Hi everyone, a very warm welcome to you all to the trading blog, covering my quest to become a six-figure prop firm trader. In the first series of posts, I covered my attempt at FTMO’s free trial, which gives you two weeks with a free MT4 account under FTMO Challenge conditions.
Regardless of whether or not I passed, I promised that I would repeat the free trial, and that commitment still stands. However, in the meantime, I did something a little more interesting: I attempted a real prop firm challenge. In this case, it was the 100k Evaluation from My Forex Funds.
Trading Blog 1st series recap
Here are some links to all of the previous posts, covering my attempt at the free trial.
- Funded Trading Blog #1: My Prop Trading Journey begins
- Funded Trading Blog #2: Leverage & my first day trading
- Funded Trading Blog #3: Day 2 of Trading
- Funded Trading Blog #4: Day 3, RSI divergence & FOMC
- Funded Trading Blog #5: Day 4 – My first losses
- Funded Trading Blog #6: Day 5 & 6 Lessons learned
- Funded Trading Blog #7: Day 7 – I can’t believe I did this
And finally, here’s the proof that I actually passed the free trial:
My Forex Funds Background
Anyway, to business. While obviously, the goal here is to pass, the real or wider goal is to use the profits from this account to then fund additional 6-figure evaluations with other prop firms. While I could have afforded to go with the MFF $200,000 evaluation, I can still meet this goal with the 100k account. Of course, the only difference is that I won’t lose quite so much if I fail.
In July last month, My Forex Funds were offering a 300k evaluation account. In fact, they’re continuing to offer it up until the end of August. While that’s kind of overkill for me, it’s a great solution if you want to reach the maximum initial funding limit (600k) in the shortest possible amount of evaluations. It’s also good when compared to FTMO, whose maximum capital allocation is 400k. You can theoretically obtain this with two successful 200k evaluations. However, in order to get maximum capital with MFF without the 300k account, you’d have to complete the 200k evaluation three times.
Therefore, if you can afford the extra cost, it obviously makes more sense to go with MFF than FTMO. I presume MFF has introduced the 300k account as a limited offer in order to gauge market interest. It clearly makes them more competitive and I hope they will make it a permanent fixture, as I would love to attempt it at a later date.
Progress
I’ll get straight to the point – I passed Phase 1 in 8 days. Obviously, I was absolutely over the moon about this.
My money management strategy was pretty simple. I would risk no more than 1% of the starting account balance per trade until the account was up by 1 – 2%. Once the account was at this level, I would then risk 1% per trade. I would repeat this process if I fell back to the start.
On day 1, my first trade failed but the next one was a success. I ended the day with a very tiny profit, about $30.
Day 2 saw my first substantial win. I was originally targeting a slightly higher profit point, but I closed it manually at a price that effectively resulted in a 1:2 risk-to-reward ratio for a cool $1600 profit. I can’t remember if the price continued to rise, but I can remember my feelings at the time. Seeing the trade run in profit at a decent RR, and seeing a fifth of the Phase 1 profit target right there for the taking, well, it wasn’t a difficult decision.
Unfortunately, the next few trades undid all of that profit, but the last one recovered it and generated a bit extra. I ended day 2 of trading with a $432 gain.
The big one – day 3
Day 3 proved to be very exciting indeed. I managed to catch a big move on crude oil with a RR of around 1:4. This netted 15% of the profit target.
However, that was just the beginning. Later that day I took a long position on gold, but made a huge mistake which I put down to tiredness. I forgot to change the lot size from my previous 10-lot crude oil trade, and instead of taking a 1-lot trade on gold, I took a 10-lot position.
Gulp.
The trade instantly fell to a small loss and I immediately thought about closing it. But then I thought it may close at a slight gain, even if just a very small one like 50 bucks, and then I can close it. I would learn my lesson and even get a few bucks out of doing so.
Looking back at this thought, I see how incredibly entitled it was, and how conceited it was to expect the trade to run in profit. The market is not under any obligation whatsoever to give you a return. Period. There is always the possibility with any trade that the price moves away from your entry point and never returns.
My reaction
In the very next moment, my thoughts then moved to the stop loss. I did set one, but I immediately realized that due to the size of the trade, it wouldn’t have to hit it in order to breach the max daily drawdown limit.
I tightened the stop loss so that I wouldn’t breach it, and threw caution to the wind and let the trade run. If it had failed, it would’ve brought my balance back to the start. I reconciled it as a risk-free chance to take a major step forward toward the profit target.
