Best Risk Management for Prop Firm Funded Accounts (Formula)

So in this video I want to talk about the risk management for all of you. We're talking beginners, we're talking people that never got a payout, never got funded or already got payouts and got funded and want bigger payouts. I'm going to give you a formula on how to get consistent payouts from the market. This is going to be the most insightful video when it comes into risk management with funded accounts. And yes, you, you might still be in your challenge phase and I do have videos on formulas when it comes into getting funded. But this is a very important part of your journey. What are you doing once you get funded? How can you get consistent payouts? And this is going to be a big wake up call for a lot of you because when you get into the funding, this is normally when you start doing dumb mistakes and then you get into drawdown and then you blow the funded account. So all of this idea of I am going to get a payout goes out of the window once you get a few losing trades. And that is exactly what I want to avoid. So we're going to go into the computer, this is going to be a downloadable resource and I'm going to give you the formulas in whatever stage of your trading you are at right now. So let's get into it. So let's talk about the best risk management for funded accounts. And you need to understand a couple of things. It's all based on the skill that you have. If you haven't got a payout, if you're a beginner trader, if you're not a beginner trader, the number of funded accounts that you have in the consistency at which you want to get the payouts. I will explain all of these in detail, but someone that has got hundreds of thousands of dollars in payouts should not be approaching prop firms the same way as someone that has never gotten a payout. And that is why I think this video is going to be great because it's going to be an arrangement of every single skill level. You will have a formula on what to risk when it comes to your funded account. And if you like that, please make sure to subscribe. I'm going to do a whole free 30 day bootcamp in this YouTube very, very soon. So keep your eyes peeled for that. So let's talk about the risk management for funded accounts. Well, first we're talking about skill and the skill is based on the idea of if you've had previous payouts or if you never had previous payouts. And first let's Start off with the people that have never gotten a payout, because this is. I know that this is a lot of you and a lot of you are getting ready for when you get funded. And this is going to be extremely, extremely important. And then let's talk about consistency. Do you want bigger payouts or do you want consistent payouts? And let's start off because I know that most people are going to want bigger payouts, right? You got your funded account. You want to get a big payout because you want to prove to yourself, I can make money from trading. But I want you to think about this. You do not have previous payouts, so you don't have previous experience showing you that I can get payouts from a prop firm. And so if you are thinking that you want bigger payouts, I want you to rethink why you want a bigger payout. You need to understand a bigger payout is going to incur more risk, because if you don't risk, you have no reward. And if you want a higher reward, which means a higher payout, you are going to have to risk more. And so I want you to rethink why. Because if you don't have previous payouts, if you don't even have one payout to prove that you can get consistent payouts, then why are you trying to go for a big one? It doesn't make any sense. If you have never gotten a payout, consistent payouts is the way to go. It really is. A lot of traders, they get so caught up because they start comparing themselves with the other traders and how much they're getting paid out. And this beginner that never got a payout before in his first payout was a $30,000 payout. Let me tell you, a lot of the people that you hear that the first payout was a $20,000 payout, they will not show you all of the blown accounts. And by the way, they will not show you the same people that are on the same boat as you, meaning they never got a payout. And. And they will never get a payout because they're always aiming for the big one, right? So I want you to think about if you are a beginner, especially if you don't have any payouts, you want consistent payouts. First you want something called proof of concept. And then once you want consistent payouts, it depends on the number of funded accounts that you have. And the reason for that is because, like, once you get funded, that is your opportunity to make money from trading, right? Once you get funded you can finally get actually a payout. You don't need to profit 8%, you don't need to profit 10%, you don't need to profit whatever it is to actually be able to get a payout. So you just need to profit. So it's going to be different. The approach that we are going to be using. If you have one funded account, two to three funded accounts, or four plus funded accounts, and you will see that we'll talk about this a little bit after at the end of the video. That is going to be one of the best lessons ever. So the risk that you are going to have if you are trading with one funded account is going to be max drawdown divided by four divided by the number of trades that you take per week. So let's say that the max drawdown on FTMO, for example, is 10%. You divide that by four and then you divide that by the number of trades that you take per week. So let's say if I take five trades per week, that means that I'm going to be risking 0.5% per trade trade. And if you want to be even more conservative, you can do this by eight. Now, why am I giving you this formula? Why is this the formula? Because you're basically dividing the max drawdown by four, which means you are going to need four weeks of consistent losing to blow your account. And if you have not never gotten a payout, but you got to the funded, the likelihood of this happening is very, very low. So if you've never gotten a payout and you have one funded account, you I would say risk max drawdown divided by four divided by number of trades per week. Because again, this is really going to reduce the risk of you blowing the account. And if you don't know the number of trades that you take per week, well, you should. And if you don't have that data, look back in the last month how many trades that you have and divide that by four. Now, if you have two to three funded accounts, the risk that you're