First Prop Firm Challenge: Complete Beginner Guide

Ready to take your first prop firm challenge? This guide covers everything from start to finish, so you can approach it with confidence.

Before You Start: Prerequisites

• ☐ Profitable on demo for 3+ months
• ☐ Consistent strategy you trust
• ☐ Understanding of risk management
• ☐ Money you can afford to lose (challenge fee)
• ☐ Time to trade properly

Step 1: Choose Your Firm

For beginners, we recommend:

• FTMO: Best reputation, clear rules, proven payouts
• The5ers: Great scaling, instant funding option
• Funded Next: Beginner-friendly, fair pricing

Start with a $10K-$25K account. Don't go big on your first try.

Step 2: Understand the Rules

Know these BEFORE you start:

• Profit target: Typically 8-10%
• Daily drawdown: Usually 5%
• Max drawdown: Usually 10%
• Minimum trading days: Often 4-5
• Time limit: 30-60 days typically
• Restricted strategies: News trading? Scalping?

Step 3: Plan Your Approach

Calculate your targets:

• 10% profit target ÷ 20 trading days = 0.5%/day needed
• That's very achievable with proper risk management
• You don't need home runs, just consistency

Step 4: Risk Management Setup

• Max risk per trade: 0.5-1%
• Max trades per day: 3-5
• Personal daily loss limit: 2% (not the full 5%)
• Stop loss: On every single trade

Step 5: During the Challenge

1. Trade your plan: Don't change strategy mid-challenge
2. Journal every trade: Screenshot, notes, emotions
3. Respect your limits: 2 losses = done for the day
4. Don't check P&L obsessively: Focus on execution
5. Take days off: You don't need to trade every day

Common First-Timer Mistakes

• ❌ Over-trading from excitement
• ❌ Risking too much per trade
• ❌ Changing strategy mid-challenge
• ❌ Revenge trading after losses
• ❌ Trying to hit target in first week
• ❌ Not reading the rules carefully

When You Pass Phase 1

Don't celebrate too early:

• Phase 2 is still ahead (usually 5% target)
• Same drawdown rules apply
• Keep the same discipline
• Many fail Phase 2 from overconfidence

If You Fail

It's not the end:

• 85-95% of people fail first time
• Analyze what went wrong
• Take a break before retrying
• Consider what you learned worth the fee
• Come back stronger

Resources

• Compare all prop firms
• Get discounts on challenges
• Calculate your position sizes