I Passed the FTMO Challenge – Again!

I’m excited to share with you all today that it happened again!

I passed a second FTMO challenge – this time with a 100k account, using only the Discipline FX Scalping Strategy as taught in the Disciplined FX Scalping Strategy Course.

I was able to pass a challenge with 10 trades over 7 days using a mechanical strategy. This strategy had an 80% win rate and returns 1.4 times your risk for each winning trade.

This challenge was a free retry after deciding to wait on last month’s challenge as my strategy took an unexpected dip and with the holidays approaching, I didn’t want to chance it turning around.

So let’s go over some stats of this experience:

  • There were 10 trades one of which was a mistake trade that got a little profit on another was just to capture a trading day – so really there were eight trades.
  • The average profit was about $1672 and the average loss was $1588
  • I took a couple of trades with E/J but basically, almost every single trade was with the A/U

Now, these were all scalping trades. I don’t think there was a single trade that returned more than maybe 16 pips – and while that may seem like nothing, and it may seem like that it must be on a 1m chart or 5m chart, this was actually on a 15m chart and these trades could sometimes last as few as 10 minutes or as long as a couple of hours.

That’s actually why I like Forex – it’s a slower-paced market compared to waking up and scalping stocks

FTMO verification passed

Let’s talk about risk

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As with my last challenge that I passed, I used a variation in risk as the account increased.

So I started out with a 1.4 percent risk per trade. Once I hit that three percent gain mark, I bumped it up to two percent, and then for one trade, I took a 2.5 percent risk for that trade. since that got me up close to the profit target, I then decided to dial it back down to 1.4 risk in case there would be losses so that I can stay up in this profit range.

And then for my last trade, I took 1.1 percent risk on that trade where if I hadn’t won that trade I could go back to risking maybe something up to 2% where I wouldn’t feel uncomfortable in taking that risk because I had already risked those percentages before.

So it kept me in a comfy zone where, knowing my stats about this trade, I know it’s has a higher win rate than a higher return so I was willing to take a bet that within three trades I’d be able to hit the profit target so by risking less as I got closer I would just keep re-measuring how much money do I need to hit target and risk according to that 1.4 ratio return.

Prop Trading Psychology

This is a huge part of what will lead you able to stick with a risk management strategy or your trading strategy and I will say every time I take a challenge, while my discipline’s rock-solid, I have my moments. It is so easy to want to move take profit targets or take out a trade early to be sure to capture a win. That’s the one inconsistency that I run into when prop trading, although it didn’t happen this time.

I think going in with a strategy that has a high win rate helped to appease some of the anxiety around trading for a challenge that has a time limit.

Now if I was trading something like five percenters or a new firm which I’m going to tell you all about, called funded traders plus, these two have very realistic time limits on taking the challenge, I’d have stuck to a certain risk percent, like 0.5 or 0.75%. These longer-term challenge models are less stressful.

Let’s Talk About Risk Management Models

So I have 3 that I want to share with you. I’ve used them all before for different accounts, strategies, and challenges.

Steady

it’s basically as it sounds – you’re using the same percent risk per trade on every trade. if you’re trading something more short-term, like FTMO, you might have to bump this up a bit to make sure you hit that profit target – it could be taking 1% per trade or 1.5% per trade, or 2% per trade.

It helps to know the stats of your strategy. This is why I like mechanical strategies because I can pull so much data from them than discretionary ones. Because with discretionary trading, you never know if you’re not going to take the trade when it comes down to game time.

So at least with mechanical strategies, I can run many different stats on them (What days of the week perform better than others, what % likelihood a trade will turn around and profit after starting out in deficit, etc.)- I think some of you guys know I’m a Ph.D. student (so researching variables is my bread and butter)!

So if you know your drawdown, as well as an average return for the month, you can adjust your risk per trade to fit your strategy, while also being mindful of the 5% daily drawdown, 10%  total drawdown, and the 10% target that you need to hit so that could end up being 1-2% risk per trade.

Scaled

The second approach is a scaled model – this is what I use for this challenge where you might want to designate something like a low, medium, and high risk.

I started out with what I consider medium: 1.4% per trade.

Once I hit that 3% target getting into this profitable zone, I bumped it up to two percent and I was willing, if the balance went down, to go back to 1.4% risk per trade.

And if it went under, such as going into a significant drawdown, like down 5%, I would consider going down to 1% risk per trade or less.

Such was not the case – Instead, the count continued to grow. Once I got into that middle zone of over 5% return, I was willing to take a 2.5% risk on that next trade – it ended up being a win and that bumped me up close to the profit target.

That’s when I moved down to a low risk, so that was back to 1.4% and then after that trade, I just kept measuring how much money I needed to hit the profit target. Then I would risk accordingly. (Target – current balance –> divide by 1.4, and that’s what I’d risk on the next trade [this was usually under 1.4%])

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Market Dependent Model

The last model I’ll name here is what I’m going to call the market-dependent model of risking according to what you see.

So this would be better for someone who is using a discretionary strategy or knows enough about their mechanical strategy to say how it performs in different types of markets.

If it’s a more volatile market you may want to risk more or less depending on what you see and how your strategy performs in that kind of market.

I think this last approach is what professional traders usually use, (but then again they aren’t necessarily trading for a challenge)

 

So any of these three models can work – there’s no one good choice.

you have to know what works for your strategy – this is why I highly recommend backtesting to really get to know what your strategy is. Define the parameters of your strategy instead of saying you’ll just trade triangles. Get to know stats by backtesting.

To sum this up, the next step for me is verification. That has a 5% target instead of 10%. I’ll probably risk the same way I’m risking now with the scaled model – but maybe dial it back a bit. I could also take the full 60 days and just take a steady, small percent risk per trade.

If I pass that too, then going into a funded account I am planning on risking tiny and I’m expecting tiny targets.

I will be happy to stop trading for the month once I hit a 3% return.

but that will be for a later post. For now, I’m happy to celebrate this win and share it with you!