Prop trading firm challenges offer capital access, clear rules, profit-sharing, and growth potential. At Bitfunded, our crypto-only focus (pairs like BTC/USDT, ETH/USDT, etc.) means the rules are sharp, and the margin for error is small. Many traders slip up not because they lack technical skill, but because of avoidable mistakes. Here are common mistakes that can get you disqualified and how to avoid them.
1. Ignoring or Misreading the Rules
Every firm has its own evaluation agreement: rules about drawdowns (daily, maximum), trading times, banned instruments or pair types, position size, use of leverage, etc. Traders assume “it’s obvious” and skip carefully reading. Even seemingly minor rules, like “no overnight weekend positions” or “no news-event trading,” can lead to disqualification.
- Breaching Bitfunded’s daily or maximum drawdown limits results in automatic disqualification, regardless of a positive P/L.
- Trading outside permitted hours or holding past limits can violate prop challenge rules.
Before starting, review the rules thoroughly. Create a checklist to ensure compliance. If anything is unclear, ask for clarification.
2. Poor Risk Management
This is the most common reason for failing. Risk management covers multiple things:
- Not respecting drawdown limits per day or overall. One bad losing streak or one oversized trade can bust you.
- Risking too large a portion of capital on one trade. Even if your edge is strong, volatility can destroy you.
- Overuse of leverage. Crypto markets are volatile; leverage multiplies both gains and losses. In many prop challenges, there are explicit limits. Adult, consistent traders use moderate leverage and always size positions prudently.
- Lack of stop-loss discipline, including not using stops, moving them randomly, or holding losing trades without a plan, leads to disqualification.
3. Overtrading & Impatience
Rushing the trading challenge to quickly hit the profit target leads to:
- Excessive number of trades per day, many of them low-probability setups.
- Overreacting to small losses, trying to make them back quickly (revenge trades).
- Deviating from one’s plan or strategy because “today feels good” or “I need to catch up.”
Rather than speed, consistency matters. Stick to your strategy, trade only setups that pass your criteria.
4. Emotional Decision Making
Crypto markets are known for sharp moves, big swings, and 24/7 sessions. That increases temptation.
- Fear or greed causes traders to enter prematurely or exit too late.
- FOMO (fear of missing out) leads to forced entries.
- Letting losses run unbounded in the hope of reversal, or cutting winners early.
Mental discipline in trading is key: know when to stop, accept small losses, and stick to your plan.
5. Inconsistency
Even good trades don’t guarantee success if performance is irregular.
- Having big winning days and big losing days alternating, without an overall trend toward profit.
- Switching strategies too quickly (e.g., from momentum to scalping to news-trading) without mastering any.
- Trading when you are tired, distracted, or under external pressure results drop.
Crypto prop challenges require sustained, profitable trading to prove your ability to succeed in similar conditions.
6. Technical/Operational Oversights
These may seem minor, but they lead to disqualification surprisingly.
- Incorrect time zone settings or not syncing your platform’s clock with the prop firm’s server can lead to trades being executed during “restricted time windows.”
- Don’t forget that fees, slippage, and spreads reduce your profit and can cause you to miss targets or hit drawdowns.
- Using banned tools or strategies: Some firms disallow hedging, bots, or trading during major news events.
- Sharing account access or having multiple accounts violates the rules.
7. Mismanaging Profit Targets
Profit targets are tempting, but they work both ways.
- Chasing high profits too quickly leads to higher risk, which in turn increases the chance of drawdown blowouts.
- Not planning for “what if I hit part of the target” situations (e.g., locking in partial profits, then managing risk on remaining).
- Letting the target drive your decisions rather than allowing your strategy to do so.
How Bitfunded Helps You Avoid These Mistakes?
Bitfunded’s crypto challenges have clear, transparent rules reflecting real crypto pair behavior, with disqualification clauses clearly outlined. Our guidance includes:
- A detailed guide including drawdown limits, minimum number of trades, and disallowed times or strategies.
- Practice opportunities via simulated trades so you can test your strategy before paying challenge fees.
- Support resources to clarify rule ambiguities before you begin.
Best Practices to Pass Your Crypto Prop Challenge
Putting all of this together, here are habits and practices that will help you succeed:
- Build and test your trading plan in demo, adapting it only based on data.
- Risk is only a small fraction per trade (for example, ≤ 1-2% of account value), and it keeps the daily drawdown well below the maximum permitted.
- Limit the number of trades per session; avoid overtrading.
- Maintain a trading journal: note setups, outcomes, and your emotional state. Over time, this reveals patterns you can correct.
- Keep your mindset calm: have rest days, avoid trading during high stress, and never chase losses.
Why It’s Important to Get It Right, Especially with Crypto?
Crypto trading is different:
- Markets run almost continuously; news or events at any hour can move markets dramatically.
- Liquidity can vary; slippage and spreads widen during volatile periods.
- Crypto regulations and exchange behavior sometimes add extra delays or risks.
Therefore, the margin for error in online prop trading in India (and globally) tends to be smaller. Mistakes that might be forgiven in stock or forex challenges can lead to disqualification in crypto prop challenges. Understanding this environment helps you adjust risk tolerance and strategy accordingly.
When choosing best funded trading firms or best crypto trading platform, prioritize clear rules, fair pricing, and transparent payouts over advertised profits.
Conclusion
Passing a pass prop challenge in the crypto world is not just about picking the right momentum trade or timing. It’s about discipline, rule-respecting risk management, consistency, and avoiding careless, emotional mistakes. At Bitfunded, traders succeed when they treat the challenge like a professional contract: read the rules, manage risk, stay consistent. Do that, and you greatly reduce the chances of disqualification.
Frequently Asked Questions
1. If I accidentally exceed the daily drawdown but profit overall, will I still be disqualified?
Yes. Most firms disqualify instantly once the daily or maximum drawdown is breached, even with overall profit.
2. Are news-event trades allowed in crypto prop challenges?
It depends on the firm. Some allow trading during news; many ban it or impose special rules. Always check first.
3. How important is a consistent strategy vs trying new setups mid-challenge?
Inconsistency is fatal. Sticking with a tested strategy increases the probability of passing vs frequent switches.
4. Can I use high leverage safely in these challenges?
High leverage increases risk; use it cautiously per challenge rules to prevent significant losses.
5. For traders in India, any special concerns about online prop trading in crypto?
Payment methods, exchange restrictions, tax reporting, and regulatory clarity are crucial for both Indian and foreign prop firms.