Risk Management for Prop Traders: Complete Guide
Master the risk management strategies that separate funded traders from failed evaluations. Learn position sizing, stop loss placement, drawdown management, and psychology that keeps you profitable long-term.
95% of prop firm evaluation failures come from poor risk management, not bad trading strategies. You can have the best setups in the world, but without disciplined position sizing, stop loss placement, and drawdown control, you will fail.
This is the complete, no-nonsense guide to risk management for proprietary trading. We cover the five pillars of risk control, position sizing formulas for every market, firm-specific rules (FTMO, TopStep, Apex, E8), psychology traps that blow accounts, and real case studies of successful funded traders.
By the end of this guide, you'll understand exactly how much to risk per trade, where to place stops, how to manage drawdown, and what separates professional risk management from gambling. Let's dive in.
IMAGE PLACEHOLDER 1
Infographic: "The 5 Pillars of Risk Management" with icons
Position Sizing → Stop Loss → R/R Ratio → Drawdown → Daily Limits
The 5 Pillars of Risk Management
Position Sizing Mastery
Calculating the exact number of contracts, lots, or shares to trade based on your account size and risk tolerance
WHY IT MATTERS
Position sizing is the single most important risk management skill. It controls how much capital you expose on each trade. Trade too large and one bad day destroys your account. Trade too small and you waste time with minimal growth. Proper position sizing ensures you can survive 10-20 consecutive losses without breaching drawdown limits.
THE RULE
Risk 0.5-1% of account per trade maximum
DEEP DIVE
- The 1% Rule is industry standard: with $100,000 account, risk $1,000 per trade maximum
- Conservative traders use 0.5% during evaluation phases to add safety margin
- As you scale to larger accounts ($200k+), many traders reduce to 0.25-0.5% per trade
- Position sizing must account for currency pair pip values, futures contract multipliers, and stock share prices
FORMULA
Position Size = (Account Balance × Risk %) ÷ Stop Loss Distance
Stop Loss Placement
Predetermined exit point that automatically closes losing trades before damage escalates
WHY IT MATTERS
Stops prevent small losses from becoming catastrophic. They remove human emotion from exit decisions during stressful market conditions. Without stops, traders fall victim to hope, holding losing positions while they spiral downward. Stops force discipline and protect your evaluation.
THE RULE
Always use hard stops. Never move stops against your position.
DEEP DIVE
- Hard stops (server-side) execute automatically even if platform crashes or internet fails
- Mental stops rely on discipline and often fail during emotional moments
- Moving stops further away to "give trades more room" is the #1 evaluation killer
- Stop placement should be based on technical structure, not arbitrary dollar amounts
Support/Resistance Stops
Place stops beyond key S/R levels (5-10 pips/ticks)
Best for: Swing trading, position trading
ATR-Based Stops
Set stops at 1.5-2× ATR from entry
Best for: Volatile markets, crypto, high-momentum stocks
Time-Based Stops
Exit if trade hasn't moved favorably within X minutes
Best for: Scalping, day trading
Risk/Reward Ratio
The mathematical relationship between potential loss (stop loss) and potential profit (take profit)
WHY IT MATTERS
Risk/Reward ratio determines long-term profitability. With a 1:2 R/R, you only need 35% win rate to be profitable. With 1:1 R/R, you need 50%+ win rate. Good R/R ratios give you mathematical edge, allowing you to lose more trades than you win and still grow your account consistently.
THE RULE
Minimum 1:2 ratio required (risk $100 to make $200+)
DEEP DIVE
- Professional prop traders typically target 1:3 to 1:5 ratios on swing trades
- Scalpers may use 1:1.5 ratios due to short-term nature and high win rates (60-70%)
- Day traders commonly use 1:2 or 1:3 ratios depending on strategy
- Never enter trades with worse than 1:1.5 ratio – it's statistically unprofitable
Win Rate Requirements by R/R
- 1:1 ratio = Need 50% win rate to break even
- 1:2 ratio = Need 34% win rate to break even
- 1:3 ratio = Need 25% win rate to break even
- 1:5 ratio = Need 17% win rate to break even
Drawdown Management
Monitoring and controlling the maximum loss from your peak account balance
WHY IT MATTERS
Drawdown is how prop firms measure risk. Breach max drawdown = instant account termination. Unlike daily loss limits that reset, drawdown follows you throughout evaluation. One large loss or multiple small losses compound. Managing drawdown means understanding static vs trailing types and implementing circuit breakers.
