10 Biggest Mistakes in Prop Trading and How to Avoid Them

Trading can bring freedom and fulfilment, but it can just as easily lead to frustration and loss. The difference often comes down to discipline and whether you learn from the most common errors that traders repeat. Both beginners and seasoned professionals fall into the same traps, often paying with wasted capital, time and energy.

Here are the ten biggest mistakes in prop trading and, crucially, how to avoid them.

Mistake 1: Trading Without a Plan

Your trading plan is your roadmap. Without it, you hand control over to the market and your emotions. Even experienced traders sometimes open positions based on gut feeling or the latest YouTube tip. That isn’t trading.

How to do it right: Create a detailed plan with clear entry and exit rules, strong risk management, and conditions for when not to trade. Test it, refine it, and most importantly, stick to it. Never trade blindly.

Mistake 2: Ignoring the Demo Account

Many traders dismiss demo accounts as “unrealistic” because they lack emotional pressure. That’s true, but it’s also their greatest strength. Demo accounts allow you to practise strategy execution in a safe environment, building skill before emotions and real money enter the picture.

How to do it right:

• Practise entries and exits until they become automatic.

• Treat your demo account with the same seriousness as a paid FTMO Challenge.

• Focus on consistency, not profits.

Mistake 3: Skipping the Trading Journal

Without records, you can’t learn properly from your mistakes. Memory is selective, and you’ll either forget details or distort them. A trading journal provides objective feedback, helping you identify patterns that work and behaviours that repeatedly hurt you.

How to do it right: Record trade data along with your thoughts, hesitations and emotions. Over time, recurring patterns will emerge that you could never have spotted otherwise. Your journal is your most honest mirror.

Mistake 4: Getting Carried Away by Winning Streaks

Profits can be more dangerous than losses. After a series of wins, traders often increase position sizes, break their rules, and convince themselves they’ve found the holy grail. The market quickly proves them wrong with painful drawdowns.

How to do it right:

• Keep your position sizing consistent, no matter the outcome.

• Remember that five winning trades don’t prove anything.

• Stick to your rules through both gains and losses.

Mistake 5: Chasing the Holy Grail

Every trader goes through a phase of constantly switching strategies in search of the perfect one. But the holy grail doesn’t exist. Almost any strategy can work in the hands of a disciplined trader.

How to do it right: Choose one strategy that suits your mindset and schedule. Commit to it, refine it, and resist the temptation to jump to the next “secret system” whenever you hit a losing streak.

Mistake 6: Neglecting Trading Psychology

Technical skills alone won’t make you successful. Fear, greed, ego and revenge shape your decisions far more than most traders admit. Those who believe they can “handle emotions” without a plan often only realise their mistake after heavy losses.

How to do it right:

• Be conscious of your emotions and acknowledge them.

• Act according to your rules, not impulses.

• Treat trading as the mental game it truly is.

Mistake 7: Ignoring Money Management

Even the most robust strategy can’t protect you from reckless risk-taking. Trading with oversized positions is like driving without a seatbelt.

How to do it right: Define a maximum risk per trade, ideally between 0.5% and 1% of your account. This approach shields you from catastrophic drawdowns and gives you space to learn and recover.

Mistake 8: Trading Out of Boredom

Bored traders are dangerous traders. Without clear signals, they look for trades where none exist, often entering impulsively just to “do something”. That habit slowly drains accounts.

How to do it right:

• Set specific trading hours and respect them.

• If no valid setup appears, don’t trade.

• Understand that discipline also means knowing when to stay out.

Mistake 9: Trading Without Data

Many traders don’t know their win rate, risk-to-reward ratio, or average drawdown. They believe they “know what they’re doing”, but without statistics, it’s nothing more than guesswork.

How to do it right: Track your performance metrics consistently. Analysing your numbers reveals where you have an edge, where you’re bleeding capital, and where to focus your improvement.

Mistake 10: Fighting the Trend Without a System

Going against a strong trend is extremely risky. Without precise timing, strict rules and quick execution, you will almost certainly get swept away.

How to do it right:

• Always respect higher timeframes.

• Use very strict criteria and tight stop-losses.

• Be prepared to cut losing trades instantly.

Conclusion: 10 Years of Lessons, 10 Ways to Succeed

Every mistake on this list has been made by countless tra

ders. The difference between beginners and professionals is not whether mistakes happen, but whether you learn from them.

At FTMO, after ten years in prop trading, we’ve seen what separates success from failure: discipline, consistency, and honest self-reflection. Master these, and you’ll be further ahead than any indicator can take you.