November 5, 2024

How to Avoid Failing the Prop firm Challenge: Risk Management

Prop trading opens up opportunities for you to trade with significant capital without risking your personal funds. One major benefit is the security of knowing you’re not risking everything—your account is protected. With SiegFund, you’re trading with authorized PE funds and licensed brokers, receiving an 80% profit split on successful trades. However, to keep your funded account active and secure, disciplined risk management is essential.

Key Prop Firm Risk Management Rules to Follow

  1. Daily Loss Limit

SiegFund sets a daily loss limit to protect your account from significant losses within a single day. For the 1-Step Challenge, the daily limit loss is 3%, and for the 2-Step Challenge, it’s set at 5%. Breaching this limit can jeopardize your funded status, so it’s crucial to monitor daily losses and step back if you’re nearing the cap. This rule is in place to prevent overtrading and minimize the impulse to “win back” losses, which often leads to further mistakes.

  1. Maximum Drawdown

Firms also impose a maximum drawdown, the total loss threshold that, if crossed, can result in losing your funded status. SiegFund’s maximum drawdown for the 1-Step Challenge is capped at 6%, while the 2-Step Challenge has a 10% cap. After a payout, this drawdown limit might lock at your starting balance, meaning any losses afterward directly impact your core account balance.

Practical Tips to Protect Your Funded Account

  1. Use a Stop-Loss (SL) on Every Trade

Even though SiegFund doesn’t require mandatory stop-losses, setting them on each trade is essential for responsible risk management. Stop-loss orders help limit potential losses, learning to set effective SLs in platforms like MetaTrader can make a difference in controlling losses. Learn how to set a stop loss in MetaTrader

  1. Follow the 2% Rule

The 2% rule is simple but effective: if you lose 2% of your account balance in a day, stop trading. This pause prevents emotional decisions and “revenge” trading, which can lead to greater losses. Following this rule gives you time to assess your approach and re-enter the market with a clear mind, helping you protect your funded status.

  1. Stay Alert to Drawdown Limits After Payouts

Once you request a payout from SiegFund, the maximum drawdown locks in at the new balance, meaning any subsequent losses will reduce your available buffer. Keeping this in mind is crucial to avoid accidentally breaching this threshold and risking your account security. After payouts, be extra cautious with trades to maintain your funded status.

In Summary

Prop trading with SiegFund allows you to develop as a trader while limiting personal financial risk. By respecting SiegFund’s daily loss limits, setting stop-losses on each trade, following the 2% rule, and staying mindful of your drawdown after payouts, you can protect your funded account and build trust with the firm.  

Ready to take on the challenge with SiegFund? Start integrating these risk management practices into your trading to maintain a steady, funded account.

What Makes SiegFund Better Than Other Firms?

Licensed Broker
Instant Refund
No Stop Loss
0 Activation Fee
90% From Live Stage
MT4, MT5
WebTrader
EA
High Frequency Trading
Martin Strategies
Weekend Holding
0 Commission
Double Leverage
Copy Trading
10+ Language Support
3Hrs Payout
Licensed Broker
Instant Refund
No Stop Loss
0 Activation Fee
90% From Live Stage
MT4, MT5
WebTrader
EA
High Frequency Trading
Martin Strategies
Weekend Holding
0 Commission
Double Leverage
Copy Trading
10+ Language Support
3Hrs Payout

Licensed Brokers

SiegFund is partnering with 10 additional licensed brokers supporting MT and WebTrader platforms, offering users FX, indices, commodities, and US shares.

Live Trading Accounts

Upon passing the challenge, SiegFund will issue a live trading account and provide real-time market data.

Excellent Trading Conditions

SiegFund operates under real market conditions, allowing EA, Copy Trading, Martingale Strategies, and High-Frequency Trading. We encourage users to seize opportunities and conquer the market!

PE License

The Talent Trader Spotting Program was recognized by the private equity firm Framsteg, authorizing SiegFund Certified Traders to utilize the funds.

Express Payouts

Upon passing the challenge, you'll receive an instant refund for the first order. You can request a profit payout anytime, with subsequent payouts eligible every 14 days.

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