THE RULE
Stop trading at 70% of maximum drawdown threshold
DEEP DIVE
- Static Drawdown: Fixed dollar amount from starting balance (easier to track)
- Trailing Drawdown: Follows highest balance achieved (more restrictive, resets as you profit)
- Most prop firm failures happen from drawdown breaches, not daily limits
- Recovery from drawdown requires disproportionate gains (20% loss needs 25% gain to recover)
| Type | Example | Firms |
|---|---|---|
| Static Drawdown | Start: $100k, Max DD: $10k. Drawdown always measured from $100k starting point. | FTMO, E8 Funding |
| Trailing Drawdown | Start: $100k, grow to $108k, Max DD: $10k. New threshold = $98k (trails high). | TopStep, Apex Trader Funding |
Daily Loss Limits
Maximum dollar amount you can lose in a single trading day before you must stop
WHY IT MATTERS
Daily limits prevent revenge trading and emotional spirals. They protect you from your worst self. After hitting daily limit, emotions run high, decision-making deteriorates, and traders make increasingly desperate trades. Daily limits force a reset, giving you time to analyze mistakes calmly.
THE RULE
Stop trading at 50-60% of daily loss limit
DEEP DIVE
- Daily limits typically reset at midnight or market open depending on firm
- Includes realized and unrealized losses (open positions count toward limit)
- Breaching daily limit often results in failed evaluation or account reset
- Smart traders stop after 2-3 losing trades, not when approaching actual limit
DAILY LOSS PROTOCOL
- 1After 1 losing trade: Review setup, confirm strategy still valid
- 2After 2 losing trades: Take 30-minute break, analyze what's different today
- 3After 3 losing trades: STOP. Close platform. Review recordings. Resume tomorrow.
- 4At 50% daily limit: Stop regardless of number of trades
- 5NEVER trade when frustrated, angry, or trying to "make it back"
Ready to Choose Your Prop Firm?
Compare FTMO, TopStep, Apex, E8 Funding, and 10+ firms. See which drawdown type and rules match your risk management style.
Interactive Position Size Calculator
Calculate your exact position size for any trade using the Fixed Percentage Risk Method (industry standard).
Position Size
1,000
shares/contracts
Risk Amount
$1,000
max loss if stopped out
Total Position Value
$50,000
capital allocated
CALCULATION BREAKDOWN
1,000 ÷ 1.00 = 1,000 shares
(Account × Risk %) ÷ Stop Distance = Position Size
This calculator uses the Fixed Percentage Risk Method for stocks. For forex, multiply by pip value. For futures, multiply by point value (e.g., ES = $50/point). Always verify calculations before entering trades.
IMAGE PLACEHOLDER 2
Chart: "Position Size Calculator In Action"
Screenshot of calculator with filled example trade
4 Position Sizing Methods Explained
Fixed Percentage Risk Method
FORMULA
Position Size = (Account Balance × Risk %) ÷ (Entry Price - Stop Loss Price)
EXAMPLE
Account: $100,000 | Risk: 1% ($1,000) | Entry: $50 | Stop Loss: $49
Position Size = ($100,000 × 0.01) ÷ ($50 - $49) = $1,000 ÷ $1 = 1,000 shares
Trade 1,000 shares. If stopped out, lose exactly $1,000 (1%)
PROS
- Consistent risk per trade
- Scales automatically with account size
- Easy to calculate with simple math
CONS
- Requires knowing exact stop loss distance beforehand
- Position size changes with each different setup
BEST FOR
Most traders. Industry standard method for prop firms. Recommended for evaluations.
Fixed Dollar Risk Method
FORMULA
Risk same dollar amount per trade (e.g., $500 every trade)
EXAMPLE
Account: $100,000 | Fixed Risk: $500 per trade | Entry: ES 4500 | Stop: ES 4490
Stop distance = 10 points × $50/point = $500 per contract. Trade 1 contract.
Max loss = $500 regardless of specific setup
PROS
- Extremely simple to implement
- Predictable losses easy to track
- No complex calculations needed
CONS
- Doesn't scale with account growth
- Can be too conservative or too aggressive over time
BEST FOR
Absolute beginners wanting maximum simplicity. Futures traders with fixed contract sizes.
