5 SECRETS Prop Firms don’t want you to KNOW (2024)

Summary

In this video, Hamza from The Funded Brothers reveals five crucial secrets that prop firms don’t want traders to know. He shares valuable insights on how to adjust your strategy and risk during the challenge phase, the importance of understanding that prop firm accounts are simulated, and how to manage your mindset effectively. Additionally, Hamza emphasizes the need for consistent withdrawals, avoiding the temptation to grow your prop accounts, and the benefits of having a personal trading account. By applying these strategies, traders can optimize their chances of success and avoid common pitfalls when working with prop firms.

Takeaways

• 😀 Adjust your risk settings if your strategy isn't working during a prop firm challenge to avoid blowing your account.
• 😀 Prop firm accounts are simulated, meaning the large balance shown is not real capital, and you're only risking a small portion of it.
• 😀 Many new traders fall for the hype and think passing prop firm challenges is easy; start with a demo or small account to test your strategy.
• 😀 Your challenge fee is real money, so treat the challenge seriously and ensure you have a proven trading strategy before paying for it.
• 😀 Don't try to grow your funded account by leaving profits in it; withdraw your profits regularly to secure them.
• 😀 Focus on gaining more capital through different prop firms rather than trying to make bigger profits from a single firm.
• 😀 Always trade with a personal account alongside prop firm accounts to improve risk management and mindset.
• 😀 Real trading is done with real money, and having a personal account changes how you approach risk and trade management.
• 😀 Don't risk your own money in the challenge if you aren't ready; practice on free trials or demo accounts first.
• 😀 Small, consistent profits over time add up and help you scale your trading without risking too much capital at once.
• 😀 Your goal should be to fund and grow your personal account using profits from prop firms and withdraw whenever you like.

Q & A

Why might a trader's strategy stop working after starting a prop firm account?

Prop firms often impose specific profit targets and drawdown limits that may cause strategies to fail during the challenge phase. Traders need to adjust their risk management and ensure they aren't overexposing themselves to losses.

What is the first secret prop firms don’t want you to know?

The first secret is that trading accounts in prop firms are simulated. While the account size might appear large, the actual capital at risk is much smaller, and traders should adjust their risk management accordingly.

How should a trader adjust their risk management when facing a losing streak?

A trader should analyze their strategy to identify their maximum losing streak and then reduce the percentage risk per trade during the challenge phase to avoid blowing the account.

Why is it important to not get stuck in the challenge phase of a prop firm?

Staying too long in the challenge phase is what prop firms want, as it increases the chances of failure. Traders should aim to pass the challenge quickly while managing their risk effectively.

What should a trader know about the psychological challenges when trading with prop firms?

When trading with simulated accounts, traders may struggle with the psychology of handling floating profits and losses. They may also overreact to gains and losses due to the perception of large amounts of money, even though the capital involved is not real.

What advice does the speaker give to new traders entering the prop firm space?

New traders should focus on developing a proven strategy before attempting to take a prop firm challenge. It's recommended to start with free trials or demo accounts to test if they can pass the challenge without risking real money.

What’s the importance of using a demo account or free trial before engaging with a prop firm?

A demo account allows new traders to practice and assess whether their strategy can pass the challenge without risking their own capital. It also provides insight into whether they’re ready for the actual challenge.

What does the speaker say about the challenge fees of prop firms?

The challenge fee is real money that a trader risks, even though the capital in the account is simulated. Traders should be aware of this fee when entering a prop firm challenge.

Why should traders avoid trying to grow their funded accounts excessively?

Prop firm accounts are simulated, so it’s better to withdraw profits rather than leave them in the account. Traders should focus on gaining more capital through different prop firms, rather than trying to make large profits in a single account.

Why is it important to have a personal trading account alongside a funded account?

Having a personal account is crucial because it gives a trader a different mindset. When trading personal capital, there’s a greater sense of responsibility, leading to better risk and trade management.