Prop firms open more ways of trading for the day traders. These firms provide opportunities for the traders to use their skills in the competitive market of prop trading. Different firms have different evaluation processes that traders must complete and prove their skills. Firms have multi-evaluation processes as well as single evaluation processes called one-step challenge prop firms. These firms provide more simple ways for day traders to secure their funding with less complexity. If traders want to get success in these tests then they must have knowledge of basic trading strategies as well as other important factors of trading. So let’s discuss in detail how traders can succeed in one-step prop firm challenges.
What are One-Step Challenge Prop Firms?
Different prop firms provide trading funding and to access this funding traders must complete an evaluation process of firms. In this evaluation process, traders are given specific criteria that traders achieve in a given time. Unlike the two-step or three-step evaluation process, these firms have just a single phase. The main purpose of this evaluation process is to check the skills of traders and how they manage risk by staying within risk management rules. After successfully passing this evaluation traders get access to firms-funded accounts and can earn up to 90% of profit split.
Criteria of one-step evaluation firms
- Traders are given profit targets that they need to achieve in a starting capital.
- Drawdown Limits or restrictions on both daily and overall account losses.
- Traders must meet this criterion within the given time mostly consisting of days or months.
- Risk Parameters that specify rules governing position sizing, leverage, and risk per trade.
Factors to get Success in One-Step Evaluation
Risk Management
Risk management is the most critical step for the success in evaluation. You must have skills to manage risk effectively if you want success in the evaluation phase. To do this you must implement these strategies:
- First, you need to find a suitable size for each trade based on risk tolerance. Like if the risk is limited to 1% of the account size per day then you also need to calculate the lot size accordingly. These limitations restrict you and you trade under the firm’s drawdown rules.
- Never start trading without a stop-loss order. This is a very important tool that protects your account from unexpected market movements. You do not even face losses to limit your losses and lock in profits on existing positions.
- Never invest all your capital in a single market. Diversify your capital to different asset classes, time frames, and strategies. This diversification reduces the risk as well as losses of a single trade.
Develop a Solid Trading Plan
If you want success in the evaluation phase then you must have a solid trading plan. This plan includes all the trading strategies like day trading and instruments that focus on financial markets. While making a plan keep in mind that you must have to follow the firm rules of the challenge.
- Focus on High-Probability Setups with higher chances of success. Different patterns like breakouts, pullbacks, and reversals are beneficial when used with technical indicators like moving averages and RSI.
- Your goal is to maintain a risk-to-reward ratio of at least 1:2 or higher. This ratio helps in the trades that are not successful and your profits from winning trades outweigh the losses.
- The trading market is changing each time so traders must have a strategy that works in these changing conditions. For example, traders prefer trend-following strategies in trending markets and if they work in sideways markets then range-bound strategies are best. You also need to make strategies according to current market conditions.
Leveraging Technical and Fundamental Analysis
For effective decision making it is very important to use both technical and fundamental analysis. These analyses also increase the chances of success. Technical analysis includes understanding chart patterns like head and shoulders, double tops, and flags for entry and exit signals. Different indicators like Bollinger Bands, MACD, and Fibonacci retracements confirm trade setups. Fundamental analysis includes monitoring the economic calendars for events like interest rate decisions, employment reports, and GDP releases. Also, use sentiment analysis to check the overall mood of the market and find bullish and bearish tendencies.
Utilizing Tools and Technology
Technology simplifies the trading complexities. Some of the best prop firms for Day trading provide different types of tools. Use those tools that are helpful for day trading. Modern trading platforms and tools can provide a competitive edge. Use advanced charting tools that help to analyze price action and identify trading opportunities. Different economic calendars help to keep informed about the upcoming economic events that can impact market volatility. Use automated calculations for position sizing, risk per trade, and stop-loss levels to follow the challenge rules.
Final Thoughts:
If you want to be successful in a one-step evaluation process then you need to have an idea of the basic strategies that you follow to get succeeded. Try to control the risk and use the right tools to achieve success.