ATR-Based Position Sizing
FORMULA
Position Size = (Account × Risk %) ÷ (2 × ATR)
EXAMPLE
Account: $100,000 | Risk: 1% | Stock price: $100 | 14-day ATR: $3
Position Size = ($100,000 × 0.01) ÷ (2 × $3) = $1,000 ÷ $6 = 167 shares
Stop loss automatically set at 2× ATR = $6 per share. Max loss ~$1,000
PROS
- Automatically adjusts for market volatility
- Market-adaptive approach
- Based on technical analysis foundation
CONS
- Requires ATR calculation or indicator
- Can be overly conservative in low-volatility periods
BEST FOR
Technical traders. Markets with varying volatility (crypto, growth stocks).
Kelly Criterion (Advanced)
FORMULA
Kelly % = (Win Rate × Avg Win) - (Loss Rate × Avg Loss) ÷ Avg Win
EXAMPLE
Win Rate: 45% | Avg Win: $400 | Avg Loss: $200
Kelly % = (0.45 × 400) - (0.55 × 200) ÷ 400 = (180 - 110) ÷ 400 = 17.5%
Theoretical optimal risk is 17.5% per trade (use 1/4 Kelly = 4.4% max in reality)
PROS
- Mathematically optimal position sizing
- Maximizes long-term growth rate
- Based on actual performance data
CONS
- Requires extensive trading history
- Full Kelly is extremely aggressive
- Overestimates can destroy accounts
BEST FOR
Advanced traders with 100+ trade history. Use 1/4 Kelly or 1/2 Kelly maximum, never full.
5 Stop Loss Strategies
Technical Structure Stops
Place stops beyond support/resistance levels, swing highs/lows, or chart patterns
PLACEMENT
Long: 5-10 pips below support. Short: 5-10 pips above resistance.
PRO
Respects market structure, reduces false stops
CON
Can result in wide stops on strong S/R levels
EXAMPLE
EUR/USD long at 1.1000, support at 1.0980. Stop at 1.0975 (5 pips below support).
ATR-Based Stops
Set stops at multiple of Average True Range indicator
PLACEMENT
Stop = Entry ± (1.5 to 2.0 × ATR)
PRO
Adjusts to market volatility automatically
CON
Can be too wide in ranging markets
EXAMPLE
Stock entry $100, ATR = $2. Stop at $96 (2× ATR from entry).
Percentage Stops
Fixed percentage from entry price
PLACEMENT
1-3% from entry depending on market
PRO
Simple to calculate, consistent approach
CON
Ignores market structure and volatility
EXAMPLE
Stock entry $50. 2% stop = $49 stop loss.
Time-Based Stops
Exit if trade hasn't moved favorably within timeframe
PLACEMENT
Scalping: 5-15 minutes. Day trading: 1-4 hours.
PRO
Frees capital from stagnant trades
CON
May exit before actual setup failure
EXAMPLE
Enter EUR/USD scalp. If not +5 pips within 10 minutes, exit.
Trailing Stops
Stop follows price as trade becomes profitable
PLACEMENT
Move stop to breakeven at 1:1 R/R, trail by ATR or structure
PRO
Protects profits, lets winners run
CON
Can be stopped out prematurely in volatile moves
EXAMPLE
Long at $100, target $106 (+$6). At $103 (+$3 = 1:1), move stop to $100 breakeven.
IMAGE PLACEHOLDER 3
Chart: "Stop Loss Placement Examples"
Annotated chart showing technical structure, ATR, and percentage stops
Need Better Trading Tools?
Discover position size calculators, risk/reward ratio tools, drawdown trackers, and journaling software used by funded traders.
