When trading with a funded account, many traders forget that clearing the challenge phase is just the beginning. Yes, to clear them is a win, but the real deal starts once traders go live.
Once they go live, they enter a world full of pressure with real capital at stake. Not only do the rules get tighter, but the emotions also reach their breaking point. This is where most traders lose the game.
At FundingPips, clearing the challenge phase is only viewed as the first step towards a sustainable trading journey. This article identifies the seven common mistakes traders make when risking their funded accounts and offers alternatives to avoid them.
Want to manage a substantial account size without investing your money? Join FundingPips today and start trading smartly.
1. Ignoring the Daily Drawdown Rule
Most traders fail when they ignore their daily drawdown or maximum drawdown limit. Most trading firms, including FundingPips, have a daily drawdown limit that should not be exceeded; otherwise, traders risk losing their accounts.
Here’s what to do instead:
One of the keys is to track your floating losses as much as your closed losses. Planning the maximum risk per day also helps. Lastly, if you find the market unstable or messy, walking away with discipline saves the day.
2. Overleveraging After One Win
Many traders get stuck in the adrenaline rush of passing a single challenge. They assume they can trade using the same setup in real-world conditions after a few wins. They end up overleveraging due to overconfidence, which leads to their downfall.
However, the game changes once they realize that they are trading with someone else’s money, where the rules are strict and the pressure is intense.
Follow this instead:
Even though the temptation to aggressively scale up your account is overwhelming, traders need to bear in mind that one oversized loss can set back their entire progress. Begin by starting small and trading consistently with patience. To stay in the game, you have to survive first to thrive later.
FundingPips provides traders with a secure environment to consistently practice their trading strategies. Want to trade smartly? Join FundingPips today.
3. Revenge Trading During the Challenge
During the challenge phase, many traders make the mistake of revenge trading. They face one loss, and they embark on a revenge trade, hoping to win it all back. However, when the pressure is real, things work differently.
Simply put, revenge trading is a form of emotional trading. It’s the fastest way to lose your account. Most funding programs are designed not only to test your strategy but also to assess your discipline. If you can resist revenge trading on a difficult day, that means you’re ready for a larger account.
To avoid revenge trading, follow these:
- After every loss, take breaks to calm down and reset.
- Regulate your emotions by journaling them.
- Place a daily limit on stop-losses.
4. Not Adapting to Live Funded Account Conditions
The key difference between a funded account and a demo account is the mental pressure each brings. When trading with a master account, some traders freeze while others force trades. The pressure is intense as the traders realize they are trading someone else’s resources.
Follow these to handle the transition better:
To improve their trading game, traders should start with a more manageable risk in the first week. They need to observe the execution and psychology of trading in real-world conditions for better results.
5. Using Rigid or Demo-Optimized Strategies
Many traders struggle to adapt their strategies once they begin trading with a master account. They believe the same strategy they used to pass the challenge phase will work with master accounts.
But the real markets are impacted by news events, geopolitical conditions, and real-world decision-making. Relying on rigid or demo-optimized strategies leads to failure. Once the strategy fails, the traders abandon it.
Here’s what you can do instead:
To survive, traders need flexibility and adaptability. FundingPips empowers adaptive traders who want to evolve their funding journey.
6. Misunderstanding Payout Rules or Scaling
Prop firms come with fine print about all the rules and regulations to be followed during a trading journey. Each funded firm has a unique payout system, scaling method, and profit targets. Some firms allow for withdrawals after every two weeks.
But many traders ignore reading the fine print. Due to this, a lot of them end up hitting payout walls and account violations. As a result, they compromise their account and miss out on incredible opportunities.
To stay one step ahead in your trading journey:
- Ensure you have thoroughly read your property firm’s rules and regulations.
- In case of any ambiguity, contact the customer support.
- Maintain a personal tracker for your payout goals
- Also, track your scaling goals.
FundingPips offers a clear breakdown of the payout and scaling plans. It rewards its consistent traders with increased account size.
7. Poor Risk Management Psychology
Despite being aware of the risk-to-reward ratios, most traders fail to follow them. A funded account must adhere to a strict risk-to-reward management strategy.
However, most traders aim for tight stop-losses and huge risk-to-reward trades to prove themselves. Or worse, when a trade turns red, they either widen stop losses or change their strategies in the middle of the week, hoping to achieve a payout goal.
This reflects poor risk-to-reward psychology. Traders need to start treating trading as a profession, rather than a lottery ticket. The primary goal is to protect the funded account, scale it up gradually, and minimize significant losses. When trading with a master account, only consistency, patience, and discipline will reap rewards.
Try this solution:
How to Break the Cycle and Succeed as a Funded Trader
Most traders lose their accounts not because of a lack of skill or strategy, but because of a lack of structure. Once the pressure builds, emotions reach a breaking point. Traders end up ignoring the rules and letting their psychology run the game.
To avoid falling into these traps, traders need to become more flexible and adaptable. Understanding the rules and the structure makes all the difference. With perfect execution, it’s possible to make them work for you. Remember, patience and discipline are your most valuable allies for achieving long-term success.
FundingPips offers traders both firm resources and clarity. It values adaptive traders who treat trading as a profession. Join FundingPips today and taste success.
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