going to have on one single account is going to be max drawdown divided by 2.5 divided by the number of trades per week. So let's say once again, 10% divided by 2.5 divided by 5 trades per week. That means I'm going to be risking 0.8% on my funded account on one of the two to three funded accounts. Because again, this is going to maximize the profit that you are going to take without risking your funded account, without risking your opportunity to make Money, which is the number one thing that you have to be thinking about. It's the opportunity for you to make money. And so you want to reduce the risk of you losing the opportunity to make money as much as possible, meaning you want to reduce the risk and the probability of you losing the funded account as much as possible. And so then you are going to do something called the Rotate account, which we are going to talk about very, very soon. And if you have four or more funded accounts, then what you should do is max drawdown divided by two divided by the number of trades per week. So that means that max drawdown divided by two divided five. That means that in this case, if I'm taking five trades per week, I'm going to be risking 1% per trade. And again, this is only on one account because then we are going to be rotating accounts. And this is going to basically guarantee that if you are profitable, you can get consistent payouts every single month. You will get a payout, right? That is my number one goal for you. I want you to see payouts getting into your account. And so that is how we are going to be approaching it if you don't have previous payouts. And stick around because we are going to talk about what this rotate account is going to be and it's going to be one of the most important things. If you're watching this, just for this video, I made a quiz that basically is going to take you through all these paths and tell you what risk you should use. And at the end there's going to be a calculator on a Google sheets that you will be able to input your values and you will be able to know how much you should be risking in percentage per trade. So make sure to check the first link in the description. The quiz is going to be there and the calculator is going to be at the end of the quiz. Now let's talk about if you have the previous payouts. Well, in this case wanting bigger payouts is a possibility. And so we'll talk about that. But first let's talk about consistent payouts on the funded accounts. Well, in one, two to three or four plus funded accounts, the formula actually remains the same as if you have not gotten a payout yet, because again, we understand that the goal is to get consistent payouts. The number one goal is consistent payouts. And so the formula remains the same. But if you have gotten previous payouts, that means that very likely you are going to get more and more and more payouts because maybe you are A little bit more profitable than the person that has not gotten payouts. Once again, the reason for these formulas, believe me, I spent hours coming up with these formulas because I was thinking, okay, what do I do and how can I guarantee that the viewer watches this video, implements these formulas and then actually gets consistent payout? Because again, my number one goal is for you to get a payout. That's the number one goal with the simple trading edge. That's the number one goal with the Bootcamp that I'm going to have very, very soon. All on YouTube. But now let's say that you have previous payouts and you want bigger payouts. Well, this depends on the number of funded accounts that you have. If you have one funded account, I don't really recommend it. But again, I'm going to give you a formula. Two to three accounts or four plus funded accounts. Well, if you have one funded account, you should do max drawdown divided by two divided by the number of trades per week. Which means, yes, you are going to be risking, in my example, around 1% per trade. But you don't need much more. You need to understand you only have one trade funded account. Why would you risk more than that on one funded account? So don't risk more than 1%, I would say, and the formula is max drawdown divided by two divided by the number of trades you take per week. But if you have two to three funded accounts, then the risk you should be taking would be max drawdown divided by the number of trades per week. So worst case scenario, this is the problem. Worst case scenario is if you have a full losing week, you are going to lose one of the accounts. Because don't forget that this is all about trading on one account and you are going to rotate the account. We are going to talk about that right after. So two to three funded accounts, you are going to very much increase the risk of you losing the funded account. But also you need to understand this is about wanting bigger payouts. And this is only for traders that have previous payouts. And then if you have four or more funded accounts, then what you can do is max drawdown divided by 0.8 divided by the number of trades per week, which means let's say that you take five trades per week. If you lose the first four, you are going to be losing this account. And again, it's just one. I really, really need to emphasize that this should be taken on one account. And that's now what we are going to talk about on the rotating the account. Because I want you to understand this very, very clearly. Before, it used to be very known that you just interlink all of the accounts and you trade all of the accounts at first. Because if you have $4 million or if you have $1 million in assets under management, that means that you are going to make $10,000 every time you risk 1% if you copy trade between all of the accounts. I've tried that. I know many, many people that have tried that. I know a lot of people that still do that and I know a lot of people that are going to do the account rotation. As I'm going to tell you, the people that are most consistent in terms of payouts, they rotate the accounts. And that's what I'm going to explain to you what this is. And the idea for this video came about when I was talking with the coach inside of the Simple Trading Edge. He's going full time trading this year. It was absolutely amazing to see. He told me I have a bunch of accounts, blah, blah, blah. And I was like, okay, now you're actually going to follow exactly what I just showed you of wanting consistent payouts. He was like, oh, but I could just interlink all of them, risk 1% and I would be making tens of thousands of dollars every single month. And I was like, yeah, but