Prop Firm-Specific Risk Rules
FTMO
MAX DRAWDOWN
$10,000 on $100k account (10%)
Static (easier)
DAILY LOSS LIMIT
$5,000 (5%)
PROFIT TARGET
$10,000 (10%) Phase 1, $5,000 (5%) Phase 2
TIPS FOR THIS FIRM
- Static drawdown is forgiving - always measured from starting balance
- Daily loss limit resets at midnight Czech time (CET)
- Consistency rule: No single day > 50% of total profits
- Avoid weekends - markets gap, harder to control risk
RECOMMENDED RISK APPROACH
Can be slightly more aggressive (1% per trade) due to static drawdown
TopStep
MAX DRAWDOWN
Trailing $2,000 on $50k account
Trailing (strict)
DAILY LOSS LIMIT
$1,000
PROFIT TARGET
$3,000
TIPS FOR THIS FIRM
- Trailing drawdown follows your high-water mark - very restrictive
- Once profitable, risk tolerance shrinks as drawdown trails
- Focus on consistency over home runs
- Perfect for scalpers with high win rate strategies
RECOMMENDED RISK APPROACH
Use conservative 0.5% risk per trade maximum
Apex Trader Funding
MAX DRAWDOWN
Trailing based on account size
Trailing + Includes open positions
DAILY LOSS LIMIT
Varies by account ($2k on $50k)
PROFIT TARGET
None (consistency-based)
TIPS FOR THIS FIRM
- Open positions count toward drawdown - must monitor unrealized P&L
- No profit target but must show consistency over time
- Excellent for patient traders
- Can hold overnight positions
RECOMMENDED RISK APPROACH
0.5-0.75% per trade, focus on win rate over R/R
E8 Funding
MAX DRAWDOWN
Static 8% on funded accounts
Static (easier)
DAILY LOSS LIMIT
5% static
PROFIT TARGET
$6,000 on $100k (6%) Phase 1, none Phase 2
TIPS FOR THIS FIRM
- Most trader-friendly drawdown rules
- Single-phase evaluation available
- No consistency rules
- Fast withdrawals (24-72 hours)
RECOMMENDED RISK APPROACH
Can use standard 1% risk per trade
IMAGE PLACEHOLDER 4
Comparison Table: "Static vs Trailing Drawdown"
Visual comparison showing how each type calculates over time
The 5 Psychology Traps That Destroy Risk Management
Revenge Trading
Immediately entering new trades to "make back" losses
WHY IT HAPPENS
Driven by frustration and ego rather than strategy
THE RESULT
Compounds losses rapidly. 60% of breached evaluations involve revenge trading.
THE SOLUTION
Rule: After 2 losing trades, take minimum 30-minute break. After 3, stop for the day.
REAL EXAMPLE
Trader loses $800 on first trade. Immediately enters another without analysis. Loses $900. Now down $1,700 and emotional. Enters third trade with doubled size trying to recover. Account blown in one session.
Overconfidence After Wins
Increasing risk after winning streak
WHY IT HAPPENS
Recent success creates illusion of invincibility
THE RESULT
One large loss erases multiple wins. Violates risk management rules.
THE SOLUTION
Your position size formula doesn't change after wins. Risk per trade stays 0.5-1% always.
REAL EXAMPLE
Trader has 5 winning trades risking 1% each (+$5,000 profit). Feels invincible. Risks 3% on next trade. Loses ($3,000). Profit reduced to +$2,000 in single trade.
Moving Stops to "Give It Room"
Widening stop loss after entering trade
WHY IT HAPPENS
Hope and denial that setup is failing
THE RESULT
Turns controlled loss into catastrophic one. Violates all risk rules.
THE SOLUTION
Stop loss is sacred. Set it based on structure before entry. Never move against position.
REAL EXAMPLE
Trader enters long with $200 stop loss. Trade moves against them. Moves stop to $400 "just in case". Gets stopped out for $400 instead of $200. Does this 3 times. Evaluation failed.
The "One Big Trade" Mindset
Trying to pass evaluation with one large winner
WHY IT HAPPENS
Impatience and misunderstanding of risk management
THE RESULT
Takes excessive risk on single trade. Usually fails.
THE SOLUTION
Pass evaluation through consistency: 30-50 small wins, not 1-2 home runs.
REAL EXAMPLE
Trader needs $8,000 more to hit profit target. Enters one trade risking $2,000 (2% account) hoping for 1:4 winner. Loses. Now down $2,000 and desperate. Evaluation failed next day.
Ignoring Daily Loss Limits
Trading past mental or actual daily stop
WHY IT HAPPENS
Belief that "next trade will turn it around"
THE RESULT
Breaches daily loss limit. Evaluation failed.
THE SOLUTION
Daily loss limit = 50% of actual limit. Absolute stop, no exceptions.
REAL EXAMPLE
Trader has $2,000 daily loss limit. Down $1,100 (55%). Thinks "one more trade to break even." Loses $600 more. Down $1,700. Panics, makes desperation trade. Loses $400. Breaches $2k limit. Account terminated.
4 Practical Examples: Risk Management in Action
Example 1: Scalping EUR/USD with FTMO Rules
TRADE SETUP
STEP-BY-STEP CALCULATION
- 1Risk amount = $100,000 × 1% = $1,000
- 2Stop distance = 20 pips
- 3Pip value needed = $1,000 ÷ 20 pips = $50/pip
- 4Position size = 5 standard lots (1 lot = $10/pip, 5 lots = $50/pip)
- 5If stopped out: Lose $1,000 (1% account)
- 6If target hit: Win $2,000 (2% account, 1:2 R/R)
OUTCOME
Trade hits take profit. Account grows to $102,000. Next trade risk = 1% of $102,000 = $1,020.
