Proptradetech is a leading provider of whitelabel prop trading solutions. We help firms manage their funded traders and provide them with the tools they need to succeed. With over 10,000 funded traders in our ecosystem, we have seen first hand the various reasons why traders lose their funded accounts. In this article, we will discuss 5 of the most common reasons why traders lose their funded accounts.
1. Trader Psychology
The forex market is a very unforgiving environment. Even the best traders will experience periods of losses. When this happens, it is important to stay calm and stick to your trading plan. However, many traders find it difficult to do this and they start to make emotional decisions. This is often the beginning of the end for their funded account.
2. Not following the rules
Prop trading firms have strict risk management rules that must be followed. If a trader breaks these rules, they will likely lose their funded account. For example, many prop firms have a maximum drawdown limit. If a trader’s account falls below this limit, they will be closed out.
3. Changing their strategy
It is important to have a trading plan and to stick to it. If you start to change your strategy too often, you will never give it enough time to work. This is why it is important to back test your strategy before you start trading with real money.
4. Revenge trading
When a trader loses a trade, it is natural to want to get revenge. However, this is a recipe for disaster. Revenge trading is often done without a plan and it can lead to even more losses.
5. Overtrading
Overtrading is another common mistake that traders make. When you overtrade, you are putting yourself at a greater risk of losing money. It is important to only trade when you have a good setup and to avoid trading just for the sake of trading.
How traders can prevent losing their funded account
By following these tips, you can increase your chances of success as a funded trader:
- Manage your emotions. The forex market is a volatile market and it is important to stay calm when you are trading. If you start to feel emotional, take a break and come back to your trading later.
- Follow the rules. Prop trading firms have strict risk management rules that must be followed. If you break these rules, you will likely lose your funded account.
- Stick to your strategy. Don’t change your strategy too often. Give it enough time to work before you make any changes.
- Avoid revenge trading. Revenge trading is a recipe for disaster. If you lose a trade, take a break and come back to your trading later.
- Don’t overtrade. Only trade when you have a good setup and avoid trading just for the sake of trading.
If you follow these tips, you will be well on your way to success as a funded trader.
Proptradetech’s whitelabel solution and How to Start a Prop Firm
PropTradeTech encounters funded account churn as a pain point of many partners that we work with and as such work with our firms to ensure a smooth client experience to ensure that
Proptradetech’s whitelabel solution allows firms to manage their funded traders and provide them with the tools they need to succeed. Our solution includes risk management services, customer support, trader dashboard, and web design. We also offer training and support to help firms get the most out of our solution. Reach out to our team here today to learn more about our prop firm offering and prop firm risk management solutions.