A negative risk-to-reward ratio (e.g., 0.5:1) is not supported by any reliable data and generally leads to poor results in prop firm challenges, despite being 'safe' in terms of prop firm rules.
• ⚠️ A 1:1 risk-to-reward ratio (e.g., 2% risk, 2% reward) is a step up but still not ideal. It may take a long time to pass a challenge because of back-and-forth results and transaction fees eating into profits.
• 🏆 The optimal risk-to-reward ratio for passing prop firm challenges, according to the speaker’s data, is around 1:2 (2% risk, 4% reward). This offers both safety and speed while complying with prop firm rules.
• 🔁 A 1:1.5 risk-to-reward ratio (2% risk, 3% reward) is another viable strategy but may not yield the fastest results compared to higher ratios like 1:2.
• 🚀 The best strategy combines a balance of safety, speed, and a higher pass rate, with the 1:2 risk-to-reward ratio emerging as the most effective for prop firm challenges.

The video is abnormal, and we are working hard to fix it.
Please replace the link and try again.