I didn’t think this idea was a bad one, but that doesn’t mean I thought it was a good one either. Obviously, I never would’ve entered such a trade on purpose. It was the perfect example of how one small mistake or piece of unwelcome emotion can turn a decent trade into a terrible one.
The price hovered dangerously close to my new stop loss, and I had resigned myself to failure.
How it panned out
However – to my disbelief – it moved away from it.
A 10-cent gain in price represented a 100-dollar profit. I watched my account equity rocket up at an incredible speed. A few hundred suddenly became a thousand. One thousand suddenly became two.
It was when the trade hit a $2,000 profit that I decided to take the money and run. I had no excuse to leave a quarter of the profit target on the table other than greed.
The price continued its momentum and I watched it hit a level that would’ve netted me $4,000. Then $6,000. Then $8,000.
If I had let it run, this one trade alone would’ve hit the profit target.
Nevermind. In forex trading, I’ve always said that “if” is a very big word that can only be mitigated by knowing the future. And if I could read that, it would be easier to just play the lottery instead.
Day 4 to the end
Day 4 turned out to be another big step towards the profit target. I risked 1% of the starting balance going long on crude oil, which unfortunately failed. However, my next trade, a 0.5% risk on gold, recovered a chunk of that loss. I also reentered crude oil for a cool $2,500 profit and finished the day over 75% of the way towards the profit target.
I finally sealed the deal on day 5 with another long position on gold. As soon as I saw the account equity hover above $108,000, I closed the position manually.
Job done!
Shortly after this, MFF sent me the e-mail congratulating me for passing Phase 1, and a link to generate my Phase 2 account.
Trading blog – MFF Phase 2
Sadly, I failed it. If I could define Phase 2 in just one word, that word would be “frustration”. There’s no real need to go through each and every one of my trades, but obviously, I’ll go through what went wrong, the mistakes I made, and what I could’ve done better.
My very first trade failed, and that, unfortunately, set the psychological tone for me for the rest of Phase 2. The first week of having the account simply consisted of a 1-2% drawdown, scraping my way back up to the starting balance or just below it, and then going back down 1-2% again.
The highest the account ever reached was around $101,200. That may not seem like much, but it’s a fifth of the way towards the profit target. However, a couple of poor trades blew it back down to around $97,000.
As far as I’m concerned, these trades were really stupid because they involved instruments that I never really trade: AUD/USD and the Dow Jones.
Why I failed Phase 2
Looking back, the trigger for my failure was a combination of frustration and impatience.
Everyone knows how emotion can trip you up in forex trading. However, I think that knowing this doesn’t really help you unless you can apply it, and identify what triggered these emotions.
In my case, I had several commitments outside of trading, such as work, which constantly caused me to miss some extremely good setups with a very good RR. Getting on just two of them would have meant passing Phase 2. Missing them left me extremely frustrated.
My impatience was then compounded by the fact that the setups I was able to get on failed.
I think anxiety was also another emotional factor. On July 26, there was a short setup on crude oil on the 15-minute chart that looked very good. However, due to the worry of losing money, I didn’t enter a position.
Let’s look at how it panned out:
Very frustrating. An obvious element of emotional trading is entering positions based on emotion and not logic. One thing this has shown me is that emotional trading can have a negative effect, even without actually entering a position. The anxiety of a loss can stop you from entering decent setups that are relatively low risk.
Trading blog 9 – what I learned
It’s easy to stick to a system when you’re winning. It’s much harder to stick to a system when you’re losing. After all, that is pretty much the definition of discipline. It’s about doing something, even though the mood that would be favorable in which to do it has long gone.
I believe there’s an African proverb – forgive me for not remembering which nation exactly – that says: if you want to punish someone, give them everything they want. I think the philosophy there is that they probably won’t be able to handle having it, and consequently, they’ll lose it. And that’s their punishment: losing something valuable to them. I think that certainly sums up my experience. Whereas Phase 1 tests your ability to make money swiftly, Phase 2 tests your ability to keep the account and make money gradually. And that’s where I failed.
With my accidental 10-fold trade on gold, I think I also proved another point in forex trading: money that comes to you very easily, i.e., on the basis of good luck, can also be taken away from you just as easily.
Thanks for reading, and I hope to get back to you with my next prop firm challenge soon. Take care.