The vast majority of crypto prop firm challenges do not see success due to a single trade. The successful trader is the one who remains within the drawdown limits by the time they reach day 30. The crypto prop firm evaluation is simply a test of risk management disguised as a profit target. Once you perceive it that way, the process turns into a mathematical calculation that can be prepared for beforehand instead of a survival of the fittest scenario. Below is a step-by-step guide to passing your crypto prop firm evaluation so that you can get the opportunity to trade with actual capital.
Basically, you are given a simulated account and the question is whether you can increase the account to the point where you can hit a profit target without violating a daily loss limit or maximum drawdown limit. If you manage this while hitting the profit target, you get access to a live account where you can earn a portion of the profits (at BuyCrypt, that portion is 80% to you, the trader, and is paid in real USDT).
The key takeaway from this is that there exists an asymmetrical relationship between the profit target and the drawdown limits. The former is something you can reach in your own time, while the latter gets you terminated from the evaluation if you ever reach them. Therefore, any decision that you make needs to be based upon this asymmetry. The evaluation aims to filter out those who are gamblers and keep only those who are consistent with their risk management practices, which are the things firms want to fund.
Reframe the challenge before executing your first trade: you are not there to make as much money as you can. Your only job is to hit the profit target without giving any reason for the risk management rules to cut you off.
Make sure that you turn your target into a per-day and per-trade target so that you do not have to think about anything on a day-to-day basis. For instance, if you had a 10% profit target with a 5% daily loss limit and a 10% maximum drawdown, and if you wanted to do this with 20 to 30 days of trading, your required net per day growth rate would be between 0.3% and 0.5% per day.
Now, consider your risk percentage. If you are using a risk percentage of 1% of your account per trade and have a 1.5:1 reward-to-risk ratio, then losing several trades each day will still result in your account moving toward the target due in large part to the compounding effects of your trades. However, if you raise your risk percentage to 5% per trade instead, you could easily hit your daily loss limit after only two losing trades. Therefore, make sure to write down all of your information including the risk numbers so that you will not have to make any decisions about when to hit your stop losses in the moment since it will all be set beforehand.
Since crypto is a volatile environment, there will be a great deal of variance in it. Even if you have a true edge, you will have many normal losing streaks. Position sizing is your way around this. Keeping your risk per trade percentage low enough (around 0.5% to 1%) will allow for five or six consecutive losers without having to touch your daily loss limit line.
Behavior patterns at BuyCrypt have shown that successful traders not only must keep their risk-per-trade numbers low, but they also need to avoid trading for revenge after experiencing some losses. Hence, the blowups are always caused by a trader increasing their sizes in order to make up for lost time and losing their drawdown limit as a result.
Place hard stop losses for every position in play. Do not ever widen the stops in order to try to avoid a loss, and do not open a large number of trades at the same time.
These rules are typically imposed on top of the profit target and drawdown limits so that firms are able to separate real skill from luck. The consistency rule has a ceiling on how much your profits can stem from one trade, and the minimum-days rule prevents you from passing your challenge if you hit your target on the very first day of trading — even if you manage to do it quickly.
The ultimate challenge will be to hit the target on a slow and steady basis without having to think about the consistency rules at hand. The low barrier for entry means you can always take your time with the evaluation process.
The best way to get better is to fail at no cost. BuyCrypt offers free tournaments that mimic the environment of the funding process. You get to train with the same trading terminal and scoring so you never have to deal with surprises.
Before commencing evaluation, it is important to confirm all items due to knowing all parameters concerning profits, losses, the maximum amount lost, etc.; more importantly, you have converted all these parameters into the corresponding figure for the account to gain money with every trade. Your risk factor per trade is set to a minimal value, which should be written down beforehand, rather than being chosen by impulse.
Every new entry has a stop-loss. The moment you hit the loss limit, you need to stop trading with a margin.
You have already participated in at least a couple of free tournaments using terminal and a scoring system to understand how to carry out the trading evaluation, and you survived without changing your trade size. You know how to space out gains.
BuyCrypt is not an official exchange and does not guarantee you profits as it is only a simulation; however, if you meet all mentioned checkpoints, you have minimal requirement by BuyCrypt in order to proceed to the next stage of funding.
The answer to this question differs; typically, there are no strict deadlines. However, if you know your trading strategy and the amount of risk to carry, usually, the average targets they ask for take up about 20-30 days.
Once you have breached any of the daily loss or max drawdown limits, you are locked out of this challenge; hence, make sure to pay full attention to sizing positions.
Of course; as the required amount by BuyCrypt to carry out a funding varies from five dollars (or for free through The Ladder), you need to treat every failure like an opportunity to learn from the one's mistakes and apply the required knowledge.
Normally, it does not happen; regardless of whether you paid attention to risks or not, usually all of the challenges contain rules limiting any consistency concerning one date or trade size; hence, such a large trade shows nothing in terms of skills.
Usually, the amount varies from 0-5% up to 1% to survive through incoming volatility.
The most common aspect relates to revenge trading after losing some money.