that's not what you're going to do because I want you to get consistent payouts. I don't want you to go back to your job. Right. So what does the account rotation mean? The account rotation simply means that you are going to use all of the funded accounts that you have one at a time. But you are always going to be rotating between them as soon as you have profit that you can lock in. So for example, if you have $100,000 account and you make $2,000, you lock in the payout, you move on to the next one. Right? One winning trade, you move on to the next one. And this is a perfect example. Let's say you make $500, which means 0.5%. At this point you're likely risking 1%. You make $500, you lock in the payout, you move on to the next one, right? Then let's say you enter in a losing streak minus $500, minus thousand, minus a thousand. So you're down 2.5% and then you make $2,000, meaning you make 2% and then you make a thousand dollars, which means you make 1%, you lock in the payout. So now you've already locked in $3,000 in payouts. And you already went through one losing streak. And then let's say you have another break even trade, that is a $200 trade. You lock in that payout too. Because don't forget that at that point, maybe this first account is already available, but you've already locked in three payouts and with this one, four payouts. So can you see what I mean? With consistent payouts. And now let's imagine that you get into a deep losing streak. Minus 1%, minus 1%, minus 1%, minus 1 percent, plus 2, plus 0.5, minus 0.5. This is a big losing streak that you could be taking. And the beautiful thing here, and the reason why I really, seriously, seriously recommend you doing this, is because as this losing streak is happening, you are not fearing that you are going to lose all of your livelihood. You are not fearing that all of a sudden you will not be able to pay the bills anymore because you still have all of these other accounts to fall back on. You still have all of the other two accounts, three accounts to fall back on. So this is extremely important because we're talking about the consistency of payouts and constantly getting, getting that payout, constantly getting money into your bank account. What is the goal with trading? The goal with trading is to get money out of the markets into our bank accounts. That's the only time that you have profited from trading. If the money is not in your bank account, you have not yet profited from the markets. If the money is in the broker, you have not yet profited from the markets because you have not withdrawn the money yet. So it's very important to keep that in mind. And so this is basically what the account rotation means. As soon as you get one trade in profit, you lock in the payout. Doesn't matter if it's $200, doesn't matter if it's $500, doesn't matter if it's a $4,000 trade, you lock that in. So maybe these $200 on this maybe break even trade that you took is actually your bills paid for a week. So do you understand how you are comparing yourself with all these other influencers or anyone that is making an interview on the prop Firm Challenge and you're forgetting that $200 is one week of bills paid and that maybe you made in one break even trade. We should not even have profited. All of a sudden you're getting a payout and you're getting your bills paid for a week. How freeing would that be? How freeing would it be to every single week, get a payout that would pay for your bills for multiple weeks to come. How beautiful would that be? And that is my goal for you. Now some of you are going to say, well, but how do I get to 100k? 100k. I have a risk management video for that. But I want to talk about, let's say you have $10,000 accounts. This is the same thing. If you have $10,000 accounts, you're going to work the same way. And yes, you are not going to get the biggest returns, but this is what you then are going to funnel into bigger challenges. Maybe your next funded account is going to be a 100k account, maybe the next account is going to be a 200k funded account. Who knows? But that is going to come from the consistency of getting these payouts. So let's say you enter in a big losing streak minus 5%. You dig yourself out of that losing streak until you lock in the payout. Then you move on to the next one. Profitable trade, lock in the payout, move on to the next one. Losing trade, winning trade, lock in the payout, right? So all of a sudden you're getting this consistent money into your bank account. That's the number one thing that I wish for you. And that's why I really urge you to try to do this. You will see a huge shift in your trading once you start doing this. All of a sudden you're going to be like, man, I don't feel as stressed anymore when I'm in a losing streak. I don't really care that much anymore. And you'll notice that it's because you have something to back you up. You have something that if you blow this account, well, it is what it is. I still have other ones. And you're not going to fall into the cycle of. I've entered in two trades, losing, okay, it's done, I'm done. I cannot pay the bills. Trading is not working for me. Blah, blah blah. That is going to happen to you. If you keep copying between accounts. Eventually it will happen to you. While if you rotate the accounts, you will go on a losing streak on one, but you won't worry because on all of the other accounts you won't will still be able to get a payout because they will be at break even or at a tiny profit or even at a tiny loss. So with that being said, this is the best system when it comes into getting consistent payouts with prop firms. And that's I really urge you to try to do this and you'll notice a huge shift in your trading so make sure to subscribe. There's going to be 30 days followed 30 days of a bootcamp coming in this channel which is going to be absolutely a game changer on YouTube. So subscribe if you want to watch that. If you want the risk management for prop firms when it comes into challenges then that video is going to be right here. Hope you enjoyed and I'll see you in the next one. Peace. If you're watching this, just for this video I made a quiz that basically is going to take you through all these paths and tell you what risk you should use and at the end there's going to be a calculator on a Google sheet that you will be able to input your values and you will be able to know how much you should be risking in percentage per trade. So make sure to check the first link in the description. The quiz is going to be there and the calculator is going to be at the end of the quiz.