Common mistakes in prop firm challenges
Learn the patterns that cause most traders to fail challenges so you can design your plan to avoid them.
1. Overleveraging early in the challenge
Many traders treat the early days of a challenge as a race to hit the profit target. This leads to oversized positions and emotional swings when trades move against them.
- Risk small enough that a losing streak still keeps you safely within drawdown limits.
- Remember that you usually have a time window and minimum trading days you do not need to win on day one.
- Think in terms of dozens of trades rather than a single "make or break" setup.
2. Disrespecting news, weekend, or EA rules
Rule violations often end accounts even when the equity curve is positive. Ignoring detailed restrictions because they seem minor is a common error.
- Track which high-impact news events are restricted for your instruments.
- Be clear on whether overnight or weekend holding is allowed.
- Confirm EA, copy-trading, and hedging policies before automating anything.
3. Chasing losses and revenge trading
After a loss, it is tempting to increase size or take marginal setups to "get back" to break-even. In a challenge with strict daily loss limits, this behaviour is especially dangerous.
- Use a pre-defined daily stop; once hit, stop trading for the day.
- Plan how you will respond after a losing streak before the challenge starts.
- Keep a log of emotional triggers so you can adjust your environment and routine.
4. Ignoring minimum trading days and pacing
Rushing to hit the profit target without thinking about minimum trading days can backfire. You may reach the target quickly but still need to trade additional days, increasing the chance of giving back profits.
- Design a plan that spreads risk across the entire evaluation window.
- Aim for steady progress rather than one or two huge trades.
- Reduce risk once you are comfortably above the profit target.
5. Trading without a written plan
Without a basic written plan, traders tend to drift into random setups and inconsistent risk. A simple document can keep you grounded when emotions spike.
- Write down your setups, risk per trade, session times, and reasons to stand aside.
- Review the plan weekly and adjust slowly based on real data, not one-off trades.
Next steps
Combine this overview of mistakes with the guides on how prop firm challenges work, how to get funded, and risk management for prop traders to build a plan that fits your personality and strategy.
Frequently asked questions
What is the most common reason traders fail prop firm challenges? Overleveraging and breaking risk rules are far more common causes of failure than a strategy being completely wrong.
Can I recover if I hit the daily loss limit? In most programs, hitting the official daily loss limit breaches the account. Use a smaller personal daily stop to protect yourself before you get close to the firm's limit.
Is it better to finish quickly or slowly? A slower, steady approach that respects minimum trading days and risk limits is usually more sustainable than trying to pass in a few oversized trades.
Compare prop trading firms
When you are ready to apply these lessons, use the comparison tools on Prop Firm Compass to see firms, rules, and evaluation models side by side.