How to Succeed in Prop Trading: A Complete Guide

Succeeding as a prop trader is not just about knowing how to trade. It’s about discipline, strategy, and mindset. Many traders dream of passing a prop trading challenge and getting paid for their profits, but only a small percentage actually make it. 

So, what separates the winners from the rest? 

In this guide, we’ll break down exactly what you need to do to succeed in prop trading and build a second source of income.

Why Some Traders Fail at Prop Trading

Before we dive into success strategies, let’s quickly cover why some traders fail at prop trading. 

While many traders have the technical skills to succeed, they struggle with discipline, mindset, and risk management. Here are some of the most common reasons why traders fail to secure or maintain profits

1. Poor Risk Management

The biggest reason traders fail is blowing their account due to poor risk management. Many prop firms have strict drawdown limits, and if you don’t control your losses, you’ll get disqualified quickly. Common mistakes include:

• Risking too much per trade
• Not using stop losses
• Revenge trading

2. Lack of Emotional Control

Emotional trading destroys even the best strategies. Fear, greed, impatience, and frustration lead to impulsive decisions that break trading plans. 

To avoid this mistake, develop emotional discipline, trust your plan, and take breaks when needed.

3. Ignoring the Prop Firm’s Rules

Prop firms don’t just test your profitability; they test your ability to follow rules. Many traders fail because they don’t fully understand the firm's guidelines on:

• Maximum drawdown
• Profit targets
• Time limits

Before you buy a trading challenge, take time to familiarise yourself with our trading rules and requirements. 

4. No Clear Trading Plan

Going into prop trading without a structured plan is like going in blind. 

Many traders jump from strategy to strategy, hoping for quick profits, but inconsistency leads to failure.

Instead, stick to a proven trading strategy and refine it over time. A good one to start with is the 5 3 1 trading strategy, which is designed to simplify the process and remove greed. 

5. Lack of Patience and Overconfidence

Some traders pass the prop trading evaluation but quickly lose the challenge because they get overconfident and take reckless trades. 

Others give up too soon when they don’t see immediate success.

Instead of doing this, think long-term, stay humble, and focus on steady, consistent growth.

How to Succeed at Prop Trading

Now that you know what not to do, here is an overview of how to succeed at prop trading in 2025. 

1. Master Your Trading Strategy

The first step to success is having a solid trading strategy. You can’t just wing it and hope for the best. 

Successful prop traders focus on one or two proven strategies that match their personality, risk tolerance, and trading style.

Some of the best prop trading strategies include:

• Scalping: Taking quick trades for small profits multiple times a day.
• Day trading: Entering and exiting trades within the same trading session.
• Swing trading: Holding trades for several days to catch bigger price moves.
• Momentum trading: Riding strong price trends using technical indicators.

Whatever strategy you choose, backtest it to ensure it has an edge before trading live capital.

2. Follow Risk Management Strictly

One of the fastest ways to fail a prop trading challenge is by ignoring risk management. Prop firms are strict about drawdown limits, so even a few reckless trades can blow your chances.

Here’s how to protect your account:

• Risk only 1-2% per trade
• Use stop losses
• Stick to a max daily drawdown
• Limit overtrading

By treating risk management as a non-negotiable rule, you’ll increase your chances of staying funded.

3. Develop a Winning Mindset

Trading is just as much about psychology as it is about technical skills. The biggest challenge in prop trading isn’t strategy, it’s managing your emotions.

To keep your mindset strong:

• Detach from money: Focus on executing good trades, not making fast profits.
• Accept losses as part of the game: Even the best traders lose. Move on quickly.
• Stay disciplined: Follow your trading plan no matter what.
• Take breaks: Avoid burnout by stepping away from the charts when needed.

Prop firms aren’t just looking for great traders. They want disciplined traders who can stick to rules under pressure.

4. Understand Prop Firm Rules Inside and Out

Every prop firm has its own set of rules, and not knowing them can cost you your funded account. 

Before you even start trading, read the rulebook carefully to avoid unnecessary mistakes.

A good idea is to keep a copy of the rules visible on your desk so that you can refer to them easily throughout your trading session. 

Many traders fail not because they lack skill but because they break prop trading rules without realising it. Don’t let that be you.

5. Learn from Mistakes and Improve

The best prop traders treat trading like a business. That means tracking performance, learning from mistakes, and constantly improving.

Trading is a game of continuous improvement. The more you analyse and refine your approach, the more consistent you’ll become.

We suggest investing in continuous learning, keeping up with the latest market news and analysing your performance each day to understand areas for improvement. 

6. Have a Clear Trading Plan

If your goal is to pass a prop trading challenge, you need a clear plan. Many traders rush in, take big risks, and fail. Instead, use a smart approach:

• Start small: In the first few days, take lower-risk trades to avoid early drawdowns.
• Build a buffer: Once you’ve made some profit, you’ll have room for drawdowns.
• Don’t chase trades: If you miss a setup, move on.
• Trade like you’re using real money: Follow the same discipline you’d use if real money were at stake.

Make a clear plan at the beginning of every single trading session to avoid placing trades on a whim or being caught out by your emotions. 

Succeeding in prop trading isn’t about luck. It’s about skill, discipline, and mindset. 

If you master your strategy, follow risk management, control your emotions, and stick to the firm’s rules, you’ll have a much higher chance of staying funded and making real profits.