One-Step Challenge: Prop or proprietary trading is a new way of trading. This trading is very common and sometimes becomes difficult for traders who cannot manage it properly. Some little mistakes can cause the trader’s account to be suspended. That’s why for the continuation of the funded trading account traders need to avoid these mistakes. In a one-step challenge, prop firm traders have just a single chance to prove their skills. Due to the short time period of time and pressure, they make a lot of mistakes. Let’s discuss these common mistakes that traders make in one-step challenge prop firms and how they can reduce them for long-term profitability and account continuation.
Table of Contents
What are One-Step Challenge Prop Firms?
One-step challenge prop firms provide traders with just a single phase for evaluation and to prove their skills. One-step challenge prop firms have simplified the process for traders to get funded and requiring them to pass a single evaluation phase before receiving a funded account. But some of the traders make some mistakes and fail to complete this challenge. When traders understand these mistakes it helps traders improve their strategies to pass the challenge and ultimately secure a funded trading account. Avoiding mistakes is not only helps to pass a challenge but also helpful for long-term profitability.
Lack of a Clear Trading Plan
One of the most common mistakes traders make when starting a one-step challenge is not having a structured and detailed trading plan. Many traders enter the challenge with a very temporary idea and useless approach that leads to inconsistent trading and decision-making under pressure. When traders do not plan their journey then they make impulsive decisions which can quickly lead to failure in the challenge. A detailed trading plan should include:
- Defined entry and exit strategies
- Risk management rules
- Trading hours and preferred market conditions
- Maximum daily and overall loss limits
Ignoring Risk Management
Risk management is the largest component of successful trading but many traders overlook it in their pursuit of rapid profits. One-step challenges prop firms have strict drawdown limits and if traders fail to manage risk properly then it can lead to quick disqualification. If traders want effective risk management then they need to implement strict risk management rules like limiting risk per trade to a small percentage of their account balance and always using stop-loss orders. Some common risk management mistakes include:
- Overleveraging trades
- Failing to use stop-loss orders
- Exceeding daily or total drawdown limits
- Ignoring position sizing principles
Overtrading and Revenge Trading
Another common mistake traders make is overtrading which mostly results from the pressure to meet profit targets quickly. Excessive trading can result in fatigue with emotional decision-making and higher transaction expenses. In the same way, revenge trading involves making impulsive trades to recover losses which results in more losses and a trader failing the challenge. To overcome this mistake traders should set a maximum number of trades per day and take breaks when needed. It is possible to avoid these expensive mistakes by being disciplined and following an established strategy.
Chasing Unrealistic Profit Goals
One-step prop firm challenges have attainable profit targets but some traders adopt overly aggressive strategies in an attempt to exceed these goals quickly. This approach can lead to excessive risk-taking while violating prop firm rules and ultimately failing the challenge. Traders just need to focus on the target and chase this profit by focusing on consistent and sustainable trading performance.
Trading Without Understanding the Firm’s Rules
Each prop firm has its own set of rules and requirements for its one-step challenge. Some traders fail because they do not thoroughly read and understand these guidelines before trading. Common rule violations include:
- Exceeding maximum lot sizes
- Trading during restricted news events
- Holding trades over weekends if not allowed
- Violating daily drawdown limits
The best way to overcome this mistake is to carefully review all the firm’s rules before starting the challenge. When traders have rules in their minds during trading then they can better follow them to ensure compliance and avoid unnecessary disqualifications.
Letting Emotions Dictate Trading Decisions
One of the main reasons prop firm challenges fail is emotional trading. Traders can act irrationally by changing stop losses, doubling down on lost positions, or canceling trades too soon out of fear, greed, or irritation. Developing a strong psychological approach to trading can help traders maintain discipline and avoid emotional pitfalls.
To improve emotional control traders should:
- Maintain a trading journal to monitor your feelings and decision-making processes.
- Use meditation or mindfulness exercises to maintain control under stress.
- Don’t let your emotions cause you to turn away from your trading plan.