The prop firm industry is great for traders, allowing retail traders to access huge amounts of capital that would have previously never been possible. However, many traders are approaching the prop firm industry as a ‘great rich quick’ scheme and are completely missing the value that the industry has to offer traders.

In this article we’ll look at exactly how you need to be approaching prop firm trading in order to find success in the long term. So, let’s get into it…

The Secret To Long Term Success In Prop Firm Trading

Since the surge in demand of the prop firm industry, many traders have completely abandoned their long term mindsets and are focusing on the short term – getting funded and withdrawing from prop firms overnight. Sadly, this mindset leads to many traders failing challenges unnecessarily and traders failing to maintain their funded accounts.

At Lux Trading – we’re a real money prop firm, meaning we only succeed when our traders make profits in the market, hence why we put so much of our time into helping our traders manage their risk and keep their funded accounts for the long term.

The Three Groups Of Prop Firm Traders

We’ve seen thousands of prop firm traders come through our doors over the last few years and we have identified three common groups to place traders within…

Group 1 – Failing Challenges

The first group of traders are typically hoping to pass one challenge and failing. These traders are often either inexperienced or looking to use a risk profile much too aggressive for their trading style – in the hopes of getting funded overnight.

These traders often repeat their challenges once or twice before completely giving up on trading as a whole. You want to ensure you aren’t a part of this cohort.

Group 2 – Funded Once

The second group of traders are typically going through a few prop firm challenges to get funded. They get funded eventually, which is great!

However, within a few months, they lose their funded trading account through violating the maximum loss or drawdown rules.

Many traders you see on social media are actually in this cohort. Popular traders on social media are very quick to show their funding certificates and their first withdrawal or two but often go fairly quiet after the first few months – usually due to losing their accounts.

This can easily be avoided with proper risk management and a long term mindset.

Group 3 – Getting Funded & Staying Funded

The third group of traders is the cohort you should want to be a part of. These traders get funded by taking their time, focusing on low risk and high quality setups. It can take some of these traders 6+ months to achieve their funded accounts.

However, these traders often maintain their funding over the long term. By using a low risk approach and managing their risk effectively, these traders are able to take consistent profits out of the markets. This leads to consistent payouts, account growth and ultimately more money in the traders pocket than if they tried to make huge returns through high risk.

By thinking long term, we see our traders achieving much better results than the traders that churn and burn through accounts rapidly.

The Benefits Of Slow But Consistent Growth

Slow and steady growth of your funded trading accounts is absolutely what you need to be aiming for. There are a few good reasons for this…

Firstly, you will maintain your funded account and not have to go through the wasted time and money of retaking your challenges in order to receive new funding. Every time you lose a funded account, it’s going to be months realistically before you’re able to withdraw consistent profits from the markets again.

Secondly, by being consistently profitable, you’re able to take advantage of the scaling plan offered by the prop firm. For example, At Lux Trading Firm we scale our traders capital up to £10,000,000 in funding.

Therefore, it’s much better for traders to make use of the scaling plan offered by the prop firm, rather than seeking aggressive growth on their own! If a prop firm is willing to double your capital for making just 10% over the space of a few months – why not use it? When you then have access to more capital from the prop firm, you can keep your risk profile extremely conservative and still manage to pull a huge amount of profit from the market without running the risk of over-leveraging or violating prop firm rules.

The Prop Firm Myth – Withdrawal Proofs On Social Media

Many prop firms, typically simulated prop firms (demo capital) are very good at their social media marketing. You’ll see a huge amount of withdrawals from traders taking their first payouts.

However, what you may have noticed is you rarely see that same trader taking larger payouts, or consistent payouts over the long term.

The reason for this is simple… These traders are using high risk per trade, over-leveraging their accounts and ultimately losing their prop firm funded accounts within just weeks of their first withdrawal.

This is a very clever marketing ploy but something you really need to be aware of. Remember, simulated prop firms can only make money when their traders fail challenges – they only lose money on profitable traders taking withdrawals.

In Summary – Long Term Success With Prop Firms

In conclusion, having success with prop firms is not easy but if you approach it with a long term mindset – rather than a get rich quick mindset, you’ll be much better placed to make this work for you.

We’ve seen the industry go from the long term mindset to a rapid ‘get funded overnight’ mindset over the last few months and it’s leading traders down the wrong path!

You wouldn’t expect to get rich overnight with your personal capital, so why would you think prop firm funding would be any different?

Leverage the capital scaling plans prop firms offer, trade consistently for the long term and the profits will accumulate!

If you’re looking to become a prop firm funded trader, work with Lux Trading Firm today!