KEY LESSON
Perfect execution: respected risk limit, had clear R/R ratio, stopped out or won based on plan not emotion.
Example 2: Day Trading ES Futures with TopStep (Trailing DD)
TRADE SETUP
STEP-BY-STEP CALCULATION
- 1Risk amount = $50,000 × 0.5% = $250
- 2Stop distance = 5 points × $50/point = $250
- 3Position size = 1 contract
- 4If stopped out: Lose $250
- 5If target hit: Win $750 (15 points × $50/point)
OUTCOME
Trade stopped out for $250 loss. Account = $49,750. Trailing drawdown now at $47,750 ($49,750 - $2,000). Takes 3 more winning trades to recover and push drawdown threshold higher.
KEY LESSON
Trailing drawdown makes recovery harder. After losses, drawdown threshold doesn't improve until you exceed previous high. Requires higher win rate.
Example 3: Swing Trading Tech Stocks (Large Position)
TRADE SETUP
STEP-BY-STEP CALCULATION
- 1Risk amount = $1,000
- 2Stop distance = $500 - $490 = $10 per share
- 3Position size = $1,000 ÷ $10 = 100 shares
- 4Total position value = 100 shares × $500 = $50,000 (50% of account)
- 5If stopped out: Lose $1,000 (100 shares × $10)
- 6If target hit: Win $3,000 (100 shares × $30)
OUTCOME
Stock gaps down overnight to $485 due to earnings miss. Stop loss order fills at $485 instead of $490. Loss = $1,500 instead of $1,000 due to slippage.
KEY LESSON
Gaps and slippage are real risks. On prop evaluations, avoid holding through major news events (earnings, FOMC, etc). Close positions before high-impact events or widen risk buffer.
Example 4: The Psychology Failure (What Not to Do)
SETUP
Trader starts day with $100,000 account, $2,000 daily loss limit
WHAT HAPPENED (THE DISASTER)
- 1Trade 1: Loses $400 (normal loss, within rules)
- 2Trade 2: Loses $500 (getting frustrated, but still within rules)
- 3Trade 3: Loses $600 (now down $1,500, close to stopping point)
- 4Gets emotional, wants to "make it back before end of day"
- 5Trade 4: Increases risk to 2% ($2,000), hoping for big winner to erase losses
- 6Trade 4 loses: Account down $3,500 total
- 7Panics, enters Trade 5 with 3% risk ($3,000) in desperation
- 8Trade 5 loses: Account down $6,500 total
- 9Breaches daily loss limit. Evaluation failed.
KEY LESSON
This is THE most common evaluation failure pattern. After Trade 3, correct action was to STOP trading for the day. Take $1,500 loss (1.5%), analyze mistakes, resume fresh tomorrow. Instead, emotions took over. Account blown in 5 trades.
IMAGE PLACEHOLDER 5
Flowchart: "Daily Loss Decision Tree"
Visual decision tree showing when to stop trading after losses
5 Common Risk Management Mistakes (And How to Fix Them)
Not Using a Position Size Calculator
Guessing or estimating position sizes instead of calculating precisely
CONSEQUENCE
Accidentally risk 3-5% instead of 1%. One bad trade breaches drawdown.
THE FIX
Use calculator (like the one below) for EVERY trade. Takes 10 seconds. No exceptions.
Ignoring Unrealized Losses
Only counting closed trades toward daily loss limit
CONSEQUENCE
Prop firms count open positions. You think you're at $800 loss, firm shows $1,400.
THE FIX
Monitor total P&L (realized + unrealized) constantly. Some platforms show "net liquidation value".
Trading Through Major News
Holding positions during FOMC, NFP, earnings, or other high-impact events
CONSEQUENCE
Violent volatility causes slippage, gap through stops, or margin calls.
THE FIX
Close all positions 30 minutes before major news. Reenter after dust settles. Gaps can blow through stops.
Using Mental Stops Instead of Hard Stops
Relying on discipline to "close manually" at certain price
CONSEQUENCE
When loss is real, emotions kick in. You hesitate. Small loss becomes large loss.
THE FIX
Always use hard stops entered into platform. Server-side, automatic, emotionless. Non-negotiable.
