Succeeding with Prop Firms: Why Most Traders Fail After Getting Funded

Welcome back, guys! It’s Sterling here from Trader Dale, and we’re back with another video in the prop firm series. Today, we’re covering 11 crucial steps to prop firm success. I wanted 12—just sounds like a better number to me—but, you know, we ended up with 11.

On a serious note, let’s go ahead and get into it. This really comes from my 20 years of trading experience and nearly 15 years of educating. Dale has been trading for a similar amount of time and educating for probably close to 10 years. Over that period, it’s not that we’ve had some realization that no one else could make, but we’ve had a very large sample size. We’ve worked with many thousands of traders, likely tens of thousands, over the last 10 to 15 years, and in doing so, you start to notice patterns—what successful traders do and what unsuccessful traders do.

What we’re going to cover here builds on a prior video where we analyzed 177,000 prop firm traders and what those who received payouts were doing differently. We’ll set some rules around those ideas so you can take them into the market and see if they help you grow more effectively—avoiding frequent setbacks and repetitive mistakes.

Let’s jump right in.

Number one: You have to start the day right. Before we get into this, I’m going to ask you to give me 30 days on this. You might think it’s BS, that you don’t want to do it, or that it won’t work. But do it for 30 days. Try it for yourself. If, after 30 days, you find no benefit, that’s totally fine—no harm done.

One of the biggest things I emphasize, especially in trading, is mindset. Psychology is the part I cover in the Funded Trader Academy, and for the last 10 years or so, it’s been my deepest area of study because it’s where I personally needed the most work. Through that, I’ve gained a deep understanding of why we are the way we are—why how you were raised as a child affects how you trade as an adult, even at 50 years old.

The way you learned to deal with loss between the ages of zero and six creates the lens through which you’ll experience loss for the rest of your life. There are ways to break through that, but unless someone recognizes it, they’ll continue acting out the same patterns they developed early on. One of the best ways to start breaking those patterns is by beginning the day differently. We are all experts at being who we were the day before, but as traders, that’s often not what we want.

For many traders, anger is a major issue—overtrading, revenge trading, trying to get back at the market. That’s an anger response. You can’t have that response as a professional trader. Or, rather, you can have it, but you need to recognize it immediately and take action—like going for a 20-minute walk. A profitable trader doesn’t fight through emotions; they allow the emotion to flow but recognize that they can’t trade in that mental state.

You have to be in a good space when trading. You can’t simply think your way into positive trading, but negative thinking will absolutely ensure losses. It’s a certainty. How you start the day matters. The Miracle Morning is a great book on this topic. Give yourself 30 minutes in the morning—some combination of the methods covered in that book—and do it for 30 days. See where you’re at.

Number two: Set a maximum of three trades per day. We covered this in the earlier video on successful prop firm traders. They don’t take a lot of trades. You don’t see 50-trade days in their journals. What you see are carefully chosen trades that align exactly with their trading plan. Setting yourself a three-trade-per-day max gives you a solid structure and ensures you’re only taking high-quality setups.

Number three: What is your risk per trade? I recommend a max risk of 0.5% per trade. Why? Because if you take a $50,000 challenge at a prop firm like Topstep, you need to make $3,000 to pass, which is a 6% gain. With a 0.5% risk per trade and a 2:1 reward-to-risk ratio, each winning trade nets you 1%. It takes six winning trades to pass or 12 consecutive losses to fail. This structure allows you to evaluate your strategy over time without blowing up your account. Trading professionally means managing risk, not YOLO-ing trades with max leverage. Even if that works once, the house will win over time if you’re not trading like a professional.

Number four: Limit orders only. I cannot stress this enough. Limit orders prevent you from chasing a falling or rising market and help avoid slippage. Emotion and logic are inversely related—when emotion goes up, logic goes down. Using limit orders ensures you enter the market based on a pre-planned decision rather than an emotional reaction. Plus, once your limit order is set, you can walk away, reducing the stress of constantly watching the screen.

Number five: Your most logical decisions happen before you enter the trade. Once you’ve placed your trade, don’t adjust it. The best decisions are made when emotions aren’t clouding your judgment. If the trade loses but was executed according to plan, that’s a good trade.

Before we continue, I want to take 30 seconds to tell you about the Funded Trader Academy. Many of you are familiar with our self-study programs, but the Funded Trader Academy provides direct access to Dale and our team of funded prop traders. You’ll see them trade live daily, ask questions in real time, receive video feedback on trades, and get the kind of hands-on mentorship that dramatically improves your chances of becoming a successful prop trader. To learn more, click “FTA” in the Trader Dale menu and book a call to see if it’s right for you. Now, back to the video.

Number six: Define your daily bias. Struggling with a bias leads to FOMO, where every market move seems like the start of something big. Setting a bias at the start of the day—or an if/then scenario that allows for adaptation—prevents that. Prop traders who get payouts trade in one direction for 90% of their trades daily.

Number seven: Trade a maximum of two markets. The most profitable traders focus on one or two markets. Dale is an outlier in trading multiple markets, but his approach allows for more time between setups. If you’re using a shorter-term strategy, managing more than two markets is inefficient.

Number eight: Set a maximum loss per day. Even the best traders can have off days due to stress, personal issues, or other factors. Setting a max daily loss—whether that’s three losing trades or a percentage of your account—prevents spiraling. Many funded traders limit their max daily loss to half of their average win.

Number nine: Journal your trades. In 20 years, I’ve never met a profitable trader who doesn’t journal every trade. Most struggling traders don’t have a written trading plan, let alone a journal. This process highlights patterns and mistakes, providing the best way to improve.

Number ten: Keep an emotional journal. Jared Tendler’s approach to trading psychology is incredibly effective. Identifying emotional triggers before they escalate allows you to take corrective action—like going for a walk—before making impulsive decisions.

Number eleven: Weekly and monthly journal reviews. Weekly reviews highlight immediate mistakes to avoid in the next week. Monthly reviews are more detailed, analyzing statistical trends to refine your strategy. Print out your trades, compare AM vs. PM setups, and look for recurring patterns.

That’s it for this video! It was a long one, but these are incredibly important points. Implementing these 11 steps will lead to significant improvements in your trading. Some of these will already be easy for you, while others will require focus. Work on the low-hanging fruit first, then refine the rest.

Hope this video helps! See you in the next one—happy trading!