The rules that keep you funded
Entries get all the attention. Risk management is what actually decides whether you're still trading in six months.
1The 1% Rule
Never risk more than 1% of your account on a single trade. On a $10,000 account, that's a $100 max loss — no exceptions, no "this one's different."
2Why Most Funded Traders Fail
About 86% of prop firm evaluations fail — and most of those failures aren't bad entries, they're risk violations: oversizing a position, revenge trading right after a loss, or blowing through the daily loss limit.
The evaluation isn't really testing your ability to pick trades. It's testing your discipline.
3Trailing Drawdown, Explained
Some futures prop firms (Apex, for example) use a trailing max drawdown. It rises with your equity peak — including unrealized profit on trades that are still open — and then locks in at that level.
Example: you're trading a $50,000 account with a $2,500 trailing drawdown. A trade runs up $1,000 in your favor, but you let it drift back to breakeven before closing it. You didn't lose any real money — but your drawdown floor had already moved up by that $1,000 peak, so you just burned $1,000 of your cushion without banking a single dollar.
Rule of thumb: take partial profits, and always respect where your peak has been — not just where price is right now.
Rules vary — some firms trail your live unrealized peak, others only your end-of-day balance. Read your firm's exact drawdown rules before your first trade.
4The Daily Loss Limit
Decide your max daily loss BEFORE the session starts — commonly 2-3% of the account, or after 2-3 losing trades, whichever comes first. Hit it? Close the platform. No exceptions.
Here's why: the math of digging out of a hole gets brutal fast.
| Drawdown | Gain needed to recover |
|---|---|
| 10% | 11% |
| 25% | 33% |
| 50% | 100% |
5Risk-Reward Reality
You don't need to be right most of the time to be profitable — you need your average win to beat your average loss. At a 1:2 risk-reward ratio, you're profitable winning just 40% of your trades. This is exactly why cutting losers fast matters more than being right.
| Risk : Reward | Breakeven win rate | In practice |
|---|---|---|
| 1 : 1 | >50% | needs strong accuracy |
| 1 : 2 | >33% | 40% win rate = profitable |
| 1 : 3 | >25% | room to be wrong often |
6Rules That Keep You Funded
- Bracket orders on every entry — stop and target placed WITH the trade, never added after the fact
- One setup, one session window, max 2-3 trades a day
- Never add to a loser
- Flat before major news releases
- Respect consistency rules — many firms have them, and a single huge day can void your payout. Steady beats spectacular.