Scaling Position Size Too Quickly
After a few wins, doubling or tripling position size
CONSEQUENCE
One normal loss (which is inevitable) wipes out all previous gains.
THE FIX
Position size formula doesn't change. Risk 1% on trade 1 and trade 100. Account size is only variable.
Real Trader Case Studies
Sarah Chen
FTMO $100,000 Challenge
RESULT
Passed Phase 1 in 18 days, Phase 2 in 12 days. Now funded trader earning $8-12k/month.
STRATEGY DETAILS
KEY DECISIONS THAT MADE THE DIFFERENCE
- Stopped trading completely after 2 consecutive losses each day
- Used ATR-based position sizing to adapt to market volatility
- Never risked more than 2.5% total exposure (max 3 trades open simultaneously)
- Closed all positions 15 minutes before major news releases
- Took 2 full days off mid-challenge when win rate dropped below 50%
WHAT MADE THE DIFFERENCE
Sarah treated the challenge like a real job, not a casino. She focused on consistency over home runs. Her biggest winning day was +2.1%, but she had 14 days with +0.3-0.7% gains. Small, consistent profits compound. She also kept a detailed journal, reviewing every trade weekly to identify patterns in her losses.
FINAL STATS
KEY TAKEAWAY
Perfect risk management execution. Every loss was controlled. Position sizing was consistent. Psychology was managed through rules (stop after 2 losses). This is the model to follow.
Mike Rodriguez
TopStep $50,000 Combine
RESULT
Failed 3 times before passing on 4th attempt. Now understands why.
WHAT WENT WRONG IN PREVIOUS ATTEMPTS
Attempt 1
Failure: Breached daily loss limit ($1,000) on day 4
Mistake: Revenge trading after 2 morning losses. Went from -$400 to -$1,200 in 30 minutes trying to recover.
Lesson: Daily loss limit exists for a reason. Should have stopped at -$500.
Attempt 2
Failure: Breached trailing drawdown on day 11
Mistake: Had grown account to $52,800 (+$2,800). Drawdown trailing at $50,800. Took 3 aggressive trades, lost $2,400. Drawdown breached.
Lesson: Didn't understand how trailing drawdown works. As account grew, his risk tolerance should have decreased, not increased.
Attempt 3
Failure: Failed to reach profit target in 30 days
Mistake: Became too conservative after previous failures. Risked only 0.25% per trade. Took 60 trades, won 53%, but gains too small.
Lesson: Being overly conservative is also a failure mode. Need balance between safety and meaningful position size.
WHAT CHANGED FOR ATTEMPT 4
- Started using a position size calculator for every single trade (previously "eyeballed it")
- Implemented strict rule: Stop trading after reaching 50% of daily loss limit
- Studied trailing drawdown mechanics, created Excel sheet to track it in real-time
- Found optimal risk: 0.6% per trade for his strategy and win rate
- Took detailed notes after every loss to identify patterns
ATTEMPT 4: SUCCESS
KEY TAKEAWAY
Mike's story shows that failure teaches more than success. His first 3 attempts taught him: (1) psychology matters more than strategy, (2) trailing drawdown is unforgiving, (3) position sizing is a precise science, not art, (4) stopping early is often the winning move. Most traders fail 2-3 challenges before passing. The difference is learning from each failure.
IMAGE PLACEHOLDER 6
Graph: "Sarah's 30-Day Equity Curve"
Equity curve showing consistent small gains vs volatile trading
Get the Pre-Trade Risk Checklist
Download our free 10-point risk management checklist used by funded traders before every single trade. Never enter a trade without verification again.
Frequently Asked Questions
Conclusion: Risk Management Is the Foundation
Risk management is not optional. It's not something you add later. It's the foundation of every successful prop trading career.
The traders who pass evaluations and build 6-figure funded careers don't have magic strategies. They have ironclad discipline around position sizing (0.5-1% per trade), stop loss placement (always hard stops, never moved), drawdown management (stop at 70% of limit), and psychology (stop after 2-3 losses).
Use the calculator above before every trade. Follow the firm-specific rules for your prop firm. Study the case studies—both Sarah's success and Mike's failures teach critical lessons. Avoid the 5 psychology traps that destroy accounts.
Risk management is boring. It's mechanical. It removes excitement and "big wins" from trading. That's exactly why it works. Master these principles, and you'll join the 5% who consistently profit instead of the 95% who blow accounts.