Useful tips for a prop trading routine
The different prop trading strategies
The main trading strategies consist of:
Each one will carry different traits that will not suit all traders. Firstly there is a time element to each strategy, and if you can’t be available behind the screens for large portions of the day, then short term methods won’t work. You need to adapt profitable methods and styles to your plan and how you see it working.
We all have different styles and how we act outside of trading will show up in your trading performance. This is because we are all human and carry emotion. The more emotional we are within trading the more difficult it will be to succeed. The best way to overcome this, is to simply trade with amounts you won’t react to if you lose. Then we can focus on bettering ourself through our strategies and build are skillsets. Constantly looking to take your trading to the next level, no matter what your situation is will be beneficial to the strategy that you will build over time. Not all traders fit into a box and we are all different.
What strategy is best for me?
Understanding what strategies will work for you will depend on how much time you can invest into your work. If you have other life priorities such as a job, then swing or position trading might be the best approach. If you have lots more time to dedicate to your craft, you might want to try day trading if it fits your investment style and characteristics.
We recommend traders try new strategies out on a demo account and start small. Always try to earn the right to trade bigger. By starting small you can test the waters to see how well you build a solid performance over a large sample size of trades.
Useful trading strategy books
In previous blogs we have displayed some of our books that we recommend traders read. Here are a few that will help with your strategy:
Market Wizards by Jack Schwager.
Reminiscences of a stock operator by Edwin Lefevre.
Trading in the zone by Mark Douglas.
These books have gone into a lot of technical strategy regarding how to trade and when. Whilst you may find other traders online who show themselves winning on a small sample size, don’t let that fool you into trying to rush profits or trade too quickly by overleveraging your account. You will know when you have found or developed your strategy, it will make you life easier and sustainable.
Most popular prop trading strategies
As we have analysed hundreds of prop traders strategies of the past year we have understood similar habits across different styles and strategies. All profitable traders will carry positive risk to reward ratios across all trades. The best performing traders seem to be all-round traders where their trades can last from as little as 30 minutes up to 3 days. Some have also used high impact news to drive their accounts to meet profit targets. The beauty about our prop fund is that we have a very open mind to new traders and are always looking at new variations and styles of traders who come through our fund.
After speaking with a few of the traders lately they have explained the 80 – 20 rule which means they focus 80 percent of the technical analysis side whilst 20 percent keeps a handle of the fundamental announcements. This combination seems to be very fruitful in building long term successful habits. We have studied the volume drives before and if a trade has many confluences at a certain location, then the news ca help drive momentum into that spot.
Do some research and figure out your available times to be trading and back test some of the strategies you think would work for your lifestyle. And then when it works, implement it slowly with low risk on your live account.