Top Prop Trading Mistakes and How to Avoid Them

1. Overleveraging Trades

Many traders get carried away when they suddenly have access to bigger capital. They start taking oversized positions, thinking bigger trades mean bigger profits. The problem is, larger positions also mean larger losses. A single bad trade can wipe out days of progress.

How to avoid it: Keep your position sizes within safe limits. Follow the 1 – 2% rule, where you don’t risk more than a small percentage of your account per trade.

2. Ignoring Risk Management

Skipping stop-loss orders or risking too much on one trade is another mistake. Risk management may sound boring, but without it, your account won’t survive for long.

How to avoid it: Always place a stop-loss, know your maximum drawdown, and stick to firm rules. Risk management should be the foundation of every trade, not an afterthought.

3. Chasing Quick Profits

Many traders think prop trading is about hitting home runs every day. They try to double their account quickly and often overtrade in the process. Unfortunately, this approach usually ends with broken rules and failed evaluations.

How to avoid it: Focus on consistency. Prop firms are more interested in steady results than sudden profits. Aim for small but reliable gains over time.

4. Violating Firm Rules

Proprietary firms have rules that explain to traders what they can and cannot do, including daily loss limits, maximum drawdowns, max lot size, etc. Even though this information is usually available to traders, many traders do not follow or even bother to learn what their firm’s rules are. Even if you are a consistently profitable trader, if you break a firm’s rule, you will still have your account revoked.

How to avoid it: Read the rules before you start trading, and as a Turbo tip, if necessary, write down the firm’s rules and keep them near you while trading.

5. Lack of Discipline and Patience

Trading out of boredom or jumping into a trade without a setup are classic mistakes. Some traders also fall into “revenge trading” where they try to recover losses quickly. These actions rarely end well.

How to avoid it: Stick to your trading plan and wait for proper setups. Remember that sometimes the best trade is no trade at all.

6. Lack of Psychological Control

Fear, greed, and overconfidence are important aspects in making trading decisions and a single emotional trade can cost you money and your funded account. 

How to avoid it: Create trading discipline. If trading under stress, step away from the computer. Meditation, journaling, or a walk can help relieve tension in your mind.

7. Skipping Journaling and Review

One of the biggest mistakes is not keeping track of your trades. Without a trading journal, you won’t know what’s working and what isn’t. You’ll likely repeat the same errors without realizing it.

How to avoid it: Maintain a trading journal where you note down the reason for your trade, the outcome, and what you learned. Over time, this will become your most valuable teacher.

8. Using Only One Strategy

Markets do not always stay the same. What works now might not work tomorrow. Some traders are too slow to adapt and end up stuck when market conditions change.


How to stop it: Always be learning and adapting. Test new strategies in demo accounts and start to build a toolbox of strategies that you can apply in different scenarios.